The document summarizes the structure and key participants in India's securities market. It outlines the major segments which include equity, debt, money, and derivatives markets. It then describes the various regulatory bodies like SEBI, RBI, and others that oversee the market. It provides details on the major types of participants such as stock exchanges, depositories, brokers, mutual funds, and others. Finally, it briefly explains the primary and secondary markets and different mechanisms for companies to raise funds such as public issues, rights issues, and private placements.
The document summarizes the structure and key participants in India's securities market. It outlines the major segments which include equity, debt, money, and derivatives markets. It then describes the various regulatory bodies like SEBI, RBI, and others that oversee the market. It provides details on the major types of participants such as stock exchanges, depositories, brokers, mutual funds, and others. Finally, it briefly explains the primary and secondary markets and different mechanisms for companies to raise funds such as public issues, rights issues, and private placements.
The document summarizes the structure and key participants in India's securities market. It outlines the major segments which include equity, debt, money, and derivatives markets. It then describes the various regulatory bodies like SEBI, RBI, and others that oversee the market. It provides details on the major types of participants such as stock exchanges, depositories, brokers, mutual funds, and others. Finally, it briefly explains the primary and secondary markets and different mechanisms for companies to raise funds such as public issues, rights issues, and private placements.
The document summarizes the structure and key participants in India's securities market. It outlines the major segments which include equity, debt, money, and derivatives markets. It then describes the various regulatory bodies like SEBI, RBI, and others that oversee the market. It provides details on the major types of participants such as stock exchanges, depositories, brokers, mutual funds, and others. Finally, it briefly explains the primary and secondary markets and different mechanisms for companies to raise funds such as public issues, rights issues, and private placements.
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Securities Market
The Battlefield
Structure of Securities Market
Equity
Govt. securities market
Debt
Corpora te debt market
Money Market
Derivatives
Options Market
Futures Market
Participants
Regulators : The key agencies which have direct or indirect control over securities market are as following:
1.
Companys Law Board : Responsible for the administration of the
Companies Act, 1956.
2.
The Reserve Bank of India : Responsible for supervision of banks,
money market and govt. securities market.
3.
Securities and Exchange Board of India (SEBI) : Responsible for the
regulation of the capital market.
4.
Department of Economics Affairs : An arm of government, which is
responsible for orderly functioning of financial markets as a whole
5.
Department of Companys Affair : Responsible for administration of
corporate bodies.
Participants
Stock Exchange : An institution where securities which have already been
issued are bought and sold
23 major stock exchanges like NSE and BSE.
Listed Securities : Securities which are listed on various stock exchanges are eligible for being traded 10,000 securities are listed on all stock exchanges in India.
Depositories : An institution which dematerialises physical certificates and
effects transfer of ownership by electronic book entries National Security Depository Limited (NSDL) and Central Securities Depositories Limited (CSDL).
Participants
Brokers : Registered members of stock exchange through whom investors
transact. 10,000 brokers in India. Eg. India Bull, Share Khan and CMS.
Foreign Institutional Investors: Institutional Investors from abroad are
registered with SEBI to operate in India are called FII. For Eg. JP Morgan Chase (US Giant Institutional Investor who took over Binani Cement 25% stake by investing 150 crores in 2005)
Participants
Merchant Banker : Firms that registered with RBI specialized in managing the issue of securities
Primary Dealers : Appointed by RBI, serve as underwriters in the primary market and market makers in the secondary market for govt. securities.
Mutual Funds : it is a vehicle for collective investment where funds of investors are pooled and managed by professional portfolio managers.
Custodian : A custodian looks after the investment back office of a mutual fund. It receives and delivers securities, collect income, distributes dividends, and segregate the asset between different schemes.
Participants
Registrar and Transfer Agents : Agent who handle all investor related services.
Underwriters : An underwriter agrees to subscribe to a given number of shares in
the event when public subscription is inadequate. An underwriter guarantees for public subscription.
Banker to an Issue : The banker to an issue collect money on behalf of the company from the applicant.
Debenture Trustee : A debenture trustee is appointed to ensure that the company is
fulfilling all the obligation of the contract.
Participants
Venture Capital Funds : Type of financing by venture capital where private
equity capital is provided as seed funding to early-stage, high-potential, growth companies and more often after the seed funding round as growth funding round (also referred to as series A round) in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company.
Credit Rating Agencies : It is a company that assigns credit ratings, which
rate a debtor's ability to pay back debt by making timely interest payments and the likelihood of default. An agency may rate the creditworthiness of issuers of debt obligations, of debt instruments, and in some cases, of the servicers of the underlying debt, but not of individual consumers.
Public Issue Rights Issue Private Placement Public Issue through Book Building Buy-out Details
STOCK/SECONDARY MARKET
Market in which outstanding securities of corporate houses as well as the government are traded under a regulated environment. Stock exchange is a regulated market plac in which listed securities are bought and so through the intervention of members (brokers) of stock exchange, by following an open system of two-way quotation.
Primary Market The primary market came into its own pace in 90s, when a large number of companies came out with public issues. Companies raise funds in domestic market through: Equity shares Preference shares Debenture/bonds
There are 3 ways company may raise equity capital in the
primary market: Public issue Rights issue Preferential allotment
Public Issue It is a system of issuing securities by a public limited company, where the general public is invited to subscribe to the capital of the company. It is governed by the provisions of the Companies Act, 1956, SEBI Guidelines on Investor Protection and the listing agreement between issuing company and the stock exchanges. General public includes individual investors, institutional investors, mutual fund, NRIs, high networth individuals (HNIs), qualified institutional buyers (QIBs), etc.
Private Placements It is a system of issuing securities, in which mass media for inviting the public is not used; instead issuing company approaches the investors individually. Private placements are placed with institutional investors, mutual funds or other financial institutions. A formal issue of prospectus and underwriting arrangements are not required and the terms are negotiated between the company and the investors. This method is useful for small companies and are unlikely to get good response from public issue.
Rights Issue Whenever, an existing company issues shares to its existing shareholders on proportionate basis, it is called as Rights Issue. This is required under Section 81 of the Companies Act,1956. It is upto, shareholders whether they want to exercise this right or not . It is comparatively cheaper method of floatation of shares, if existing shareholders forfeit their right then the company can issue shares to public.
