The document discusses the securities market and its key components. The securities market provides a platform for trading money as well as monetary claims. It has two main parts - the money market for short term trading of liquid assets, and the capital market. The capital market allows companies to raise funds by issuing securities like shares and bonds to investors in the primary market. It also provides a secondary market for trading of existing securities. Key mechanisms for raising funds in the primary market include public issues, rights issues, private placements, and issues through book building. The secondary market is facilitated by stock exchanges which provide a regulated platform for trading of listed securities.

1. MARKET FOR SECURITIES

2.  PROVIDE MONETARY SUPPORT
 MARKET IN WHICH MONEY AS WELL AS MONETARY
CLAIMS ARE TRADED IN
 COMPONENTS ARE:
 1. MONEY MARKET – WHERE LIQUID FUNDS (CASH) AS
WELL AS HIGHLY LIQUID SECURITIES ARE TRADED FOR
A VERY SHORT TERM PERIOD
 PARTICIPANTS – MAINLY BANKS & FINANCIAL
INSTITUTIONS; OTHERS – MFs, PF TRUSTS, INSURANCE
CO, CORPORATE HOUSES, NBFCs AND RBI
 2. CAPITAL MARKET
FINANCIAL MARKETS

3. • MARKET WHERE COMPANIES RAISE FUNDS
DIRECTLY FROM INVESTORS & O/S SECURITIES
BOUGHT & SOLD
• UNDER SEBI
• SCRA, COMPANIES ACT, SEBI ACT, FEMA ETC
• TWO TYPES:
• PRIMARY MARKET
• SECONDARY MARKET (STOCK MARKET)
CAPITAL MARKET

4. • MARKET PROVIDES PLATFORM FOR NEW &
OLD COMPANIES TO RAISE FUNDS BY ISSUING
SECURITIES (EQUITY SHARES, PREF SHARES,
BONDS, DEBENTURES ETC) DIRECTLY TO THE
INVESTORS
• BRIDGE BETWEEN SAVINGS AND
INVESTMENTS
• ISSUED THRU FOLLOWING MECHANISMS:
PRIMARY MARKET

5.  ISSUE SYSTEM OF PUBLIC LTD CO
 GENERAL PUBLIC SUBSCRIBE TOWARDS CAPITAL OF
THE COMPANY
 GEN PUBLIC – INDIVIDUALS, INSTITUTIONS, MFs, NRIs
ETC
 SHOULD BE LISTED WITHIN 10 WEEKS FROM CLOSE OF
ISSUE & STOCK EXCHANGE NAME IN PROSPECTUS
 AT PAR, PREMIUM OR DISCOUNT
 ISSUE PRICE DECIDED BY CO
 FORMALITIES OF SEBI TO BE COMPLETED
1. PUBLIC ISSUE

6. • IF EXISTING CO WANTS TO ISSUE SHARES –
SHUD BE ISSUED TO ITS EXISTING
SHAREHOLDERS ON A PROPORTIONATE BASIS
• IF SUBSEQUENT TO ITS PUBLIC ISSUE
• ONLY IF SHAREHOLDERS DENY – ISSUED TO
GENERAL PUBLIC – BUT AFTER PASSING
RESOLUTIONS U/S 81 OF COMPANIES ACT
2. RIGHTS ISSUE

7. • ISSUING COMPANY APPROACHES THE
INVESTORS INDIVIDUALLY
• MODE USED BY PVT LTD COMPANIES (SINCE
CANT GO FOR ADS FOR SUBSCRIPTION)
• SOMETIMES BY PUBLIC LTD CO ALSO
• CANT BE DONE ON A STOCK EXCHANGE
• BUT RULES ARE AMENDED
3. PRIVATE PLACEMENT

8.  SYSTEM OF ISSUING SHARES TO GENERAL PUBLIC
 PRICING DONE BY INVITING BIDS FROM THE PUBLIC
 FINAL PRICE DECISIONS, BIDS ACCEPTANCE & BOOK
RUNNING – AS PER SEBI RULES
 DIFFERENT INVESTORS – QIBs, NON-INDIVIDUAL
BUYERS & INDIVIDUAL BUYERS
 CUT OFF POINT – ONLY IF BID AT OR ABOVE CUT OFF
POINT – ALLOTTED; OTHERWISE DISQUALIFIED &
MONEY REFUNDED
 LISTED ON A RECOGNISED STOCK EXCHANGE
4. PUBLIC ISSUE THROUGH BOOK
BUILDING

9. • THRU OTCEI
• COMPANY NEGOTIATES WITH ATLEAST ONE
DEALER TO BUY ENTIRE ISSUE AT A SPECIFIED
PRICE
• INTENTION IS DEALERS WILL SELL SHARES TO
GENERAL PUBLIC IN FUTURE
• DEALER – NO CONTROL OVER MGMT
• DEALER SELLS – EITHER THRU STOCK
EXCHANGE OR DIRECTLY TO PUBLIC
5. BUYOUT DEALS

10. • MARKET WHERE O/S SECURITIES OF
COMPANIES ARE TRADED
• AS PER SCRA ALL TRANSACTIONS IN
SECURITIES OTHER THAN SPOT
TRANSACTIONS MUST BE DONE IN A
RECOGNISED STOCK EXCHANGE
• STOCK EXCHANGE – SECONDARY MARKET
SECONDARY MARKET

11.  REGULATED MARKET PLACE – WHERE LISTED
SECURITIES – BOUGHT & SOLD
 THRU MEMBERS OF SE (BROKERS), BY TWO-WAY
QUOTATION, TRADE SETTLEMENT AS PER BYE-LAWS OF
SE
 MUST HAVE RECOGNITION OF CENT GOVT UNDER SEC
4 OF SCRA, 1956
 AT PRESENT 23 SE IN INDIA (MAJOR TRANSACTIONS IN
BSE & NSE)
 ALL TRADES ON THE FLOOR OF SE BECOME LEGAL &
VALID & NO DEFAULT RISK – BCOS SE ASSUMES AS A
COUNTER PARTY
STOCK EXCHANGE

12.  BOMBAY STOCK EXCHANGE (BSE):
 FROM 1861 TO 1875 – UNDER BANYAN TREE – SHARES
BOUGHT & SOLD THRU OUTCRY
 ASSOCIATION OF THESE INDIVIDUALS IN 1875 – NATIVE
SHARE AND STOCK BROKERS ASSOCIATION
 VOLUNTARY & NON-PROFIT ORGN
 REGD AS BSE IN 1887 – AS SE – THE STOCK EXCHANGE,
MUMBAI
 TILL 1995 – 96 TRADING AS OUTCRY IN TRADING HALL
(TRADING RING)
HISTORY OF STOCK EXCHANGE

13.  ONLY REPS INSIDE RING
 MEMBERS GIVEN CABINS AROUND RING
 SHOUT FOR QUOTATION – IF NEGOTIATION OVER – ORDER
INTO A TRADE
 TELECOM FACILITIES & ONLINE FACILITIES
 COUNTERS FOR PROMINENT SHARES
 MEMBERS INFORM TRADE TO SE OFFICIALS – FOR SHARE
PRICE DISSEMINATION
 DISPLAY OF PRICES ON PTI SCREEN
 REPORTING TO SE OFFICIALS AT THE END OF TRADING
SESSION
 SETTLEMENT THRU CLEARING HOUSES

14. • NO PHYSICAL PRESENCE IN RING
• SYSTEM, NET CONNECTIVITY & SOFTWARES
• EVERY MEMBER HAS COMPUTER SOFTWARE –
TRADERS WORK STATION
• ORDERS ON OPEN DISPLAY
• COMPUTERS MATCH ORDERS W.R.TO PRICE &
TIME DISPLAY
• IMMEDIATE CONFIRMATION
• CLEARING HOUSES – DO NETTING FOR TRADE
SETTLEMENTS
NEW SYSTEM OF ONLINE TRADING

15. • AHMEDABAD STOCK EXCHANGE (1894)
• CALCUTTA STOCK EXCHANGE (1908)
• MADRAS STOCK EXCHANGE (1921)
• HYDERABAD STOCK EXCHANGE
• DELHI STOCK EXCHANGE (1947)
• AND OTHERS
• ALL GIVEN TEMP RECOGNITION FOR FIRST 5
YRS EXCEPT BSE

16. • INDIA – DIFFERENT ORGN SET-UPS LIKE:
• VOLUNTARY NON-PROFIT ORGN – BSE & ASE
• PVT LTD CO – LTD WITH GUARANTEE – MSE &
HSE
• JOINT STOCK CO – CSE, DSE, BANGALORE SE
• BUT NOW SEBI – CORPORATISATION OF SE IE.,
ALL IN CO FORM
• SEBI – DEMUTILISATION OF SE – IE., MERGING SE
– LOSS MAKING WITH PROFIT MAKING
ORGANISATION OF SE

17. • TRADING THRU MEMBERS / BROKERS –
ELIGIBILITY – NET WORTH, INITIAL SECURITY,
COLLATERAL SECURITY AND ANNUAL
SUBSCRIPTION
• INITIAL SECURITY DIFFERS – FOR CAPITAL
MARKET, FUTURES AND OPTIONS, WHOLE
DEBT MARKET ETC
• ATLEAST 2 YEARS OF EXPERIENCE IN DEALING
SECURITIES
FEATURES OF SE

18. • LISTING REQUIREMENTS:
• CO – MIN ISSUED & PAID UP CAPITAL OF 3 CR
(BSE – 10 CR)
• OUT OF ISSUED CAPITAL – ATLEAST 25% TO
GENERAL PUBLIC; NO SINGLE SHAREHOLDER
SHUD HOLD MORE THAN 0.5% OF PAID-UP
CAPITAL
• CO SHUD DEPOSIT 1% OF ISSUE AMOUNT WITH
REGIONAL SE AS SECURITY DEPOSIT (REGIONAL
SE – NEAREST & REGD)
TRADING IN LISTED SECURITIES ONLY

19. • INITIAL & ANNUAL LISTING FEE TO BE PAID
• TO FINALISE ALLOTMENT WITHIN 30 DAYS
FROM ISSUE CLOSURE
• PROVIDE DIRECTORS’ & SHAREHOLDERS’
MEETING INFO IF HELD

20. • PREVIOUSLY RATES GIVEN BY OPEN OUTCRY
• NOW ONLINE TRADING SYSTEM
• OPEN SYSTEM – TO PROVIDE COMPETITIVE
RATE TO BUYERS AND SELLERS
OPEN SYSTEM OF QUOTATION

21. COMPLETELY REGULATED
• ALL TRANSACTIONS TO BE REPORTED TO SE &
SETTLED ACCORDING TO THE RULES OF THE
EXCHANGE
• SE REGULATES TRADE TIMINGS, TYPES OF
TRADES, ORDER AND TRADE SYSTEM,
SETTLEMENT PROCEDURE, MARGIN SYSTEM
AND ACTIVITIES OF MEMBER BROKERS

22. SETTLEMENT THROUGH SE
• EVERY SE HAS A DEPT CALLED ‘CLEARING
HOUSE’ – RESPONSIBLE FOR CARRYING OUT
SETTLEMENT OF TRADES
• SETTLEMENT – EXCHANGE OF MONEY VALUE
AND SECURITIES BETWEEN BROKERS

23. FUNCTIONS OF THE SE
• ENROLMENT OF MEMBERS – QUALIFICATION,
INITIAL DEPOSIT, ANNUAL MEMBERSHIP FEE
• MAKE BYE-LAWS OF THE SE: FOR LISTING & DE-
LISTING, MEMBERSHIP, TRADING RULES &
PROCEDURES, RULES FOR MARGINS,
SETTLEMENT RULES FOR CLEARING HOUSE,
ARBITRATION RULES, CHECK FOR GOOD-BAD
DELIVERIES, MISCELLANEOUS
• PROVIDE FOR LISTING OF SECURITIES – MIN
ISSUE SIZE, MIN PUBLIC OFFER, MANNER OF
ALLOTMENT ETC

24. • PROVIDE FACILITIES FOR TRADING – EVERY SE HAS
OBJECTIVES TO PROVIDE FOR TRADING
• PROVIDE CLEARING SERVICES – ALL TRADES TAKEN PLACE ON
THE FLOOR OF SE TO BE SETTLED THRU INTERVENTION OF SE
– SE ASSUMES AS COUNTER PARTY – SO THAT NONE OF THE
PARTY SUFFER LOSS DUE TO DEFAULT
– THRU DEPT – CLEARING HOUSE – DO NETTING OF TRADES
• PUBLICATION OF INFO – DISSEMINATION TO HELP MEMBERS
& INVESTORS TO TAKE EFFECTIVE DECISION; INFO LIKE:
– DAILY RATE LIST, CORP ACTION INFO, LISTING RULES,
TRADING RULES, MEMBERSHIP RULES, CO INFO RECEIVED
(MERGER, MEETING, BOOK CLOSURE), INDEX, GUIDELINES
FOR GOOD-BAD DELIVERIES AND OTHER EXCHANGE-
SPECIFIC INFO

25. • ARBITRATION – SEPARATE CELL FOR DISPUTER
SETTLEMENT B/W MEMBERS OR B/W
MEMBERS AND INVESTORS/CLIENTS – CELL
FINAL DECISION & BINDING ON MEMBERS
• INVESTOR EDUCATION AND INVESTOR
PROTECTION – CLASSES OR PUBLISH INFO IN
NEWSPAPERS TO EDUCATE & FOR INVESTOR
PROTECTION; ‘INVESTOR PROTECTION FUND’
BY ALL SE – PROVIDE FOR LOSS OF BROKERS’
DEFAULT

26. TOPICS FOR SEMINAR
• MARKET MECHANISM
• FUNCTIONAL SPECIALISATION OF BROKERS
• CAPITAL MARKET REGULATOR
– CCI
– SEBI
• DEPOSITORY SYSTEM – RECENT DEVELOPMENT
IN THE STOCK MARKET
• DEPOSITORIES IN INDIA
• OTCEI
• FOREIGN STOCK EXCHANGES