Monday, November 29, 2010

Madras Stock Exchange started in 1920

The Madras Stock Exchange was founded in 1920 in Broasway. The Exchange functioned in a rented building in Broadway. In a matter of months it attracted a large number of requests for admission to membership and about 100 members were enrolled. Around 25 proved to be active.

The Exchange was trading predominantly in textile shares, shares of foreign-owned plantation companies, including rupee company shares of Ceyon, and active shares of popular companies listed on the Bombay and Calcutta Stock Exchanges. But when the initial interest in shares waned due to a general recession, the volume of business began to shrink rapidly by the middle of 1923.

The older firms, which were somewhat better established, courageously continued to carry on the trade in securities in the hope that better times would arrive sooner or later. These firms had the additional advantage of having diversified activities by way of exchange, freight, and finance broking and were, therefore, able to sustain themselves for a number of years. Nevertheless, by the beginnings of 1926, there were only two firms of brokers functioning in Madras, one European, Huson, Tod & Co., housed in the Chartered Bank Building, George Town, and the other Indian, Kothari & Sons, situated in the building occupied by the Central Bank on Broadway.

In 1934 and 1935, there was overtrading and speculation on a large scale in Government Securities as well as Corporate Securities. Many big clients of Huson, Tod & Co. could not meet their market commitments, which in turn resulted in the firm being unable to honour its market obligations. Hubert Hadow, a partner, who was on home leave in England at the time, immediately returned to Madras and offered to liquidate his assets in England – which were, in fact, beyond the jurisdiction of the Indian courts – to meet the liabilities of the company.

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