Internet plays the dominant role as for the future of stock exchanges. The changes in the system have wiped out the traditional modalities of buying and selling of shares. Electronic networks are dominating the scene. The investment activities have multiplied. The day to day volume of the operations has reached staggering heights with corresponding increase in the number of brokers. The dealings have turned out methodical, systematic and instant access has rendered the verifying procedures easy. Gain or loss, an investor can deal confidently and will know his position with the click of the mouse.
ECNs have reduced the possibility of front running. The lightening speed with which the transactions take place, without any manual intervention, has made it virtually impossible for the traders to acquire prior knowledge of customer's incoming orders and do the balancing act. The future of the stock exchanges is bright, as they have multiple roles to play in the economy. The companies are able to raise capital for expansion by selling shares to the investing public. The Exchange impacts most of the commercial activities. Some of them are:
Mobilizing savings for investment: The intelligent investing public is always on the lookout for better avenues for getting higher profits. When they draw their savings from institutions like Commercial Banks, and amount kept as idle deposit and invests more prudently in shares, such money goes to promote business activity. The economic sectors that are in dire need of resources, like commerce and industry and agriculture get their demands, paving way for higher productivity and growth.
Facilitating company growth: Business means opportunities; business means timing, making the right move at the right time. In this era of industrial and internet revolution, decisions to expand and change the production lines, acquisition of necessary business assets, takeovers and mergers will have to be taken fast. The share market makes it possible for the businessman to grow through fusion or acquisition.
Redistribution of wealth: This establishment is not founded to felicitate redistribution of wealth. But this consequential action just happens. The investors share the wealth of dividends declared and increase in the prices of shares which will result in capital gains. They get their portion of wealth of the profitable businesses.
Investment opportunities for small investors: The future of the small investors is more or less safe, if they are guided properly. Such guidance is neither costly nor it is far to seek. Buying shares depends upon one's affordability and as such it is the convenient mode. You have the freedom to invest. With no differentiation between the small and big investors, this is a place where justice to the investors is assured.
Capital raising by the Government for development and social welfare projects:
Towards creating a welfare society, the first duty of the Government is to create infrastructure. Sewage and water treatment plants, housing projects are financed by floating bonds. The public lends money to the government through the medium of Exchange. The bonds apparently offer tax concessions to the investing public, but in reality they do not seem to provide the actual relief in the over all context. Sooner or later, the government will tax the citizens to repay the bonds on redemption and the expenses devolved in managing the issue of bonds together with interest. It is just like "rob Peter to pay Paul."
The future of stock exchanges is intimately linked to the overall economic health of the nation. They progress like a train that speeds on two parallel tracks.
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