CAPITAL MARKETrecent developments and innovations By M.Pasupathi R.Vinoth
CAPITAL MARKET A capital market is a market for securities (both debt and equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is lent for periods longer than a year.
Capital markets consist of the primary market and the secondary market. The primary markets are where new stock and bonds issues are sold (via underwriting) to investors. The secondary markets are where existing securities are sold and bought from one investor or trader to another, usually on a securities exchange, over the counter, or elsewhere.
'Healthy' Capital Markets The idea of a 'healthy capital market' supposes two purposes: There should be an adequate supply of sound, long-term investment vehicles, fairly and reasonably priced, that would allow people to prudently accumulate adequate reserves for old age, education, a start in life for the next generation, and emergency needs. The allocation of capital should be consistent with the survival of society over the long term. The goals of issuers of securities should be consistent with those of investors, and the aims of both and the allocation of capital should be directed towards the survival and improvement of society over the long-term.
Why innovation and developments? Innovation is the key to growth and sustainability in the Indian capital market Change is ongoing and is coming, for better or worse to sustain a 'healthy' capital market
Recent changes and innovations NSE pioneered commencement of Internet Trading in February 2000, which led to the wide popularization of the NSE in the broker community. The creation of Asset Backed Securities, reducing the amount of equity needed for working capital and reducing the cost of financing; The abolition of fixed commissions, intensifying competition among brokers;
recent changes The development of scripless trading and book entry settlement, reducing back office paperwork and transaction costs. Capital market insurance solutions are a recent financial innovation such that they offer a promising means of funding protection for even the largest potential catastrophes.
Unit-Linked Insurance Plans (ULIP) – the capital market-linked insurance products are the new best selling instruments in the insurance market Prepaid Card is a very important and one of the most successful innovations in financial services.Thesecards are popular because using these cards, consumers can pay bills, make purchases and get cash from ATM networks.
NSE also conducts online examination and award certifications, under its programmes of NSE's Certification in Financial Markets (NCFM). Currently, certifications are available in 9 modules, covering different sectors of financial and capital markets
Developments RBI launched the electronic order matching system for trading in government securities on its Negotiated Trading System SEBI in 2006, has allowed MFs to float Gold Exchange Traded Fund schemes which have been are permitted to invest primarily in Gold and Gold related instruments, which have been defined as such instruments having gold as underlying, as are specified by SEBI from time to time.
. The Securities Contracts (Regulation) Amendment Bill, 2003, to facilitate the process of demutualisation and corporatisation of stock exchanges Guidelines for Private Placement of debt by listed companies-to regulate the private placement of debt by listed companies
The RBI, in its Credit Policy Statement announced on 18th April, 2006 has proposed to introduce a ‘when issued’ (WI) market in Government securities in order to further strengthen the debt management framework
SEBI introduces Commitees for IPO issues regarding the mismanagement of funds. to keep a track regards the usage of funds Since 1998-2005, 238 IPO issues existed.
Anchor investors-come under QIB- CONDITIONS: min investment- 10 crore or 1 billion Out of 60%,18% is allocated to them Adani issue- 6 anchors investors