QS Study

Ways of Getting Membership in Stock Exchange

In a stock exchange only the members are allowed to transact financial instruments. Any qualified organization can be a member of the stock exchange. It is called the economic mirror of a country. But there are some criteria to be a member of the stock exchange. The conditions and regulations are given below:

Application: One can desire to be a member of the stock exchange has to apply to the proper authority of the stock exchange in the prescribed manner.

Capability: To be a member one is to be capable of entering into contracts according to Contract Act. For this one must not be a minor, mad, or unsound mind.

Solvency: The organization must be economically solvent. The potential parties have to collect solvency certificate from a bank.

Citizenship: The desired party must be the citizen of a respective country at which the stock exchange is located.

Qualifying share: To be a member of stock exchange one has to buy at least a share from the stock exchange.

Proposal and support signature: The application must be proposed by an existing member of the stock exchange by signing at and another member must sign it to convey support the membership. This is similar to bank account opening procedures.

Promise: The applicant has to sign an agreement to obey the rules and regulations of concerned stock exchange.

Approval of member: Then the application for membership must be passed through the council through at least two third of votes of the existing members.

Fees: To be a member one has to follow the provided conditions to pay a certain amount of fees.

From the above discussion, we can say that by obeying the above conditions a capable firm can be a member of a stock exchange. But it is a great irony that some corruption also occurs in these procedures.

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