Stock Exchange-B.V.Raghunandan

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stock exchange, meaning, formation, functions, indices etc

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Stock Exchange-B.V.Raghunandan

  1. 1. ChapterV-Stock Exchange<br />
  2. 2. Meaning & Definition<br />Stock Exchange is,” an association, organisation or body of individuals, whether incorporate or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities”<br />-The Securities Contracts (Regulation) Act, 1956<br />
  3. 3. Characteristics of Stock Exchange<br />Organised Market<br />Securities Market<br />Secondary market<br />Part of Capital Market<br />Listed Securities<br />Restricted Membership<br />Dealing only by Members<br />Standardised Practices<br />Facilitator<br />Speculation<br />
  4. 4. Role and Functions of a Stock Exchange<br />Public Finance<br />Growth of Joint Stock Companies<br />Enabling Book-Building Route<br />Capital Mobility<br />Foreign Funds<br />Index Compilation<br />Technical Analysis<br />Economic Development<br />Ready Market<br />Liquidity for Securities<br />Evaluation<br />Price Stability<br />Capital Formation<br />Promoting Saving Habits<br />Investor Protection<br />Corporate Governance<br />
  5. 5. Members of a Stock Exchange: Jobber & His Characteristics<br />Dealer<br />Specialist<br />Stability in the Market<br />Dealing with Brokers<br />Jobber’s Profit<br />Equalising Quantity<br />Speculation<br />Two-way Quotes<br />Matching Demand and Supply<br />Company Sponsorship<br />
  6. 6. Brokers & Their Characteristics<br />Agent<br />Generalist<br />Conduit between Jobber and the Public<br />Income in the form of Commission<br />
  7. 7. Types of Dealings<br />Dealings in Cash Market<br />Dealings in Futures & Options Market<br />
  8. 8. Cash Market<br />Rolling Settlement<br />T+2 Settlement<br />Trading Day<br />Pay-In Day<br />Pay-Out Day<br />
  9. 9. Futures & Options Marker<br />Meant for Risk Management Arising Out of Dealings in Cash Market<br />Exchange Traded<br />Big Investors and Institutions Take Positions<br />For Protecting the Value of Holding<br />Providing for the Risks Arising Out of Trading<br />
  10. 10. Futures: Characteristics<br />StandardisedFeatures<br />Counter-Party is the Clearing House<br />Margin Requirement<br />Time Spread<br />Three Contracts for Settlement<br />
  11. 11. Futures: Trading Mechanism<br />Trading<br />Strategies<br />Uses:<br /> -Hedging<br /> -Speculation<br /> -Arbitrage<br />Types of Futures: Stock Future and Index Future<br />
  12. 12. Option<br />A contract to buy or sell without an obligation<br />European Option and American Option<br />Call Option and Put Option<br />Uses of Options: <br /> -Hedging<br /> -Speculation<br /> -Arbitrage<br />
  13. 13. Advantages of Option<br />No Big Investment<br />No Margin as in Futures<br />No Obligation<br />No Marked-to-Market<br />More Gain than Risk<br />Premium paid alone is the Disadvantage<br />
  14. 14. Listing of Shares: Procedure<br />Initial Public Offer<br />Size of Public Offer: Not Less than 25% of Issued Capital & Post Issue Paid Up Capital is not less than <br /> Rs.10 Crore<br />Filing Application: MA, AA, Prospectus, Directors Report, Specimen Copies of Share Certificates and Debenture Certificates<br />-Wide Distribution of Shares: 5 for Each Rs.1 Lakh cap<br />-Dividend & Bonus in the Past 10 years<br />-Brief History of the Company<br />-Management Pattern<br />
  15. 15. Listing Procedure ….Continued<br />Payment of Listing Fees<br />Signing Listing Agreement<br />Screening the Application<br />Listing the Shares<br />
  16. 16. SEBI: Functions<br />Regulation of Securities Market<br />Registration of FIs<br />Registration of Collective Investment Scheme<br />Education & Training<br />Prohibition of Insider Trading<br />Prohibition of Unfair Trade Practices<br />Regulation of M&A<br />Registration of FII<br />Registration & Regulation of SEs<br />Conducting Research<br />
  17. 17. Powers of SEBI<br />Levying Fees<br />Approving Bye-laws of SEs<br />Ordering Amendment of Bylaws of SEBI<br />Inspection<br />Compulsory Listing<br />Power of Punishment<br />
  18. 18. THANK YOU<br />

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