Management of Risk in Financial Services; Stock Exchange Operations; Managing of issue shares and bonds- Mobilizing of Fixed Deposits Inter-Corporate Loans.

1. MANAGEMENT OF FINANCIAL
SERVICES
UNIT 2

2. MANAGEMENT OF RISK IN FINANCIAL SERVICES
• Risk has two components namely uncertainty and exposure.
If both are not present, there is no risk.
• We face risk because we are ignorant about the future.

3. RISK MANAGEMENT
‘Risk management’ encompasses: risk reduction through safety,
quality control and hazard education, alternative risk
financing, including self-insurance and captive insurance, and
the purchase of traditional insurance products, as suitable.

4. Stock exchange operations
Stock Exchange
“ An association or body of individuals, whether incorporated or
not, established for the purpose of assisting and controlling
the business of buying, selling and dealing in securities.”
“ A stock exchange is a market where stocks and shares are
bought and sold.”
In the stock market, purchase and sale of shares are effected in
conditions of free competition. Government securities are
traded outside the trading ring in form of over the counter
sale or purchase.

5. NSE (National Stock Exchange)
Cover 364 cities and towns - fully automated screen based
trading system – provide an efficient and transparent trading,
clearing and settlement mechanism, and has witnessed
several innovations in products and services – incorporated in
November 1992 with a paid up capital of Rs. 25 crore –
started operation in Debt market in June 1994 and in Capital
Market in November 1994 – NSE is owned by set of financial
institutions, banks, insurance companies and other financial
intermediaries - managed by professionals, who do not
directly or indirectly trade on exchange – Board Comprise of
senior executive from law, economics, accountancy, finance –
public representative by SEBI and one full time executive of
the exchange – day to day management of the Exchange is
delegated to the Managing Director.

6. Objectives of NSE :-
1. Establishing a nation wide trading facility for equities, debt
instruments and hybrids.
2. Ensuring equal access to investors all over the country
through an appropriate communication network.
3. Providing a fair, efficient and transparent securities market to
investors using electronics trading systems.
4. Enabling shorter settlement cycles and book entry
settlements systems.
5. Meeting the current international standards of securities
markets.

7. BSE ( Bombay Stock Exchange )
Established in 1875 as “The Native Share and Stock Brokers
Association” – first stock exchange in country to have
obtained permanent recognition in 1956 from Govt. under
the Securities Contract (Regulation )Act 1956 – providing
transparent and efficient market of trading in securities, debt
and derivatives – provide redressal of grievances against
companies or its own member – educate investors by
providing programs - 20 Directors has decides the policies
and regulates the affairs of exchange – Board consists of 9
elected directors , who are from broking community , 3 SEBI
nominees , 6 public representative, and Executive Director
and Chief Executive Officer and a Chief Operating officer –
the Executive Director as the Chief Executive Officer is
responsible for the day to day administration of exchange

8. Security Measures and Operational Features of BSE and NSE
The aim at offering the investors and traders better
transparency, genuine settlement cycle, honest transaction
and to reduce and solve investor grievance if any.
1] Market Timing :-
2] Automated Trading System :-

9. 3] Market Segments :-
4] Brokerage and Other Transaction Costs :-
5] Transfer of Ownership :-
6] Listing of Securities :-

10. 7] Surveillance at BSE :-
8] Trade Guarantee Fund :-
9] Brokers' Contingency Fund :-
10] Investors or Customers Protection Fund :-
11] Market Wide Circuit Breakers :-
12] Basket Trading System :-
13 ] Redressal of Investors Grievances and Arbitration
Procedure :-

11. 13 ] Redressal of Investors Grievances and Arbitration
Procedure :-
1 Arbitration Committee:-
a) Investors, Grievances against companies:-
b) Investors, grievances against member-brokers of the
Exchange:-
c) Complaints of Member inter-se :-
d) Resolution of complaints through arbitration:-
2 Lower bench Arbitration :-
3 Full Bench Arbitration :-
4 Appeal Before the Governing Board :-
5 Patawat Arbitration :-

12. 14 ] Opportunities Available for Foreign Investors :-