industrial securities market

7/31/2019 Industrial Securities Market

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The term stock market can be used to denote individualstock exchanges at various places or one marketcomprising all individual stock exchanges in the country.

The industrial securities market, particularly the equitiesmarket, occupies a disproportionately large space in thediscussion in the print and electronic media.

The industry , rich &middle classes tend to be highlypreoccupied with this market, and regard it as thebarometer of the health of the economy.


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Organization and cultureNumber of SEs in India increased from 9 in 1979-80to 23 at the end of Mar 2003.

India has largest num of recognized SEs in the world

, and all are regulated by SEBI.All SEs have two parts

NIM(for fresh or additional capital)

SM(the securities issued in NIM are traded on SM)


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The role of SM is only indirect as itencourages investors to invest inindustrial securities by making them

liquid i.e by providing facilities forcontinuous ,regular ,ready buyingand selling of those securities


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It is the premier or apex SE in India , oldest andrecognised permanently.

It is biggest in size(in terms of fresh capitalraised, secondary market turnover andcapitalisation and the total listed co; and theirpaid up capital)

The trading in securities has been vogue in India

since 1793.BSE was estd in 1857


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BSE introduced BOLT(Bombay Online TradingSystem) on Jan 19,1995.

BSE started both equity and debt trading onBOLT system

BSEs business no longer confined toMumbai ,by the end of 1997,there were 100

cities in which it had set up business.


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Apart fro BSE,2 other SEs in Mumbai namely

NSEI(National Stock Exch of India Ltd)

OTCEI(Over the Counter Exch of India Ltd)


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Fully automated ,electronic ,screen based trading systemSponsored by IDBI ,LIC ,GIC ,Commercial banks ,financial

institutions etc

Objectives:a) To provide nation wide equal access and fair ,efficient, completely transparent securities trading sys to investors

by using suitable communication network

b) To bring Indian stock market in line with internationalmarkets.

c) To promote sec market in debt instruments such asgovt and corporate bonds.


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NSEI introduced trading in

Repos with effect from 23 jun

1995

Whole sale debt marketsegment(WDMS)

Started functioningfrom 30 June 1994

Caters to banks ,fininst , otherinstitutionalparticipants and whichdeals in PSU bonds,

TBs, govt sec , callmoney, CPs, CDs etc

Capital marketsegment(CMS)

Started trading from 3Nov,1994

Deals in equities,convertible debenturesetc

Include securities thatare traded in other SE s

also.


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Set up in 1992,headquarters is at Mumbai.

First SE to introduce screen based automatedtrading system.

Promoted by UTI,ICICI,IDBI,IFCI,LIC,GIC,

CANBANK as a co; under section 25 of thecompanies act 1956


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Obj of OTCEI:To help co; to raise capital from market at

the cheapest costs.

To cater to the needs of co; which cannot belisted on other official exchanges.

To eliminate the problems of illiquidsecurities ,delayed settlements and unfairpractices faced by the investors.


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The securities which are traded on OTCEI are dividedin to 3 categories.

They are 1) listed 2)permitted 3) initiated

These securities cannot be traded on other SEs

They can be bought and sold at any of the OTCEI

counters all over India

It has two players-members and dealers(instead ofbrokers)

Scheduled banks ,mutual funds ,bankingsubsidiaries ,FIs ,merchant bankers , venture capitalfunds ,NBFCs other than finance and leasing co;having a min net worth of Rs 2.5 crore can becomemembers of OTCEI


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It allows domestic and foreign institutionalinvestors also to trade on it by offering them

netting facilities for both intra-custodian andinter custodian transactions.

The trading on OTCEI is based on rollover

concept which means all trading done on anyday is settled on the same day itself andnetting with the previous or subsequent daystransactions is not permitted.


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National and Regional exchanges in India3 SEs has brought certain problems

Apart from the SEs in Mumbai , there are20 other national and regional exchangeslocated in metropolitan centres and cities in India.

The relative position of the BSE has declined

over the yearsIn addition to official SEs, currently there areabout 40 unofficial exchanges operating asbrokers association in India ,which are not

recognised by SEBI


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8746 brokers

1476 merchant bankers

425 registrar to issues

429 financing and advertising agencies271 issue stationery printers

117 collecting bankers

2100 underwriters

113 portfolio managers

23 debenture trustees


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Only those securities are traded which are listed

.

From May 27,1996,the listing requirements aremade more stringent in order to broaden theshareholder base of the co; and to avoid large chunkof shares being held by a few individuals close to co;managements.

It is now stipulated that ,in case of offer for sale ,there will have to be at least 10 public shareholdersfor every Rs 1 lakh if equity offered to the public


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For listing on BSE, the min equity capital of aco; is 10 crore rupees.

The non manufacturing co; cannot make apublic issue unless they have track record ofdividend payments for at least 3 years out of

5 preceding years.

industrial securities market

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