It’s perhaps a salute and a tribute to this iconic landmark that most illustrations and frames of Mumbai’s commercial cityscape will always feature the now-familiar outline of the Phiroze Jeejeebhoy Towers, home to the Bombay Stock Exchange.
The Bombay Stock Exchange was formed in 1875 but its history goes back to the 1850s when stockbrokers would assemble under banyan trees in front of Mumbai’s Town Hall (in the space where Horniman Circle Gardens is located) and carry on business. A decade later, the brokers moved to a location under banyan trees at the junction of Meadows Street and MG Road. As the number of brokers increased, they shifted their meeting areas several times, but ended up overflowing to the streets. In 1874, the brokers found a permanent place and the area came to be known as Dalal Street or Brokers’ Street.
The construction of the Phiroze Jeejeebhoy Towers (BSE’s current location) began in the 1970s and the BSE started operations in the building in 1980. While it was initially referred to as BSE Towers, following the death of Sir Phiroze Jamshedji Jeejeebhoy, BSE chairman since 1966, the building was renamed in his memory.
However, it would only be in 2002 that the name The Stock Exchange, Mumbai was changed to Bombay Stock Exchange, and on August 19, 2005, the exchange turned into a corporate entity from an Association of Persons (AoP) and was renamed as Bombay Stock Exchange Limited.
Kisan Ratilal Choksey (73), Chairman of KR Choksey Shares and Securities (KRC), a brokerage firm, has been closely observing the BSE for the last five decades. Taking a trip down memory lane, he recalls that when he entered the stock market in 1961, BSE was the only stock exchange in India at that time. Being a Commerce graduate, he recollects how several people had discouraged him from entering the stock market due to the speculation involved.
“It was difficult for investors to get acquainted with the process. I started off by attending the Annual General Meeting (AGM), reading the balance sheets and meeting the management in order to give proper advice to the investors. My aim was that the broker and the investor should both benefit from the right moves,” says Choksey.
He adds that the entry of brands such as Reliance and the dilution of the Foreign Exchange Regulation Act (FERA) of 1973 with the Foreign Exchange Management Act (FEMA) in 1999 were instrumental in encouraging individuals to invest in the market. “The economic policy under Prime Minister Rajiv Gandhi boosted the stock market and brought it on the right track. The economic reforms under Prime Minister PV Narasimha Rao and then Finance Minister Manmohan Singh, which brought about the liberalisation of the Indian economy in 1991, marked a turning point as it brought about healthy
competition,” he states.
He observes that while liberalisation was initially viewed with scepticism, it proved to be a good move in the long run. “There is always resistance and aversion for new things. Steps such as the dematerialisation of shares or demat (conversion of physical share certificates into electronic shares) and the computerisation of processes helped open up the market a lot and allow investors to conduct transactions at competitive rates,” he shares, admitting that it also has a flip side — “The automation led to an increase in network partners or sub-brokers and their knowledge was often not up to the mark. But it helps that the clients are often more knowledgeable nowadays.”
Broker the economy
While there have been dark times such as when the BSE was the target of the 1993 serial bomb blasts and the present market conditions are still not optimum, Choksey believes that the future will herald further growth for the BSE.
“Overall, the passage of time has ensured greater transparency. The economy’s health is indicated by the stock market. While at present, there is no volume in the market and a lack of momentum, it reflects a lack of confidence by investors towards the market.
The Finance Ministry should look into this aspect and ensure that policies are executed, properly. We are going through a bad period, which is temporary but there is plenty of potential for the market to expand,” he concludes.
Is the banyan tree still around?
Abha Bahl, architect and co-founder of the Bombay Heritage Walks, observes that based on historical books, the tree could still be located around Horniman Circle. “There are three 300 to 400-year-old banyan trees within and outside the Horniman Circle Garden that match the descriptions of the archival photographs, and it could be any one of these trees. In the past, the area was known as Bombay Green until the 18th century. There was a watering hole for cattle as stockbrokers and cotton traders would assemble in the space. It was a vital location in the city, and the area was known as Zero Point (from which all distances are measured). There are still signs of the water source inside Horniman Circle Gardens, which lends credence to the belief,” she states.
Wall of fame
Over the years, the BSE Ltd played a pioneering role in the development of the Indian securities market. They formulated a set of rules and regulations for the securities market and laid down best practices, which were adopted by 23 stock exchanges across the country. They were pioneers in introducing equity derivatives, first in India in the financial services sector to launch its website in Hindi and Gujarati and even had the first bell-ringing ceremony in the history of the Indian capital markets. Its SENSEX (abbreviated version of The Bombay Stock Exchange Sensitive Index) is the benchmark equity index that reflects the health of the Indian economy. Approximately 6,000 Indian companies are listed with the Bombay Stock Exchange.