Treasury Products-B.V.Raghunandan

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the money market instruments and other short-term investment products in which the treasury can park its short-term funds

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Treasury Products-B.V.Raghunandan

  1. 1. UNIT II Treasury Products
  2. 2. Treasury Products <ul><li>Money Market Instruments </li></ul><ul><li>Capital Market Instruments </li></ul><ul><li>Primary market in Equity Shares: </li></ul><ul><li>-Fixed Price Offer </li></ul><ul><li>-Book-Building </li></ul>
  3. 3. Players In Money Market <ul><li>Central Government </li></ul><ul><li>Public Sector Undertaking </li></ul><ul><li>Insurance Companies </li></ul><ul><li>Mutual Funds </li></ul><ul><li>Banks </li></ul><ul><li>Corporates </li></ul><ul><li>Others </li></ul><ul><li>-NBFCs </li></ul><ul><li>-Provident Funds </li></ul><ul><li>-Pension Funds </li></ul><ul><li>-Primary Dealers </li></ul><ul><li>-Foreign Institutional Investors </li></ul><ul><li>-Investment Trusts </li></ul>
  4. 4. Capital Market: Players <ul><li>Pure Borrowers </li></ul><ul><li>-Governments </li></ul><ul><li>-Public Sector undertakings </li></ul><ul><li>Pure Investors </li></ul><ul><li>-Insurance Companies </li></ul><ul><li>-Mutual Funds </li></ul><ul><li>-NBFCs </li></ul><ul><li>-Provident Funds </li></ul><ul><li>-Pension Funds </li></ul><ul><li>-High Networth Individual </li></ul><ul><li>-Retail Investors </li></ul><ul><li>-FIIs </li></ul>
  5. 5. Players Who are Both Borrowers & Lenders <ul><li>Commercial Banks </li></ul><ul><li>Financial Institutions </li></ul><ul><li>Corporates </li></ul>
  6. 6. Money Market Instruments <ul><li>Treasury Bill </li></ul><ul><li>Repo & Reverse Repo </li></ul><ul><li>Call Money & Notice Money </li></ul><ul><li>Certificate of Deposit </li></ul><ul><li>Commercial Paper </li></ul><ul><li>Bankers’ Acceptance </li></ul><ul><li>Commercial Bill </li></ul>
  7. 7. Capital Market Instruments: Equity Shares <ul><li>Dividend </li></ul><ul><li>Bonus Shares </li></ul><ul><li>Appreciation in Market Value </li></ul><ul><li>Corporate Action </li></ul><ul><li>Voting Right </li></ul><ul><li>Preemptive Right </li></ul><ul><li>Lower Incidence of Taxation </li></ul><ul><li>Sponsored ADRs/GDRs </li></ul>
  8. 8. Preference Shares: Another Ownership Security <ul><li>Preferential Claim for Dividend & Redemption over Equity Shareholders </li></ul><ul><li>Dividend not Taxable in the Hands of Investors </li></ul><ul><li>Convertibility Clause </li></ul><ul><li>Lack of Secondary Market renders it Unattractive As a Treasury Product </li></ul>
  9. 9. Debt Securities As Capital Market Instruments <ul><li>Government Bonds </li></ul><ul><li>Corporate Bonds </li></ul><ul><li>Hybrid Bonds/Innovative Bonds/Perpetual Bonds </li></ul>
  10. 10. Primary Market in Equity Shares: Rationale for Public Issue <ul><li>Organic Growth </li></ul><ul><li>Working Capital </li></ul><ul><li>Merger&Acquisitions </li></ul><ul><li>Financial Restructuring </li></ul><ul><li>Exit Route for VC </li></ul>
  11. 11. Procedure for Public Issue <ul><li>Appointment of Merchant Banker </li></ul><ul><li>Application to a Stock Exchange </li></ul><ul><li>Agreement with the Depository </li></ul><ul><li>Appointment of Underwriters </li></ul><ul><li>Appointment of Registrar to the Issue </li></ul><ul><li>Appointment of Banker to the Issue </li></ul><ul><li>Appointment of Brokers </li></ul><ul><li>Obtaining Credit Rating </li></ul><ul><li>Appointment of an Advertising Agency </li></ul>
  12. 12. Book-Building: Features <ul><li>Quantity Assessment through Information Memorandum </li></ul><ul><li>Price Discovery through Red Herring Prospectus </li></ul><ul><li>Final Prospectus Post Issue </li></ul>
  13. 13. Book-Building: Procedure <ul><li>Merchant Banker As a Lead Book Runner </li></ul><ul><li>Appointment of Syndicate Members </li></ul><ul><li>Quantity Assessment </li></ul><ul><li>Appointment of Underwriters </li></ul><ul><li>Registrar to the Issue </li></ul><ul><li>Appointment of a Banker to the Issue & Opening an Escrow Account </li></ul><ul><li>Determining Cut-off Price and Allotment </li></ul>

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