By: Aamarpali Puri

“Pharmaceutical Aids” or “Pharmaceutical Necessities” are the term used for the chemical substances have no therapeutic value but are must for the preparation of certain Tablets, Injections, Ointments and Cosmetics etc. Various types Pharmaceutical Aids are explained as follow:

1. Antioxidants: These are mainly used to prevent rancidity of oils and fats through oxidation. These when added prevent microbial growth in various pharmaceutical products, cosmetics and food. Example: Sodium Sulphite, Butylated hydroxyl Toulene, Butylated hydroxynsaisole.
2. Preservatives: These are bacteriostatic, bactericidal, antibacterial or antifungal in their action so act as antimicrobial preservatives. The help in preservation of Pharmaceutical products, cosmetics and food products. Example: Benzoic acid (antifungal), Cresol and Phenol (anti-infective agent), Chloroform and Propylparaben (anti-microbial agent), sodium benzoate (fungistatic agent)
3. Colouring Agents: These subtstances are used in Pharmaceutical products to impart colour. They can be natural or synthetic colouring agents. Natural colouring agents include mineral colours (ferric oxide, titanium dioxide), chlorophyll, Beta Carotens etc. Synthetic dyes include Nitro dyes, Azodyes, Rosanilines etc.  The common colouring agents are Amaranth, Caramel, Cochineal, Erythrosin and Eosin.
4. Flavouring Agents: These are mostly aromatic compounds which makes pharmaceutical product palatable. Essential oils and powders obtained from plants and minerals are used to give flavor to pharmaceutical product. Example: Benzaldehyde, Methyl salicylate and Vanilin.
5. Sweetening Agents: Various Pharmaceutical Syrups, Beverages and Canned foods are sweetened with these agents. They improve taste and make it palatable. Example: Sucrose, Saccharin and Sorbitol etc.
6. Emulsifying Agents: An emulsifying agent is an inert substance used to homogenize two immiscible phases by reducing surface tension. Example: Acacia, Agar, Bentonite, Carbomer, Gelatine and Povidone etc.
7. Ointments base: Ointments are smooth semisolid substances applied to the skin externally. The ointment contains an inert base and medically active compound. The bases can be formed of the Arachis oil, Olive oil, Oleic acid, Spermaceti (Waxy substance obtained from head of Sperm Whale) , White bee wax, Wool fat and Wool alcohol etc.
8. Diluents: When an active medical compound is to be administered in very small amount then diluents are added to increase the bulk. Example: Lactose, Starch and Sucrose etc.
9. Binders: They bind the powdered medically active compound. The cohesive properties of these binders help in making tablets. Example: Mucilage and liquid Glucose.
10. Disintegrating Agent: It facilitates breaking of tablets. Example: Starch.
11. Lubricants: When tablet is prepared lubricants improve rate of flow. Example: Stearic acid, hydrogenated vegetable oil and Talc
12. Coating: The surface coating of a tablet is formed of gelatin, and paraffin etc.
13. Solvents: Other then water some organic liquids are used as solvents in pharmaceutical preparations. Example: Acetone (dissolves Fats and Resins), Dimethyl Sulphoxide (polar hygroscopic liquid), Ethanol (Preparation of tinctures and spirits) , Denatured spirit (Unfit for human consumption used for surface coating), Glycerol & Glycerine (used in creams, jellies, and pastes for his moisturizing properties), Propylene Glycol (Substitute of Glycerine), Isopropyl Alcohol (skin cleansing), Oils (Arachies and Sesame etc) and Ether (General purpose solvent in pharmaceutical industry.

 By: Subhajit Chattopadhyay

Future Roles of Stock Exchanges in India

Introduction:

Indian Stock exchanges commenced their operations way back in 1875, when Bombay Stock Exchange started functioning. This was followed by the formation of Calcutta and Madras stock exchanges in the year 1908. As business expanded, capital requirement and need for investment increased. So several exchanges were formed as of now there are 23 stock exchanges functioning in India. Apart from stock exchanges, there are several dedicated commodity exchanges, too.

Harvey (2007) identified two broad factors which impacted the operation of stock exchange operation, first changes in the business scenario and changes in the regulatory environment. Increased technological capabilities of Alternative Trading System have put pressure on traditional role of stock exchanges as order matching intermediary. Further, innovation financial instruments and its derivatives have caused exchanges to look for ways to enter into these markets. Regulatory interventions like Regulation on ATS (adopted 1998) and regulation on National Market System (adopted in 1975) in US impacted the operation of exchanges.

Further in UK, MFID’s intent to stimulate competition and European Commission’s aim to consolidate the market to reduce cost of raising fund impacted the functioning of exchanges. Moreover, gap between standards between Europe and U.S. regulatory environment made the EU a more favoured destination for raising capital.

To manage the difference across countries three pronged approach were taken –

1. Harmonisation
2. Competition
3. Convergence

Indian Stock Exchanges – Two decades of existence

The performance of the stock exchanges if analysed till last year since inception of liberalisation policies during ‘90s till, a distinctive phenomena can be noticed. Following table captures the performance of the stock exchanges in a nutshell –

Table 1: Performance of Stock Exchanges – 1992 – 2001

Names of the Stock Exchanges	Average Volume*	Rank – Volume	Average Growth rate	Rank – growth rate
Ahmedabad	24764.3	5	0.18	17.00
Bangalore	4171.1	9	0.62	10.00
Bhubaneshwar	326.8	18	-0.33	22.00
Calcutta	152015.44	3	0.20	16.00
Cochin	693	15	0.53	11.00
Coimbatore	983.3	13	4.41	4.00
Delhi	38988.8	4	0.47	12.00
Gauhati	233.3	19	-0.12	19.00
Hyderabad	1019.1	12	0.17	18.00
ISE	164	21	180.87	1.00
Jaipur	485.5	16	-0.17	20.00
Ludhiana	4790.3	8	0.23	15.00
Madhya Pradesh	85.3	23	1.37	6.00
Madras	1318.9	11	1.14	7.00
Patna	745.2	14	-0.36	23.00
Mangalore	91.2	22	1.94	5.00
Mumbai	288416.3	2	0.45	13.00
NSE	480052.5	1	6.16	2.00
OTCEI	483	17	5.39	3.00
Pune	5436.3	7	0.42	14.00
SKSE	209.1	20	-0.21	21.00
Uttar Pradesh	14671.2	6	0.66	9.00
Vadodara	1832.1	0	1.00	8.00

(* measure in crores)

The first decade marked strong performance of stock exchange as turnover in the cash segment registered 9 times (approx) growth compared to same in 1992-93. Out of the 23 stock exchanges, 18 recorded a positive growth. ISE recorded highest growth whose turnover increased by 180 times within a period of 3 years from 1999. But in terms of annual average volume of transaction NSE ranked at the top within 7 years of inception. The next table summarises the performance in the second till 2012.

Table 2: Performance of Stock Exchanges –  2002 – 2012

Stock Exchanges	Average Volume (2002 -12)	Deviation from first decades’ average
Ahmedabad	7576.753	-69%
Bangalore	685.54	-84%
Bhubaneshwar	22.98667	-93%
Calcutta	37286.63	-75%
Cochin	61.46667	-91%
Coimbatore	66.42	-93%
Delhi	8579.72	-78%
Gauhati	16.82	-93%
Hyderabad	150.14	-85%
ISE	34.93333	-79%
Jaipur	33.43333	-93%
Ludhiana	1025.82	-79%
Madhya Pradesh	8.42	-90%
Madras	106.46	-92%
Patna	56.88	-92%
Mangalore	7.546667	-92%
Mumbai	717251.4	149%
NSE	1778001	270%
OTCEI	43.06667	-91%
Pune	852.4867	-84%
SKSE	15.27333	-93%
Uttar Pradesh	6626.147	-55%
Vadodara	131.8643	-93%

From the table above, it can be noted that out of 23 exchanges, 21 recorded a negative growth. Only exceptions are NSE and BSE, which recorded consistent growth. It can be observed that during this decade, there were only 4 exchanges which functioned though volumes of transactions that were decreasing steadily. The regional stock exchanges became redundant and failed to encourage the investors to invest through them.

Evolving Roles of Stock Exchange & Related Concerns

Traditional roles of stock exchange are providing a platform where corporate can raise capital in an efficient manner and at the same time protecting interest of the investors is also paramount.  Over the years, the traditional roles have evolved, where stock exchanges actively participate in creating new asset classes for investment, promoting investors’ awareness, maintaining transparency in operation, creating an effective mechanism for grievance redressal of investors at the same time to create new products for investment, new technology and devising more techniques to manage risk.

But as the stock exchanges themselves evolved as a profit making companies and their stocks were registered in their respective stock exchanges then issues of conflict of interest, concern on comprise on quality of surveillance & implementation of regulations emerged.   According to the report published by OICU – ISCO (2006), following concerns came up from different countries –

1. A) Balancing commercial and public functions – Concerns were raised as the exchanges become for-profit organisation, which may compel the stock exchanges to look after the members’ interest by compromising interest of the broader market. Further, in order to boost profit such exchanges may reduce spending on regulatory standards and on implementation of other compliance related issues.
2. B) Misuse of regulatory power – Most of the exchanges are entrusted with some amount of regulatory power to make the market. Concerns were raised as profit makers where such regulatory roles are susceptible to misuse of power for commercial benefit. This may happen particularly where such exchange is subject to little completion. This may happen in two ways, first initiating regulatory actions which are disadvantageous to competition and second using its power to finance operation through regulatory income.
3. C) Conflicts due to self-listing – Demutualisation of an exchange has its benefit as exchanges get access to more capital and the promoters/ member realise the value that has been created. In such scenarios doubts have been raised as whether they can works as their own regulator.
4. D) Financial Risk & Exchange viability – The report also raises question whether for-profit exchanges may take more risk than other type of exchanges.

The OICU-IOSCO report (2006) enlists the following approaches to contain various concerns that were voices in the report –

1. Governance arrangement – The essence of remedies discussed under this section primary deals with composition and power of the governing body of the exchange e.g. appointment of independent or public directors in governing bodies.
2. Separation of functions within an exchange – Issues discussed under this section basically underlines that regulatory functions should be insulated from commercial compulsions of the exchange. And there should be specific provisions for appointment or removal of head of regulations, regulatory oversight or audit by independent or public directors

iii. Restriction on ownerships – Ownership related issues revolve around 3 categories of actions. First, placing specific eligibility (fit/ proper) requirement on controlling/ substantial shareholders; secondly, public disclosure once threshold limit is exceeded and third placing restriction on permitted size of shareholding with/ without discretion to approve higher levels.

1. Oversight arrangement – This section suggests increasing oversight by regulators, special oversight to deal with self-listing and specific terms included to exchanges authority.
2. Transfer or removal of functions

Problem Statement

In this era of global economy and free movement of capital, the role of a stock exchange is inextricably linked with the continuous development taking place around the world. Development in terms of innovation in financial products & technology, functioning of market intermediaries, harmonisation of international standards and operation procedures keeps changing the role of stock exchanges and style of functioning. In Indian context concentration of trades in two stock exchanges viz. NSE & BSE while other regional stock exchanges are steadily decaying. Thus we shall look into the following issues –

1. Infusing or attracting liquidity into stock exchanges – this may be of relevance to the regional exchanges
2. Exploring market structure and its determinants – this could include different types of trading strategies, order routing services as emerging in various developed markets
3. Auxiliary roles of stock exchanges like promoting investor awareness / education which play a direct role in protecting investor’s interest and also an indirect role in increase the depth of the market.

Research Methodology

Research methodologies are designed based on the issues that are being explored or investigated and the objective of the research. Given the research topic which dwells with anticipating future roles or operational style of stock exchange can only be analysed by studying the new developments taking place in Indian stock market. To understand the Indian picture, tracing global changes is required to serve as a context. Thus, approach here is to review concerned literatures and unveil the trends in stock market operation.

Some researchers have defined various terms like approaches or paradigm. Chalmers (1982) has underlined that paradigm has the following dimensions –

• Explicitly stated laws and/ or assumptions
• Standard ways of applying the fundamental laws to a variety of situations.
• Instrumentation and instrumental techniques that bring the laws of the paradigm to bear on the real world.
• General metaphysical principles that guide work within the paradigm.
• General methodological prescriptions about how to conduct work within the paradigm.

Various authors have identified three basic paradigms – a. post-positivism b. critical theory c. interpretivism. Apparently the approach to research is segregated as qualitative and quantitative. But both these approaches depend upon two terms like Ontology and Epistemology. Epistemology is connected to exploration for the proof/ characteristics of existence and identifying the method which will help in establishment of existence whereas Ontology is concerned with the reality of existence. The entire approach of quantitative methods of research is a derivative post-positivism approach whereas qualitative research has been classified by Creswell (1997) as ethnographic, interpretive and critical research. The difference between these two approaches are characterised by the difference in approach toward exploring or examining realities and how to understand what we know. It is observed qualitative methods are adopted to describe and explain phenomena, current experience with an objective to develop a new theory where as quantitative methods are used to confirm the validity of a theory which is different in different sisituations and also to modify it increase the depth of understanding.

In qualitative research issues or phenomena are studied to make a sense of the phenomena and also to interpret the same. To carry out information/ data in various forms e.g. personal experiences, life stories, introspective, interviews, observational & historical interaction are studied.

In the present context it is basically a comparative study wherein an attempt has been made to examine the actions taken in India with respect to the various emerging phenomena (which is continuously emerging and has the potential of impacting the operations of stock exchanges). Such phenomena could range from liquidity, product innovation, innovation taking place in terms trading strategies (including market integration, efficiency and transparency), technological issues impacting trades, maintaining transparency, protection of investors’ interest etc.

Data:

In order to capture data pertaining to capture recent changes taking place in global stock market various research reports especially conducted by IOSCO have been referred to. Simultaneously, various reports, concepts papers and reports of various committees have been reviewed to understand the future style of operation of stock exchanges in India.

Operation of an Indian stock exchange is strictly regulated by SEBI (Security Exchange Board of India). Thus, the spirit of the research method is to explore and capture the recent changes taking place around the world as evident in various publications of the recognised bodies. The attempt is to underline the new changes as revealed by the various public reports, consultation and working papers.

Empirical Studies:

Liquidity:

Liquidity is critical for sustenance of stock exchange. A report published on liquidity in emerging markets (OICU-IOSCO, 2007) underlines following factors to boost liquidity –

1. Reducing concentration of ownership and thereby increasing free-float level in publicly listed companies. Also more active participation of pension funds is sought to ensure infusion of capital.
2. Liberalising intermediary sector and opening foreign participation. Reduction of transaction cost by lowering commission and taxes. Encouraging cross-listing & dual listing will increase liquidity.
3. Availability of more investment products viz. structured and call warrants hedge funds etc.
4. Capital Raising Process

Indian perspective – modernising capital raising process

In terms of boosting liquidity and making stock market a lucrative source of finance SEBI pondering upon modernising capital raising process. A group consisting of representatives of stock exchanges, depositaries, merchant banks etc has been formed to ponder upon reduction of post-issuance cost, participation of retail investors in IPO, and reduction of post issues settlement period from 12 days. In this context a concept paper has been released on January, 2015. Following the though process investors are allowed to submit their application to SEBI registered stock broker, depository participant, self certified bank. Simultaneously investors could also apply online through the web-portals of the above mentioned entities. This process ensured that post-issue timelines reduced from 12days to 6 days. To encourage use stock market as a source of capital fast track issuance was initiated (available to enlisted entities). This obviated the necessity of filing of draft offer document with SEBI and can open the issue with Red Herring prospectus. Further, SEBI is currently examining the relevance of the conditions of having Rs3000 crore of public shareholding requirement and relevance of public float criteria.

Attracting Foreign Investment in Stock Market

Role and impact of foreign capital is significant. In order to encourage such investment SEBI has attempted to minimise regulatory hurdles of foreign investors. SEBI formed a committee to study the existing provisions and came out with a report (June, 2013) on Rationalisation of Investment Routes and Monitoring of Foreign Portfolio Investments. The salient features of the recommendation of committee is as follows –

1. To create one single route by merging FII, sub-account and QFI. The relaxations given to PIO/ NRI should be retained where more sector should be permitted to access foreign venture capital.
2. It also suggested that foreign portfolio investors (FPI) need not directly register with SEBI. Eligible entities can directly approach designated depositary participant (DDP) which will register them on behalf of SEBI. It is DDP which will carry out due diligence, maintain investment, disseminate information of investment made an FPI.
3. FPI should be a resident of a country which either a signatory of IOSCO’s MOU or have bilateral MOU with SEBI.
4. FPI and DDP shall ensure that total shareholding should always be less than 10% of the paid-up equity capital of a investee company. Aggregate shareholding of all FPIs shall not exceed the lower of 24% of the paid-up equity or sect oral cap.

Crowd funding – a challenge to existing stock exchanges

Crowd funding is a financing methods which has surfaced very recently. The method is currently in a very nascent stage in which people fund a creative venture (perhaps in small amounts). Such capital could be sought from various online platforms including social media. IOSCO (2014) has come out with a working paper which indicates four types of funding mechanism like social lending, reward, peer-to-peer lending and equity crowd funding. Similarly SEBI also came out with one consultation paper in June, 2014.It offers various benefits ability to raise capital at a lower cost, compliance cost and cost concerning due diligence. Emergence of crowd funding made its space in the domain dominated venture capital funds and private equity. Along with its advantages it came out with its own risk, especially for the investors there is hardly any protection in case default, fraud, information asymmetry (given its dependence on internet) and absence of regulatory framework. However, the consultation paper on crowd funding mentions the ambit of SEBIs role in monitoring as follows –

1. Recognition of crowd funding portals and period inspection of the same
2. Oversight and regulation of crowd funding market
3. No role in vetting of private placement offer of the issuing companies
4. Issuing guidelines pertaining to information disclosure needed while making such offer.

To protect the interest of retail investors the consultation paper proposes that participation of retail investors are limited to following categories –

1. Who receive advice from investment advisor/ uses services of portfolio manager/ having relevant qualification.
2. And having a minimum gross income of Rs10 lacs, having income tax return for last 3 years,
3. And will not invest more than Rs.60,000 in crowd funding and not more than 10% of their net worth.

The paper proposes that three categories of entities can create trading platform. Existing stock exchanges and SEBI registered depositaries which constitutes category-I. Category – II is comprised of technology business incubator promoted by central or state government or non-profit making societies having 5 years of experience with minimum of Rs. 10 crores.  Also association or networks of private equity or angel investors having a paid-up share capital of 2 crores, registered under companies act 2013 with a minimum of 100 active members.

Further, following information have been sought in the consultation paper in the private placement offer letter –

1. Name and address of the company
2. Description of the exiting venture
3. Issue size, target offering, intended usage of funds and valuation of securities.
4. Past history of funding

Co-location / proximity server hosting:

Executing trade fast provides an advantage to the investors in exploiting the favourable conditions. Keeping the global trend in mind SEBI has permitted collocation and stock exchanges like NSE, BSE and MCX-SX provide this facility to enhance speed in carrying out transaction. This has also led to faster adoption high frequency trading practices. As of February, 2013, in NSE 94.16% of equity derivative order, 73.88% of cash market comes from collocated servers. For BSE is 7.06% and 17.96% respectively. Further, SEBI has proposed to offer the service in a manner which is fare, equitable and transparent. The stock exchanges should maintain infrastructure adequate to accommodate the vast segment of investors and at the same time non-collocated investors have also fair access to stock exchanges’ trading system.

Different types of orders & its execution

Keeping the diverse motives of the investors various types of ordering options has been devised. For example reserve order (where only a part of the order is visible while entire order is placed for execution), discretionary order (which has a visible price and a non-displayed discretionary price), hidden order, various kinds of PEG orders, inter-market sweep order, post only order.

In most of the cases best execution of order is defined as the most favourable price for the investor, given the circumstances.

But as competition increases and new trading platforms become available, other factors like cost of transaction, speed of execution, order size etc. has to be considered as indicated MiFID (OICU-IOSCO, 2013). Countries like Canada & USA have adopted Order Protection Rule which requires that better priced order to trader prior to inferior orders. Malayasia, Singapore, Mexico requires clients order to be traded ahead of the proprietary orders.

The same report indicates that in presence of multiple trading platforms, firms have to make information pertaining to venue of execution of order (order routing principles).

 Different types of trading platforms & trading mechanism

The recent changes taking places in modus operandi of stock exchanges impacts the market structure. According to the report on Market Structure (OICU-IOSCO, 2013) entire European Union is experiencing increase in number of multilateral trading facilities. Italy and Germany particularly witnessed growth to the tune of 250%, whereas UK had a growth of 21% (though higher in terms of absolute numbers) during the period 2008 to 2012. Glaring contrast emerged as the number of regulated markets decreased for Italy, UK & Netherlands. In USA, involvement of undisplayed trading centres came to prominence as these exchanges account for 25.4% of share volume (SEC, 2010). Further offering of collocation services, role of dark pools i.e. alternative trading centres (which is catering to institutional investors) executing large orders without impacting affecting the price and reduced trading cost also presented a different paradigm of trading. The report has also pointed out that another type of trading arrangement which called broker-dealer internalisation (which is treated as underplayed liquidity) where trades are carried out internally.

In case of India, it can be seen that innovation with respect to various types of trade order are limited. Whereas in terms of embracing technological advances it is at par with the global practice. Indian stock exchanges are found to be promoting wireless/ mobile trading, internet trading, algorithmic trading, smart order routing facilities.

India’s initiative:

Protection of Investors’ Interest:

Given the poor financial literacy amongst Indian investors two pronged strategy has been adopted – one is to prevent spread of biased or misleading information, penalise insider trading and second one is to promote awareness and increase financial literacy.

SEBI Research Analyst Regulation:

SEBI sensed that there is a need to ensure impartial report to protect investors’ interest. Accordingly SEBI came out with Research Analysts Regulation in 2013. Following entities comes under the ambit of the regulation –

1. Independent research analyst
2. Intermediaries that employ research analyst and issues research reports
3. Research analysts giving recommendation in the public media.

However, entities providing research reports to their unit holders shall not be required to be registered under these regulations. But incase their views are publicised through the public media then they need to comply with the regulation. This regulation imposes following conditions-

1. To devise comprehensive, objective and written internal control system to avoid any conflict of interest. Further research analyst or the intermediary shall not trade within 30 days before or 5 days after publication of a research report.
2. No report can be published or recommendation can be made in the research analyst/ intermediaries traded in the last 30 days.
3. They cannot trade in any securities before the issuers’ initial public offering which is being tracked by the research analyst.
4. Further, compensation of a research analyst cannot be linked with the brokerage of any merchant/ investment bank. Compensation of research analyst is to be documented and approved by the board of directors. And such compensation won’t be subjected to monitoring of any employee of investment/ merchant bank.
5. Analysts cannot make public appearances for a company where he was involved. Similarly they are prohibited from road shows/ sales and marketing activities.
6. Incase analyst predicts a price target for a security within a time period in its report then the report should indicate the past closing prices of similar duration or last three year whichever is shorter.
7. Analysts making their comments in the public media should disclose their registration details and financial interest, if any.

Insider trading:

High level committee of SEBI reviewed the SEBI (prohibition of insider trading) Regulations 1992 and came out with a new proposal on December 7, 2013. In the following section salient points of proposed regulation is underlined –

1. Not only sharing or disclosing of unpublished price sensitive information (UPSI) is made unlawful but even the act of procuring UPSI has also been made unlawful.
2. Persons having UPSI are prohibited from trading and in case of trade it shall be on the person to prove that no undue advantage has been taken. Further it allows the persons perpetually having UPSI to trade in securities provided their trading plan is approved by the compliance officer. And once this is approved the persons having UPSI can not deviate from the plan.
3. Specific provisions have been created to inform the company while buying the shares and its impact on shareholding status. Further codes of fair disclosure to be stipulated and intimation of trading undertaken by the insider have to be published.

Investor Education:

ISOCO (October, 2014) released a strategic framework for investor education. It emphasises on investment knowledge and understanding, financial skills and competence and programme design & delivery management. The report summarises the current practices of members participating in the study including India.

Members are found to be increasing awareness about availability of different investable products and its suitability. They are also engaged in developing short, medium and long term education plan to serve the investors’ need.  A number of members found that they structure their website according to life events and stages and other focuses behavioural issues.

The report pointed out that it is important to identify various investor segment and then develop content for that segment. Segments can be created with the help of demographic variables.

Stock exchanges in India (only BSE and NSE) have developed short term programmes, certification exams and long-term professional programmes in connection to the regulatory bodies to facilitate promotion of financial literacy.  But regional stock exchanges are not actively pursuing such initiatives.

Way Ahead

O’Hara (2004) in his article has attempted to underline the direction of evolution of securities regulation. Advancement in IT which has significantly impacted the information searching cost (a component of transaction cost) significantly and also helped various exchanges to share/ integrate information. This changes the market dynamics where stock exchanges face competition as transaction cost reduced significantly and number of competitors increased. Consequently, the securities trading started to fragment into multiple venues instead of concentrating. This also impacted the style of functioning and changes exchanged structure.  The competition facilitated the exchanges migration from a membership driven structure to a corporate structure (demutualised) – this enables the exchanges outside capital formation and aligns incentive and risk associated with an exchange. This paper envisages that such exchanges should be allowed to be self-regulated as investors will prefer those exchanges which protect investors’ interest the best.

 Social Stock Exchanges

Social financing refers to financing companies working as social business. Yunus (2009) defined social business as “once whose purpose is to address and solve social problems, not to make money for its investors. It’s a non-loss, non-dividend paying company … these profits remain with the company and are used to expand its outreach to increase the quality of the product or service it provides and to design methods to bring down the cost of the product or service.” In social finance framework, social stock exchanges are functioning in South Africa as an advance stage of formation in UK. In this context South Africa has taken pioneering initiative as it has established worlds’ first social stock exchange (SASIX) that offers an opportunity to buy shares in various social projects (which is exactly not same as social business entity) as follows –

1. Food security
2. Small business development
3. Vulnerable people
4. Animal protection
5. Education
6. Health
7. Environment and conservation

There is a listing framework which uses following criteria for enlistment –

1. A primary social objective
2. Financially sustainable business model
3. Accountability and transparency mechanism
4. Specific development interventions addressing an identified need in a community
5. Clear and measurable deliverables
6. Past track record in similar projects
7. Conformity with SASIX good practice guidance

In UK the concept of SSE emerged from the report of Social Investment Task Force (SITF). SITF identified following challenges which needs to be addressed to encourage investments in social business –

1. Consistent performance tracking
2. Market definition of social business and structure
3. Inadequate standards for measuring social impact against performance benchmarks.

Moreover issues related to accreditation process, rating agencies and remuneration for key personnel also needs attention for effective and efficient functioning of social stock exchanges.

Indian stock exchanges also have initiated following actions on the following issues to ensure transparency and accountability –

1.    Rationalisation of Investment Routes and Monitoring of Foreign Portfolio Investments

2.    Public Issues by Insurance Companies

3.    Public Issues by General Insurance Companies

4.    Comprehensive Regulation for Credit Rating Agencies

5.    Assessment of Long Term Performance of Credit Rating Agencies

6.    Report of the RBI-SEBI Standing Technical Committee on Interest Rate Futures

7.    Report on Unified Exchange Traded Corporate Bond Market

8.    Short Selling and Securities Lending and Borrowing

9.    Corporate Bonds and Securitization

 Conclusion:

As illustrated in the previous sections the recent changes taking place in Indian stock market are geared towards speed, ease of trade and transparency. In the recent future we might see our exchanges moving towards following direction –

1. Stock exchanges would be adopting more mechanism to encourage investor to participate. Like usage of wireless technologies in trade execution would broaden the investor base similarly use of smart order routing, algorithmic trading also attract sophisticated and intensive investor to trade,
2. System complying more transparent practices about providing unbiased information (monitoring credit rating agencies/analysts’ recommendation/ kind of information disseminated in IPO prospectus etc), initiatives to provide quick clarifications and cost-effective dissemination of information of trading activities would also be adopted by the stock exchange.
3. Given scanty participation of retail investors and lack of financial knowledge would not encourage our regulators to allow Alternative Trading System, formation of alternative trading system (with lesser regulation) or allowing Dark Pools/ Dark Liquidity. Similarly Broker-Dealer internalisation which can be considered as undisplayed liquidity may not be allowed till Indian stock market allows more maturity.
4. Since trades are concentrated in two stock exchanges so the scope of coming out with different routing techniques are also limited. But since stock exchanges has the leeway in designing different types of order it can be anticipated that stock market will witness some witness some innovation in that respect.
5. The stock exchanges may provide structured retail products for various categories of retail investor after assessing its suitability.

References

1. SEBI, Report on Rationalisation of Investment Routes and Monitoring of Foreign Portfolio Investments, June 2014
2. SEBI, Discussion Paper on Revisiting the Capital Raising Process, January 2015
3. SEBI, Discussion paper on Co-location / Proximity Hosting Facility Offered by the Stock Exchanges, May , 2013
4. SEBI, Consultation Paper On Proposed Regulation Of Research Analysts, November 2013
5. SEBI, Report of High Level Committee to Review SEBI (Prohibition of Insider Trading Regulation, 1992), December 2013
6. SEBI, Consultation Paper on Crowdfunding in India , June 2014
7. SEBI, The Annual Report, 2013
8. SEBI, The Annual Report, 2010
9. SEBI, The Annual Report, 2009
10. SEBI, The Annual Report, 2008
11. OICU-IOSCO, Strategic Framework for Investor Education (Final Report), October 2014
12. OICU-IOSCO, Factors Influencing Liquidity in Emerging Markets , December 2007
13. OICU-IOSCO, Regulatory Issues Raised by Change in Market Structure, March 2013
14. OICU-IOSCO, Report on IOSCO Social Media & Automation of Advice Tools Surveys, July 2014
15. OICU-IOSCO, Regulatory Issues in Emerging Markets, June 2012
16. OICU-IOSCO, Issues Raised by Dark Liquidity, June 2010
17. Securities & Exchange Commission, Concept Release Securty Market Structure, April 2010
18. OICU-IOSCO, Regulatory Issues Raised by the Impact of Technological Changes on Market Integrity and Efficiency, October 2011
19. M K Maheswari, H L Verma, B S Bhatia, Future Regional Stock Exchange: A Case for Revival, Indian Management Studies Journal, 2009 (13).

APPENDIX – I

Sr. No	Stock Exchange	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11	Apr’11 – Dec’11	Apr’12 -Dec’12
1	Ahmedabad	15459	4544	0	0	0	0	0	0	0	0	0
2	Bangalore	0	0	0	0	0	0	0	0	0	0	0
3	Bhubaneshwar	0	0	0	0	0	0	0	0	0	0	0
4	Calcutta	6540	1928	2715	2800	694	446	393	0	2597	3772	3286
5	Cochin	0	0	0	0	0	0	0	0	0	0	0
6	Coimbatore	0	0	0	0	0	0	0	0	0	0	0
7	Delhi	1	3	0	0	0	0	0	0	0	0	0
8	Gauhati	0	0	0	0	0	0	0	0	0	0	0
9	Hyderabad	5	2	14	89	92	0	0	0	0	0	0
10	ISE	65	0	0	0	0	0	0	0	0	0	0
11	Jaipur	0	0	0	0	0	0	0	0	0	0	0
12	Ludhiana	0	0	0	0	0	0	0	0	0	0	0
13	Madhya Pradesh	0	0	0	0	0	0	0	0	0	0	0
14	Madras	0	101	27	5	1	0	0	0	0	0	0
15	Patna	1	0	0	91	0	0	0	0	0	0	0
16	Mangalore	0	0	0	0	0	0	0	0	0	0	0
17	Mumbai	314073	502618	518717	816074	956185	1578857	1100075	1378809	1105027	482263	410230
18	NSE	617989	1099534	1140072	1569558	1945287	3551037	2752023	4138023	3577410	1972731	1973624
19	OTCEI	0	16	0	0	0	0	0	0	0	0	0
20	Pune	2	0	0	0	0	0	0	0	0	0	0
21	SKSE	0	0	0	0	0	0	0	0	0	0	0
22	Uttar Pradesh	14763	11751	5343	1486	799	475	89	25	0	0	0
23	Vadodara	3	0	0	0	0	0	0	0	0	0	0

By: Rajesh G Konnur

The universe was born with sound. Harmonic wave ignites and soothes mind and body.  The human body, from the time of conception, incorporates music into its functions. Music is especially useful in nursery and pediatric wards, labor rooms, waiting halls of OPD and OTs. The effect of music on healing is quite apparent  in post operative intensive care units (ICUs) too, where it reduce anxiety and pain and have a soothing, tranquilizing effect”.

    The term “dance therapy” was coined in the US and the American Dance Therapy Association defines this discipline as “the psycho-therapeutic use of movement as a process that furthers emotional, cognitive and physical integration in individuals”. Dance therapy with medical guidance is a fun filled way to engage and express you while also improving physical and emotional condition”. It quickens the healing process & helps divert a patient’s mind and improve their emotional state”. Both, music and dance therapy allay anxiety and fear. It helps patients adjust to their environment and tend to recover fast. Slow rhythmic dance helps to strengthen muscles & abates pain. Research shows that, profound beneficial effects are in the neurology and neuro ICUs. Patients who are paralyzed, comatose or semi – comatose respond to sound, particularly familiar tunes or voices, with enhanced will and recovery, to the extent as therapy.

   Music therapy can help children with communication, attention, motivation and behavioral problem. They must have high quality and well maintained instruments. It is good for treating mood disorders, ADHD, depression, and learning disorders. Music can improve one’s mood by reducing stress and lowering anxiety levels, which can help counteract or prevent depression.

 Dance therapy has been utilized since its inception in the 1940’s to promote healing in people diagnosed with physical disabilities and mental illness. Dance therapists work with people who are dealing with variety of medical conditions including disorders such as traumatic brain injuries, Parkinson’s, multiple sclerosis, spinal cord injuries, cancer, fibromyalgia and chronic pain. It focuses on movement behavior and body movement, as the core component of dance, simultaneously provides the means of assessment and the mode of intervention for dance / movement therapy.

Nurses play a vital role. Identifying the client, assessment and evaluation is primary responsibilities. Collaborating with dance and music therapist including medical professionals is paramount concern. She acts as mother, advocate, guide and researcher at different settings and roles.

By: Shaifali Rachna Puri

Survey of related literature means a careful perusal of researches already done and write ups published or lectures delivered on issues directly or indirectly connected with the problem being proposed for investigation. It means having a soaking into the waters of knowledge, which has relevance to the study in hand

Every research begins from where the previous researchers have left it and goes forward, may be one inch or even less towards the solution of the problem or answer of a question. Therefore for every researcher it is essential to acquaint himself with what has already been thought, expressed and done about the problem under investigation. This is possible only if he/she reviews and surveys books, journals, newspapers, records, documents. Thesis, indexes, abstracts, dissertations and other sources of information directly or indirectly concerned with problem of investigation.

The study of related literature implies locating, reading and evaluating reports of research as well as reports of casual information and opinions that are related to the individual’s planned research project.

Research takes advantage of the knowledge that has accumulated in the past as a result of constant endeavor. It can never be undertaken in isolation of the work that has already been done on the problems, which are directly or indirectly related to the study proposed by the researcher. A careful review of the related literature on the problem similar or related to the one been investigated is one of the important steps in the planning of any research

Importance of Related Literature

(1) The review of related literature enables the researcher to define the limits of his field. It helps him to delimit and define his problem.

(2) By reviewing the related literature, the researcher can avoid unfruitful and useless problem areas. He can select those areas in which positive findings are very likely to result and his endeavors would likely add knowledge in a meaningful way.

(3) It helps a researcher to know about the tools and instruments which Proved to be useful and promising in the previous studies. The advantage of related literature is also to provide an insight into the statistical method through which validity of the results is to be established.

(4) Through the review of literature, a researcher can avoid unintentional duplication of well established findings. It is no use to replicate a study when the stability and validity of its results is to be established.

(5) Another purpose for reviewing the related literature is to know about the recommendations of previous researchers for further research which they have listed in their studies.

(6) It helps in speculating useful hypothesis and provides helpful suggestions for significant investigation. The studies that show substantial agreements and those that seem to present conflicting conclusions help the researcher to sharpen his understanding.

(7) The existing knowledge in problem area provides background of research project and makes the researcher aware of the status of the problem.

(8) By reviewing the related literature, the researcher is able to formulate an appropriate research design. The researcher studies the procedure employed by previous researchers and on the basis of this knowledge is able to formulate a design suitable to problem in hand. Analysis of measures, sampling and methods of previous research may lead to a more sophisticated design.

(9) It helps the researcher in locating the sources of data and to collect the pertinent data useful in the interpretation of results. It helps to provide suggestions for possible modifications in the research to avoid unanticipated difficulties.

Someone has said, if one fails to build the foundation of knowledge provided by review of literature, one’s work is likely to be shallow and naïve, and will often duplicate the work which has already been done.

By: Aamarpali Puri

Experiment .1: Which grape is heavier?

(Cohesion and adhesion)

Material required: Fresh grapes, 7-Up Soda, Clear drinking glass

Method: Pour and fill a glass with 7-Up Soda. Peel one grape and take an unpeeled grape. The two grapes are dropped at the same time in glass. The unpeeled grape rises to the top of the cup while the peeled grape remains at the bottom.

Questions:

1. Why does the peeled grape sink to the bottom?
2. Which of the two grapes is lighter in weight?
3. What makes the unpeeled grape float?
4. Would an unpeeled grape also float in water?

Explanation: This activity relates adhesive and cohesive forces (CO₂ bubbles adhering to the grape skin) and the effects of hydrophobic and hydrophilic properties. This demonstration is suitable for studying bonding interactions, i.e. hydrogen bonds. The unpeeled grape has water-repelling–hydrophobic–properties and thus the CO₂ bubbles from the 7-Up can adhere to this surface. The peeled grape does not have hydrophobic skin, thus it is hydrophilic–water-attracting. The bubbles of the 7-Up have no way of adhering to the grape. This causes the grape to stay at the bottom of the glass. The unpeeled grape becomes lighter in weight, because of the adhering bubbles, and rises to the surface of the liquid. There it loses some of the bubbles to become heavier again. It may sink for a while, picking up more bubbles, to bob up to the surface again.

Precautions: The soda used should be non flat.

 

Experiment .2: Stem end blackening in potato.

(Redox reaction)

Material Required: Potato, water, burner, baking soda, tartar, pH paper

Method: A potato is cooked in boiling water for 40 minutes. After being removed from the water and allowed to cool, the end of the potato that has been connected to the plant will produce a dark gray color. This is called “Stem-end Blackening” region.

Questions:

Why a particular portion of potatoes shows change in colour after boiling.

What is the effect of pH of water on stem end blackening?

Explanation: The reason for this color change is that iron ions in the potato are experiencing a “redox” reaction. During cooking ferric (Fe⁺³) ions are formed from ferrous (Fe⁺²) ions by the gaining of electrons from phenolic substances in the region where darkening has occurred.

Precautions:

The water in which we are boiling potatoes should be checked for pH because this “Stem-end Blackening” is pH sensitive. Neutral and basic cooking solutions produce a greater amount of blackening effect, and acidic water causes little to no color change.

Note: Baking soda will be used as a sweetening agent to make the basic cooking solutions, and cream of tartar will serve in making the acid solution. Universal indicator paper will be used to check that each solution is in the specified pH range.

 

Experiment .3 Negative inflation

Material Required: Baloon, Plastic bottle, hot water, cold water

Method: Fill a plastic (PET) bottle with hot water (NOT boiling water) and fill a bowl with cold water. Let them sit for one minute, then empty the bottle quickly. Stretch a balloon over the open end of the bottle and push the bottle down into the cold water. The balloon is pulled in and get inflated inside the bottle.

Common Questions

Question 1. : Why it happens that when you squeeze egg completely surrounding it with your hand it doesn’t break but it breaks if you are wearing ring?

Answer 1. Eggs are surprisingly strong and will stand up to forces applied evenly to them. They don’t stand up so well to uneven forces, which is why they crack easily on the side of a bowl or break when they hit the ground. Hold an egg, completely surrounding it with your hand. Squeeze it, making sure that the pressure is even all around. You should be able to squeeze it very hard without breaking it (do this over a sink or bowl just in case). The egg may break if it is already slightly cracked, or if you are wearing a ring.

Questions 2. : Why does the balloon inflate into the bottle?

Answer 2. The warm water heats the bottle which, in turn, heats the air inside the bottle after the water is poured out. When the bottle is placed in the cold water, the air inside cools and contracts, causing outside air to be drawn in, pulling the balloon in and inflating it inside the bottle.

By: Rajesh Konnur

The postural trainer, Lumo Back’s research findings examined the physical and mental health symptoms that arise spending way too much time sitting in front of a computer screen thereby giving rise to Silicon Valley Syndrome. The results show that 60% of participants reported that they have experienced adverse health effects as a result of technology.

“I have technology as much as anyone – I am a tech company founder, after all”, CEO Monisha Perkash said to Venture Beat. “While our computers and devices can help us feel more productive, this study shows that more people are using technology in ways that will devolve our bodies than those that are using it in a healthy manner. This abuse of technology could very well set up for a series of health pandemics in the not so far –off future”. Perkash said that Lumo Back’s goal is to use technology in a way that helps, rather than destroys, our body.

 Eye strain is the most common ailment, followed by back pain, neck pain, headaches, wrist pain, carpel tunnel disorders and insomnia.

Women are more likely than men to be affected and are more likely to try and resolve their symptoms by taking a pill.

Young Americans are three times likely as older Americans to cut back on their use of gadgets when they start getting those aches and pains. In contrast, older Americans were twice as likely to take prescription medications to alleviate their symptoms.

The most common measures to combat SVS are posture correction, stretching, medication, taking breaks, exercise and consultation.

Back pain is widespread and pervasive problem. About 80% of Americans experience significant back pain sometime in their lives and that pain cost more than 50 billion USD per year. It is a leading cause of missed work days, disability claims, visits to the doctor, outnumbered only by the common cold.

Lumo Back found that the average American spends more than three – quarters of their work day sitting.

We sit, we slouch, we type, we strain our eyes and necks and while we may be writing prolific (& eloquent, I might add) articles, building powerful software, coordinating marketing campaigns, chatting on facebook; responding to email & generally living life in the always on internet era, we are also hurting our bodies.

Human beings were not meant to sit all day long, & the average computer worker could easily spend 48,360 hours sitting at work over a 30 year career.

Lumo Back describes sitting as “the new smoking”. People who spend the most time sitting increase their risk or diabetes, cardiovascular events and death.

By: Krishnakumar, V.G

Introduction

This article is meant for familiarizing tissue culture to common man and hence, complicated terms and terminologies are least used. Technology is also elaborated to simplicity so that a layman can have an understanding of this developing technology.

Tissue culture is the synonym for scientific asexual regeneration of living organisms as far as modern agriculturists and the whole world of biologists. Technically, tissue culture is a form of vegetative propagation. It is the science of artificial replication of a living plant or animal from a single cell or group of cells- tissue. Tissue culture is also known as micro propagation.

Indian epics have very well exposed to this science in the very past. Agasthyamuni, the founder of Sidhavydya (a branch of Ayurveda) was born in a pot. When Varuna Maharshi saw Urvashi and Rambha, the resultant semen was collected in pot. Biologically, Agasthyamuni was thus haploid! (half of the chromosome numbers in cell nucleus. Normal living being developed through sexual regeneration- union of sperm and ovum which are haploid- is diploid. Human sperm and ovum have 23 chromosomes and a human being’s cell will have 46 chromosomes)

There is energy in every living cell which has of certain life. Before the expiry of the lifespan of the cell, if it is stimulated it can reproduce the next generation having original characteristics of the donor organism. Unlike animal cells which can reproduce that particular cells (a cell of skin can produce only skin tissue, a liver cell can produce only liver tissue) when stimulated, plant cells have a phenomenon, totipotency (the ability of a single cell to divide and produce all of the differentiated cells in an organism- Wikipedia)

In our garden, we used to regenerate flowering plants like rose, etc. using the branch cuttings and planting in filled-in pots. Within few days, new plant establishes. Likewise, if we plant a live branch of a mango tree and dip the cut end in rooting hormone and plant, another mango sapling, exactly having the qualities of the mother tree, will start establishing. The tissues of cut end of the plant stem are stimulated by the hormone to produce roots and thus whole plant system is generated.

Process of plant tissue culture.

Father of plant tissue culture is Mr. Gottlieb Haberlandt, the German scientist of Academy of Science. It was in 1902 on his experiments on the culture of single cell the first true cultures were obtained by Gautheret from cambial tissue of great maple tree.

Tissue culture process is having two stages, viz., in vitro process (inside lab) and ex vitro (in natural condition) process

In vitro process

Cell from any part of a plant can be developed to a full-fledged plant. This can be done in a highly suitable environment. The process is given below:

The growing part of the ideal mother plant is cut (explants), cleaned and sterilized to free from all impurities, pathogens and microbes under various sterilizing process. This part is cut to smaller parts and then kept in growth media borne vessel. Growth media is the compound of various minerals, salts vitamins and plant hormones prepared in a highly protected hygienic environment. This vessel is kept for a fixed period in the growth room which is having a maximum of 25^oC and minimum 18^oC and 12 hours lighting. During this process, the cells undergo uncontrolled and undefined division (exactly similar to cancer growth) and result in callus formation. This callus is later multiplied under sterile atmosphere. Normally, shoot development is done initially and later when there is sufficient quantity of cultures are ready, rooting initiation is done. After establishing roots, the culture plants are transferred to further process under Ex Vitro process, i.e, outside the laboratory.  The laboratory manager can decide the development of shoots or roots in culture as it is done by adding the concerned hormone in the culture media.

Ex vitro process

The cultures received from the laboratory are washed off the media and then split. The split culture plants are separated and planted in wet cocopeat-filled portrays (similar to the egg-packing case) and kept in poly houses which has high humidity and temperature range of 26-30^o C in daytime and 25-28^o C in night time and humidity of 80%. During these conditions, the real root formation and normal function of plant develops. After 2 weeks, these plants are taken out, and dead ones are removed. The survived plants are then transferred to fresh protrays filled with wet cocopeat and regular watering is done. After 90 days of such poly house life, the plants are transferred to shade net house, where the plants will get in touch with real soil in nursery bed and finally to poly bags or root trainers for sales.

The need for tissue culture

As already stated, tissue culture is a sort of photocopying! We can produce the exact offspring’s of a plant as much as we require from a small portion of that plant. When there is a heavy demand for a particular plant and seed availability would be inadequate, tissue culture is the answer. When there was gregarious flowering of bamboos in Northeast India and regeneration was in docks, Government of India resorted to tissue culture of bamboos to meet the need of planting materials by setting up a Tissue Culture Laboratory for bamboo propagation in Nagaon Paper Mill, Jagi Road, Assam, under Government of India owned Hindustan Paper Corporation. This tissue culture lab facility can produce one billion plantlets of various bamboo species annually.

In India, banana is widely produced under tissue culture method and thus profit making.

Tissue culture can ensure plant purity. The costs are high in in vitro stage, where costly organic chemicals are used and high cost for lab establishments are also to be met with. Skilled technicians are required for this delicate work. Hygiene is of high priority to establish success in tissue culture. Uncontrolled contamination in culture at any stage can result in heavy loss.

Tissue culture facility can be developed for just 1000 plants to even billions of plants per month. It can be established in a building having an area of 800 square feet! Government of India is providing financial and technical support to new entrepreneurs. Details can be available in the websites of department of biotechnology or national horticulture mission.

 Conclusion

Tissue culture is the most updating field of technology and success lies with the customization of technology for the requirement of plants and its demand. In our country, this technology can transform the agriculture scenario by increased output, by incorporating the genetic engineering methods. As every biotechnology ventures are having high risk for want of adequate technology and technicians, less entrants are in the field. Tissue culture should be introduced as a subject in the Vocational Higher Secondary syllabus to prepare technicians in the field.

About Author: Well experienced Forestry personnel in all fields of forestry in paper industry. Raising plantations of pulpwood like eucalyptus, acacia, bamboo etc. Experience in Tissue Culture laboratory (from the installation to production stage), extraction works and storage. Well experienced in public activities like Farm forestry. His Specialties: Forestry- plantation, tissue culture, extraction and community forestry.

By :  Aamarpali Puri

In Chemistry, there are often many ideas that are frequently misinterpreted. Sometimes because of students coping with making sense of abstract concepts. Since science is constantly changing to adapt to new discoveries and methods, some misconceptions may be due to old ideas or legends. Following is meant to generate an awareness of some of the misconceptions found in Class IX Chemistry, particularly that of the atomic and molecular models.

Misconception	“Proper” concept (to date, of course!)
Atoms
Atoms can be seen with a microscope.	Atoms cannot be seen with a microscope. The extent of an atom’s small size is often not well understood. For example, there are about one million atoms across the width of human hair, but many students guess a number in the hundreds or thousands.
Atoms are alive (because they move)	Atoms vibrate because they all possess some thermal energy. They do not possess the characteristics of living things (i.e. needing energy to survive, producing wastes, reproduction, adaptability, etc.). The nuclei of cells and atoms are not synonymous.
Atoms are like cells with a membrane and nucleus
Atoms can reproduce after the nuclei divide
Atoms have electrons circling them like planets around a star	Electrons do not follow a simple circular pattern around the nucleus.
An electron shell is like an eggshell or clamshell, thin and hard	Shells are not physical shells like eggshells. They are not thin or hard. They are regions around the nucleus where electrons can be found.
The electron shell is there to protect the nucleus, like an eggshell and a yolk
The electron cloud is like a rain cloud, with electrons suspended in it like droplets of water. The cloud contains the electrons but is made of something else	Electrons are not suspended motionless in the “electron cloud”. Instead, they are constantly moving throughout the “cloud”, which is not made of any other kind of matter.
The electron shell is a matrix of some kind of stuff with electrons embedded in it
Atoms “own” their electrons	There are not different kinds of electrons for different atoms. Atoms do not “possess” their specific electrons. Electrons are the same and can be transferred from one atom to another.
Molecules
Molecules are basic, simple, indivisible entities	Molecules are made of smaller entities (atoms) which reorganized into different molecules. Therefore molecules are divisible.
Molecules of solids are hard, molecules of gases are soft	Molecule shape, size and mass do not change between solid and gas phases. Just because the phase as a whole appears different, e.g. often the gas is less visible than when in the solid form, doesn’t mean that the molecules themselves have changed, only the forces between them. Changes of state are physical changes.
Molecules of solids are biggest, molecules of gases are smallest
Molecules of solids are cubes, molecules of gases are round
Vapour molecules weigh less than solid molecules (e.g. water vapour vs. ice)
Molecules expand when heated	Molecules themselves do not expand. The substance heated may appear to expand because heat causes molecules to move faster (and further apart).
Chemical Bonds
Molecules are glued together	Forces of attraction hold molecules together, not glue.
Bonds store energy, Breaking chemical bonds releases energy, Bond making requires energy	Not all bonds release energy when broken or require energy to form. Exothermic reactions can form new molecules in which the products possess less energy than the reactants; hence, release energy when the bonds form and require energy to be broken.
Ionic pairs, such as Na+ and Cl–, are molecules	Ions are not considered molecules, which contain covalent bonds. A better word to use for ionic pairs in ionic compounds may be formula unit.
The chemical bond is a physical thing made of matter	Chemical bonds are not made of a separate form of matter, but the electrons that are shared and forces of attraction.
Chemical Bonds –Ionic
Ionic compounds form neutral molecules, such as Na+Cl– molecules, in water	In water, ionic compounds dissociate into their ions, which are not neutral molecules because they possess a charge and the solution can act as an electrolyte.
Bonds within “ionic molecules” are stronger than inter-molecular forces	Ionic compounds are not composed of “molecules”, but of ions which are attracted to one another. For example, an Na+ ion that is surrounded by Cl– ions is attracted to all of the Cl– ions, even though they are not all considered part of the “formula unit”. It is these bonds that are broken when the ionic compound is dissolved in water, resulting in Na+ and Cl– ions.
Na+Cl– bonds are not broken in dissolving; only inter-molecular bonds are broken
Chemical Bonds –Covalent
Electrons know which atom they came from	There are not different kinds of electrons for different atoms. Atoms do not “possess” their specific electrons. Electrons are the same and can be transferred from one atom to another.
Atoms know who owes them an electron
Electron pairs are equally shared in all covalent bonds	Electrons pairs are not shared equally in all covalent bonds. In some, one atom attracts the electron pair more than the other atom (i.e. a difference in electronegativity), and causes the electron pair to be closer to it than to the other atom.
The strengths of covalent bonds and intermolecular forces are similar	The strength of a covalent bond, an intramolecular force (within the molecule, i.e. between atoms), is much greater than that of intermolecular forces (between molecules). Hence, molecules can be pulled apart more easily than breaking apart the molecules themselves.
Chemical Reactions
Freezing and boiling are examples of chemical reactions	Freezing and boiling are examples of changes of state, which are physical reactions, not chemical. Other changes of state include melting, condensation, and sublimation. One characteristic that changes of state do share with chemical changes: energy is either added or removed from the system, unlike other physical changes.
Physical changes are reversible while chemical changes are not	A very common misconception. Chemical changes are also reversible. Consider equilibrium reactions in which forward and backward reactions are both occurring at the same time, as well as Le Chatalier’s Principle. Some physical changes are also hard to reverse, for example, crushing a rock.
The original substance vanishes “completely and forever” in a chemical reaction	The original substance can be produced if the reaction can be reversed under the necessary conditions.
Mass is conserved, but not the number or species of atoms	Atoms are not created or destroyed in standard chemical reactions. Therefore, the number and species of atoms do not change, and hence mass is also conserved.
Reactions that proceed more rapidly also proceed further (more completely.)	This shows a discrepancy between the concepts of speed and completeness. A reaction can reach equilibrium before it has been “completed”, regardless of how fast the reaction proceeds.
Chemical reactions will continue until all the reactants are exhausted	Reactions can reach equilibrium before the reactants are exhausted. Equilibrium constants and Le Chatalier’s Principle.
Chemical equilibrium is a static condition	Students may believe that no reactions are occurring at equilibrium because the net reaction is zero. However, this means that reactions are still occurring—both forward and backward reactions are occurring at the same rate, and no net change is observed. Chemical equilibrium is dynamic.
A candle burning is endothermic, since heat is needed to initiate the reaction	Heat is needed at the beginning to initiate, or activate, the reaction. Once activated, the reaction proceeds without further energy input, and releases energy in the form of light. Therefore, it is an exothermic reaction. Another example is heating a piece of magnesium metal in a Bunsen burner, which causes it to combine with the oxygen in the air, releasing a bright light and forming magnesium oxide.
Energy is used up in chemical reactions. Energy is created in chemical reactions.	Energy is not “used up” or “created” in chemical reactions. Instead, they are released or stored in the form of chemical bonds between atoms.
Miscellaneous
Oil doesn’t mix with water because oil and water molecules repel each other	Oil molecules are actually attracted to water molecules more than to their own molecules. This can be shown when a drop of oil, which is originally spherical in shape which minimizes the number of molecules which are not surrounded by its own molecules, is dropped onto the surface of water. When it hits the water, the oil droplet spreads out instead of staying spherical, showing that the attraction between oil and water is greater than between oil and oil. Oil and water remain in separate phases, however, because the water-water attractive forces are still much greater than oil-water attraction. It would require an input of energy for the oil molecules to come between water molecules.
Adding salt to water decreases the amount of time cooking	Adding salt to water does increase the boiling point. However, it takes longer for the water to reach this higher temperature (with a constant supply of heat from the stove), and the once the water has reached the higher temperature, the change is so small that it is not significant.
Strength (of acids and bases) and concentration mean the same thing	Concentration is the number of moles of solute that are dissolved in one liter of solvent. Strength is the percentage of those molecules that dissociate into ions. An interesting fact: some weak acids (e.g. acetic) actually increase in strength as their concentration decreases.

References:

(most misconceptions taken from here)

Arizona State University. 2001. Students Preconceptions and Misconceptions in Chemistry. Visited April 2002. <http://www.daisley.net/hellevator/misconceptions/misconceptions.pdf>

Kevin Lehmann, 1996. Bad Chemistry. Dept of Chemistry, Princeton University, NJ. Visited April 2002. <http://www.princeton.edu/~lehmann/BadChemistry.html>

O’Connell, Joe. 2001. Salt Myths and Urban Legends. Visited April 2002. <http://www.scbbqa.com/myths/Salt.html>

Oklahoma State. Common Student Misconceptions. Visited April 2002. <http://www.okstate.edu/jgelder/acidPage25.html#Com>

Werwa, Eric. 2000. Everything you’ve always wanted to know about what your students think they know but were afraid to ask. Visited April 2002. <http://www.mrs.org/microworld/werwa.pdf>