1. Investment Management
UNIT-2
SECURITIES MARKETS

2. Bombay Stock Exchange (BSE)
It is one of the oldest stock exchanges in Asia.
It was formally established in the year 1875.
It was recognized on a permanent basis in the year 1957.
BSE has designed an online trading system popularly known as BSE On-line Trading (BOLT).
It has been designed to get the best buy and sell orders from the investors.
It has been expanded successfully in various other cities such as Ahmedabad, Rajkot, Pune, Vadodra and Kolkata.
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

3. World’s No.1 exchange in terms of listed members.
BSE
Established in 1875 as “The Native Share and Stock Brokers Association”.
Broad shareholder base - includes two leading global exchanges Deutsche Bourse and Singapore Exchange as strategic partners.
World’s No.1 exchange in terms of listed members.
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

4. BSE
First Exchange in India and second in the world to obtain an ISO 9001:2000 certification and Information Security Management System standard BS certification for its online trading system(BOLT).
BSE’s popular equity index – the S&P BSE SENSEX – India’s most widely tracked stock market benchmark index.
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

5. Awards and Recognition :
BSE
Awards and Recognition :
India Innovation award for Big Data Implementation.
The Golden Peacock Global CSR award.
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V.Prabakaran, AP/MBA - Securities Market

6. National Stock Exchange (NSE)
2/11/2018
NSE was set up by IDBI and other financial institutions in the year and started functioning in1994.
It was established to provide nationwide facilities to the investors for trading securities.
The various objectives of NSE are:
To establish a nationwide trading facility for equities ,debt and hybrid instruments.
To provide a fair and efficient securities market to the investors.
To meet the current international standards of securities market.
To enable shorter settlement cycle.
V.Prabakaran, AP/MBA - Securities Market

7. MEMBERSHIP OF NSE
The membership of NSE is based on a number of factors such as capital adequacy, track record, education and experience.
An applicant has to go through two stages of admission in order to become a member of NSE. Written test followed by an interview.
The segments in which the applicants are admitted:
Wholesale debt market
Capital market
Derivative market
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

8. Advantages of NSE NSE provides the following advantages:
Wider accessibility
Screen-based trading
Transparent transactions
Matching of orders
Effective settlement of corporate benefit
Trading in dematerialized form
SGL facility in the debt market
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

9. BSE vs NSE Bombay Stock Exchange National Stock Exchange
Established in 1875
Established in 1992
6000+ Listed Members
1600+ Listed Members
SENSEX
NIFTY
Mumbai, India
Oldest Stock Exchange in Asia
Largest Stock Exchange in India in terms of daily turnover
Presence in 450+ cities
Presence in 1,500 + cities
NEAT System
BOLT System
BSE started as an Association of persons in 1875, which was accredited as a stock exchange in 1957
NSE was founded in 1992, as a tax paying company, but later on, in 1993 it was recognized as a Stock Exchange.
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V.Prabakaran, AP/MBA - Securities Market

10. Interconnected Stock Exchange (ISE)
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Started in1998.
Diluted version of ‘National Stock Market System’(NSMS)
Main Objective: To interlink 15 odd regional stock exchanges of country to ensure liquidity.
Minimize the cost of regional exchanges as they were incurring huge costs by supporting very illiquid market.
V.Prabakaran, AP/MBA - Securities Market

11. Participants of ISE
Bangalore, Bhuvaneswar, Chennai, Cochin, Coimbatore, Guwahati, Hyderabad, Jaipur, Ludhiana, Indore, Magadh, Mangalore, Saurashtra Kutch, Uttar Pradesh & Vadodara
Total cost of ISE project is about 15crore’s shared equally by all participating exchanges.
Membership to ISE costs Rs.16,000/- along with capital adequacy deposit of Rs.4 lakhs
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V.Prabakaran, AP/MBA - Securities Market

12. Cont…
2/11/2018
ISE is a national-level stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its Trading Members.
It has 791 Trading Members, who are located in 84 cities spread across 18 states. These intermediaries are administratively supported through the regional offices at Delhi, Kolkata, Patna, Ahmedabad, Coimbatore and Nagpur, besides Mumbai.
V.Prabakaran, AP/MBA - Securities Market

13. Cont…
2/11/2018
ISE has floated ISE Securities & Services Limited (ISS) as a wholly-owned subsidiary under the policy formulated by the Securities and Exchange Board of India (SEBI) for “Revival of Small Stock Exchanges”.
ISS has been registered by SEBI as a Trading-cum- Clearing Member in the Capital Market segment and Futures & Options segment of NSE and Capital Market segment of BSE.
Trading Members of ISE can access NSE and BSE by registering themselves as Sub-brokers of ISS.
ISS, thus provides the investors in smaller cities, a one-stop solution for cost-effective and efficient trading and settlement services in securities.
V.Prabakaran, AP/MBA - Securities Market

14. Objectives
2/11/2018
Create a single integrated national-level solution with access to multiple markets by providing high cost-effective service to investors across the country. 
Create a liquid and vibrant national-level market for all listed companies in general and small capital companies in particular. 
Optimally utilising the existing infrastructure and other resources of Participating Stock Exchanges, which are under-utilised now. 
Provide a level playing field to small Trading Members by offering opportunity to participate in a national market for investment-oriented business. 
Provide clearing and settlement facilities to the Trading Members across the country at their doorstep in a decentralised mode. 
Spread demat trading across the country.
V.Prabakaran, AP/MBA - Securities Market

15. Mode of functioning in ISE
ISE enables a trading member of one exchange to deal with his counter-part in other exchanges from his local Trader Work station using ISE established Central System.
Central Computer in Mumbai & all regional stock exchanges linked to Central computer through VSAT. (Very Small Aperture Terminal)
Once linked, each broker who has a terminal for the local market, will be given an additional segment of ISE.
Broker will have access to both local and National market.
Once order is made in the National market, it will immediately come to the central order book maintained in Mumbai, gets matched and reporting will be done.
Trading will be done through the same trader work station.
2/11/2018
V.Prabakaran, AP/MBA - Securities Market

16. Risk Management and Surveillance at ISE
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Trading limit will be imposed for every broker.
Alert will be sent once the limit is reached.
If trade is continued then the broker will be immediately switched off from the system.
If the broker fails to meet his commitments he will not be allowed to trade.
Becoming a defaulter in one stock exchange will automatically declare him as defaulter in the other exchange too.
V.Prabakaran, AP/MBA - Securities Market

17. OTCEI
2/11/2018
Over the counter exchange of India was started in The OTCEI was started with the objective of providing a market for the smaller companies that could not offered the listing fees of the large exchange and didnt fulfill the minimum capital requirement of listing.
Role model is NASDAQ (National Association of Securities Dealers Automated Quotation)
V.Prabakaran, AP/MBA - Securities Market

18. Cont…
2/11/2018
The aim at creating a fully decentralized and transport market. Over the counter exchange means trading across the counter in scrip. The counter refers to the location of the member or dealer of the OTCEI where the deal or trade takes place. Every counter is treated as trading floor for OTCEI where the investor buy or sell.
It is incorporated as company under section 25 of the Indian companies act 1956.Promoters are UTI, ICICI, IDBI, IFCI, LIC, SBI CAPITAL MARKET
V.Prabakaran, AP/MBA - Securities Market

19. Procedure for the listing of shares at OTCEI
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OTCEI appoints a member as a sponsor for the company’s issue.
The sponsor appraises the project or company on various aspects, such as technical, managerial, commercial, economical and financial.
After appraisal, the sponsor certifies the OTCEI regarding its appraisal.
The sponsor determines the price of shares to be offered to the public, members and dealers of OTCEI.
The sponsor after compliance with all SEBI guidelines gets all statutory consent.
V.Prabakaran, AP/MBA - Securities Market

20. Cont…
2/11/2018
The sponsor registers the issue with OTCEI and makes the listing application to the OTCEI as per rules and regulations.
After getting the approval, the allotment is made.
Once the allotment is over, the equity is listed and trading commences.
After the completion of entire process of allotment and refund, the company or the sponsor makes the application for the listing of scrips at OTCEI. 
V.Prabakaran, AP/MBA - Securities Market

21. PLAYERS IN THE OTCEI MARKET
2/11/2018
The players on the OTCEI exchange are the members and dealers. The activities of members and dealers are:
Act as broker, buy and sell securities according to the instructions of investor.
Market makers in securities, they quote the prices at which members are willing to buy and sell the specified no. of securities.
V.Prabakaran, AP/MBA - Securities Market

22. Members
2/11/2018
Members can be public financial institutions, scheduled banks, mutual funds, SEBI approved merchant banker, banking subsidiaries, venture capital funds and other non-banking financial companies with minimum net worth of 2.5 crores.
Members pay a one time non-refundable admission fee of rs 10 lakh and rs 5 lakh after one year.
The annual subscription fee is rs 1 lakh.
V.Prabakaran, AP/MBA - Securities Market

23. Dealers
2/11/2018
The dealers are individuals, partnership firm, and corporate entities with a minimum net worth of Rs 5 lakh.
They should have adequate office space and telecommunication facilities.
They have to pay one time non-refundable fee of rs 2 lakh and annual subscription fee of rs
OTCEI may collect additional security deposit if it considers necessary, depending upon the business experience of applicant.
V.Prabakaran, AP/MBA - Securities Market

24. Scrips to be traded
2/11/2018
The minimum capital requirement for a company to be listed on the OTCEI is Rs 3 crores and the maximum is Rs 50 crore.
For companies with an issued capital of more than 30 lakh but less than 300 lakhs, the minimum public offer should be 25% of the issued capital or 20 lakhs worth of shares in face value, which ever is higher.
Companies with an issued capital of more than Rs 30 crores seeking to be listed have to comply with listing requirements and guidelines that are applicable to such companies in other stock exchanges.
V.Prabakaran, AP/MBA - Securities Market

25. Benefits - Companies
2/11/2018
 It will provides a method of funds raising through capital market instruments which are priced fairly
In OTCEI the companies will be able to negotiate the issue price the sponsor who will market the issue.
It will also help to save unnecessary issue expenses on raising funds from capital market.
V.Prabakaran, AP/MBA - Securities Market

26. For Investors
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 Investment in stock will become easier. Its wide network will bring the stock exchange to every street corner.
It will provide greater confidence and fidelity of trade.
Investor can look up the price displayed at the OTC counter.
It will enable transaction complete quickly.
It also provide liquidity to investors
V.Prabakaran, AP/MBA - Securities Market

27. Market Maker
2/11/2018
A market maker is a broker-dealer firm that assumes the risk of holding a certain number of shares of a particular security in order to facilitate the trading of that security. Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares, and once an order is received from a buyer, the market maker immediately sells from its own inventory or seeks an offsetting order. The Nasdaq is the prime example of an operation of market makers, given that there are more than 500 member firms that act as Nasdaq market makers, keeping the financial markets running efficiently.
V.Prabakaran, AP/MBA - Securities Market

28. Regulatory Environment
2/11/2018
Ministry of Finance
SEBI
RBI
are the major regulatory bodies exercising regulatory control and supervision over the functioning of financial system in the country.
V.Prabakaran, AP/MBA - Securities Market

29. Cont…
Upto 1992, primary market was controlled by the Controller of Capital Issues(CCI).
SEBI was formed under the SEBI Act,1992, to protect the interest of investors in securities as well as for promoting and regulating the securities market.
All public issues are governed by rules, regulations and guidelines issued by SEBI.
SEBI has been instrumental in bringing greater transparency in capital issues.
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V.Prabakaran, AP/MBA - Securities Market

30. SEBI
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Securities and Exchange Board of India (SEBI) was set up as an administrative arrangement in 1988.In 1992, the SEBI Act was enacted, which gave statutory status to SEBI.
It mandates SEBI to perform a dual function: investor protection through regulation of the securities market and fostering the development of this market.
SEBI has been vested most of the functions and powers under the Securities Contract Regulation (SCR) Act, which brought stock exchanges, their members, as well as contracts in securities which could be traded under the regulations of the Ministry of Finance.
V.Prabakaran, AP/MBA - Securities Market

31. Cont…
2/11/2018
In addition to registering and regulating intermediaries, service providers , mutual funds, collective investment schemes, venture capital funds and takeovers, SEBI is also vested with the power to issue directives to any person(s) related to the securities market or to companies in areas of issue of capital, transfer of securities and disclosures.
It also has powers to inspect books and records, suspend registered entities and cancel registration.
V.Prabakaran, AP/MBA - Securities Market

32. Objectives of SEBI
2/11/2018
To protect the interest of the investors in securities.
To promote the development of securities market.
To regulate the securities market, ensuring fair practices by the issuers of securities, viz., companies.
V.Prabakaran, AP/MBA - Securities Market

33. Functions of SEBI
2/11/2018
Specifying rules and regulations: SEBI has the authority to specify rules and regulations to control the stock exchange. For instance, the opening (9.15 am) and closing (3.30 pm) time of the market has been determined by SEBI, and it has the right to change the timing if deemed necessary.
Providing licenses to dealers and brokers: No dealer or broker can start distributing securities to investors without getting a prior approval and license from SEBI. It also has the right to withhold or cancel the license of brokers and dealers not adhering to the specified guidelines.
V.Prabakaran, AP/MBA - Securities Market

34. Cont…
2/11/2018
Auditing the performance of various stock exchanges: The regulating body is also responsible for auditing the performances of various stock exchanges and bringing transparency in their functioning.
Controlling mergers, acquisitions and take- overs of the companies: Some companies try to manipulate stocks and buy a majority stake in other companies with an intention of a take-over. SEBI controls and prohibits such movements if it is not in the interest of the company.
V.Prabakaran, AP/MBA - Securities Market

35. Cont…
2/11/2018
Prohibiting unfair trade practices in the market: While SEBI has laid down specific guidelines that promote fair trade practices, many companies occasionally undertake activities that are not healthy for the market. SEBI has the power to prohibit such activities and take action against the parties involved in such a trade.
Apart from these important functions, SEBI has many other responsibilities, which it exercises appropriately in order to regulate the Indian stock market.
V.Prabakaran, AP/MBA - Securities Market

36. RBI
2/11/2018
Reserve Bank of India (RBI) has regulatory involvement in the capital market, but this has been limited to debt management through primary dealers, foreign exchange control and liquidity support to market participants.
It is RBI and not SEBI that regulates primary dealers in the Government securities market.
RBI instituted the primary dealership of Government securities in March Securities transactions that involve a foreign exchange transactions need the permission of RBI.
V.Prabakaran, AP/MBA - Securities Market

37. 2/11/2018
Thanks…
V.Prabakaran, AP/MBA - Securities Market