Stock Exchange

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Stock exchanges provide an organized market place for the investors to buy and sell securities freely. Stock exchanges are very sensitive to the political and economic changes Functions and Services rendered by a stock exchange:

Ideal Meeting Place Mobilization of Savings

Providing Safety to Investors

Distribution of New Securities

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Ready Market Liquidity (indicator for measuring the efficiency of an exchange) Capital Formation Speculative Trading Sound Price Setting Economic Barometer

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Dissemination of Market data Perfect market conditions Efficient channeling of savings Optimal resource allocation Platform for public debt

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Stock exchange traders

Only the registered members are permitted to carry out trading on the floor of a stock exchange Remisiers sub brokers employed by member to secure business Authorized Clerks Brokers and Jobbers Tarawaniwalas Dealers
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Sl. No Feature 1 Agent

Jobber

Broker

Jobber is an independent Broker is merely an agent dealer or a merchant to buy or sell on behalf of willing to buy and sell his clients securities Jobber is a specialist Jobber deals only with brokers and not with public . No direct sale or purchase in the market Broker is a generalist Brokers deals with a jobber on behalf of his clients. He is a middleman between the jobber and buyer. Has to negotiate terms and conditions of sale or purchase and safeguard his clients interest Lower brokerage rate is fixed by rules. 4/7/12

2 3

Specialization Dealing with public

Price Quotation Quotes two prices buying and selling. Sale quotation is higher than purchase Margin Jobbers profit margin is fixed by competition among themselves as dealers

WEAKNESSES

Raging Speculation Insider Trading Menace Neglect of small investors Restrictions on forward trading Bad trading practices

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Lack of integration Lack of interface Inefficient banking system Inadequacy of investor service Inadequate infrastructure

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STEPS IN STOCK TRADING Client Registration Agreement Order Placing Order confirmation Trade confirmation

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Contract note Delivery & Cleaning Share Transfer Settlement

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Indian Stock Exchange

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24 stock exchanges ( 21 regional + NSE, OTCEI and ISE) ISE promoted by 15 regional stock exchanges and based at Mumbai. The NSE, OTCEI, ISE and majority of the regional stock exchanges have adopted Screen Based Trading system (SBTS) to provide automated and modern facilities for trading in a transparent, fair and open manner with access to investors across the country.

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THE BOMBAY STOCK EXCHANGE

Genesis Established in 1875 under the name The Native Share and Stockbrokers Association as a voluntary non profit organization. Acclaimed as a premier stock exchange in the country. Management As per SEBI Orders issued in march 2001, the Governing Board presently comprises of 10 directors, viz., 3 government nominees, a RBI nominee, 5 public representatives and an Executive Director.

4/7/12 The Executive Director, as the chief Executive officer, is responsible for the day-to-day administration of the

BOLT (BSE-ON-LINE-TRADING)

For expansion of its BOLT network to locations outside Mumbai. The members of BSE are free to install their own trading terminals at any place in the country The BSE has admitted subsidiary companies formed by 13 regional stock exchanges as its members as on Nov 30, 2001. The members of these regional stock exchange work as subbrokers.

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Listing of Securities objectives are: providing liquidity to securities mobilizing savings for economic development protecting interest of investors by ensuring full disclosures

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FOR NEW COMPANIES

Minimum Capital Their issued and subscribed equity capital after the public issue should be Rs. 10 crores. In addition the issuer company should have a post-issue net worth (equity capital + free reserves excluding revaluation reserves) of Rs. 20 crores. Minimum Public offer As per Rule 19(2) (b) of the securities contract (Regulation) Rules, 1957, securities of a company can be listed on a stock exchange only when at least 25 percent of each class or kind of securities is offered to the public for subscription.
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FOR COMPANIES EXCHANGES

LISTED

ON

OTHER

STOCK

Minimum equity capital of Rs. 3 crores. Profit track record for at least last three years Minimum net worth of Rs. 20 crores Minimum market capitalization of Rs. 20 crores, based on average price of last six months Trading for a minimum 50% of the total trading days during the same six months on any stock exchange
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Minimum average volume traded per day during the last three complete months should be 1,000 shares and minimum 5 trades per day. 25% of the issued capital should be with public and minimum 15 shareholders per Rs. 1 lakh of capital in the public category The company should be agreeable to sign an agreement with CDSL and NSDL for DEMAT trading.

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FOR COMPANIES DELISTED RELISTING OF THIS EXCHANGE

ALREADY

AND

SEEKING

Permission to use the name of the exchange Submission of letter of application Allotment of securities ( offered to the public within 30 days of the date of closure of subscription list) Trading permission ( the issuer company should complete formalities for trading at all the stock exchanges where the securities are to be listed within 7 working days of finalization of basis of allotment)

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Security Deposit ( 1% of issue amount with the regional stock exchange before the issue opens) Listing Fees ( annual listing fees by the 30th April ) Listing Agreement Z Group ( for companies which have not complied with and are in the breach of provisions of the listing agreement)

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THE NATIONAL STOCK EXCHANGE LIMITED (NSE) Genesis

incorporated in November 1992 with an equity capital 25 crores. Commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The capital Market (Equities) in November 1994 Operations in Derivatives Segment in June 2000

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The Mission

Establishing a nationwide trading facility for equities, debt instruments and hybrids Ensuring equal access to investors all over the country through an appropriate communicating network Providing a fair, efficient and transparent securities market to investors using electronic trading systems Enabling shorter settlement cycles and book entry settlement systems and Meeting the current international standards of securities markets.

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Listing Requirement

The minimum paid up capital for IPOs is Rs. 20 crores. Companies already listed on another exchange a minimum market capitalization of Rs 20 crores (for companies with a paid up capital of at least Rs. 10 crores) or of Rs 40 crores (for companies with a paid up capital of less than Rs. 10 crores)

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Products Offers wide range of products and services in the equities, debt and derivatives segments of the market Indices: Major Indices/other indices Derivatives - Futures/Options Computer to Computer link facility: Equities/Derivatives Internet Based Trading Initial Public Offering Mutual Funds Mutual Fund Service System Exchange Traded Funds Index Funds Working Capital Funding Direct payout to investors
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Intermediaries in New Issues Market

The intermediaries include Merchant Bankers/Lead Managers, Underwriters, Bankers to the issue, Brokers to the issue, Registrars, Share Transfer Agents, and Debenture Trustees.

Merchant Bankers/Lead Managers The intermediaries in the stock market who are responsible for public issues management.

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I.

Category
These are the merchant bankers who carry out such functions as relating to new issues as determination of security mix to be issued, drafting of prospectus, application forms, allotment letters and a host of other documents, appointment of registrars for handling share applications and transfers, making arrangements for underwriting, placement of shares, selection and appointment of brokers and bankers to the issue etc. only these mechant bankers are permitted to act as Lead Managers to an issue.

II.

III. IV.

Consultants, advisers, portfolio managers and comanagers. Underwriters, advisers and consultants 4/7/12 Advisers or consultants

Registration Conditions

Capital adequacy Infrastructure Expertise Fees Undertaking

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UNDERWRITERS

A set of all institutions and agencies that provide a commitment to take up the issue of securities in the event of a failure of the issue to get full subscription from the public are known as underwriters. Brokers, investment companies, commercial banks and term lending institutions provide underwriting services. The issuing company in consultation with the merchant bankers/lead managers appoints underwriters.

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BANKERS TO AN ISSUE

Bankers who are engaged in the function of acceptance of applications for shares and debentures alongwith application money from investors in respect of issue of securities and also refund of application money to the applicants to whom securities could not be allotted, are called bankers to an issue.

BROKERS TO AN ISSUE

Intermediaries that are responsible for procuring the subscription to the issue from the prospective investors are called brokers to the issue. They help the investors make a right choice of the company for making investments. Maximum brokerage rate, applicable4/7/12 types of to all industrial securities, whether underwritten or not is 1.5

REGISTRARS TO AN ISSUE AND SHARE TRANSFER AGENTS

1.

2.

Two categories which carry on activities of both registrars to an issue and also of share transfer agents Which carry on activities of either registrar to an issue or as a share transfer agent. Carry out functions such as keeping a proper record of applications and moneys received from investors, assisting issuing companies in determining the basis of allotment of securities as per stock exchange guidelines and in consultation with stock exchanges, functioning as Depository participants (DPs).

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DEBENTURE TRUSTEES

Trustees who are appointed to safeguard the interests of debenture holders. Appointed before issue of debentures by a company.

Eligibility 1. A scheduled bank carrying on commercial activity; or 2. A public financial institution within the meaning of section 4- A of the companies Act 1956 3. An insurance company 4. A body corporate
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THANK YOU
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