Business studies +2

1. UNIT - 10 FINANCIAL MARKETS

2. Financial Market
 Concept
 Types
Money Market anditsInstruments
Capital Market anditsTypes (PrimaryandSecondary)
Stock Exchange:
 Functions
 TradingProcedure
SecuritiesandExchangeBoardof India(SEBI)
 Objectives
 Functions

3. It refers to that market Which Creates & Exchange
Financial Assets (Shares, Debentures ,Treasury Bills ,
Commercial Papers etc).

4. FUNCTIONS OF FINANCIAL MARKET
Mobilizationof Savings andtheir channelization intomore
productiveuses
Facilitates PriceDiscovery
Provides Liquidity toFinancial Assets
ReducetheCost of Transactions

5. CLASSIFICATION OF FINANCIAL MARKET
Financial
Mark
Money Market Ca
pital
Market

6. MONEY MARKET
It refers to that market where transactions in Short-Term
Securities are made.
Treasury Bills
Issued by the RBI on behalf of the Central Government of
India to meet it’s short- term Financial Needs.
Commercial Papers
Issued by Reputed Companies to banks, insurance
companies, unit trust and firms

7. MONEY MARKET
Call Money
Short term finance repayable on demand, with a maturity
period of one to fifteen days, used for inter-bank
transactions
Certificate of Deposits
A negotiable instrument which can be transferred after a
certain period by an endorsement
Commercial Bills
Used by business firms to finance their working capital
needs

8. CAPITAL MARKET
It refers to that market where transactions in Long-term securities
are made.
Capital Market
PrimaryMarket SecondaryMarket

9. A. PRIMARY MARKET
Market in which securities are sold for the first time for
collecting long-term capital.
It is also known as “New Issue Market”
*Money collected from this market is generally used in meeting the
long-term requirements of the companies.

10. FEATURES OF PRIMARY MARKET
Relatedwith thefreshissueof Securities
Noparticular Place
Different ways to float Capital *
Comes BeforeSecondary Market

11. *WAYS TO FLOAT CAPITAL
Public Issue
 Initial Public Offer (IPO’s)
Offer for Sale
 Throughintermediary (Stock BrokingFirms)
PrivatePlacement
 Companies sell thesecurities toBigInstitutional Investors Right Issue
Right Issue
 Offeringadditional capital totheexistingshareholders
Electronic Initial Public Issue(e-IPOs)
 Issuingof Securities throughelectronic medium

12. B. SECONDARYMARKET
It referstothemarket inwhichexistingsecuritiesarebought and sold.

13. FEATURES OF SECONDARY MARKET
CreatesLiquidity
Comes next toPrimarymarket
Particular Place
Encourages NewInvestment.

14. STOCK EXCHANGE
Stock Exchange means an organized market where securities
issue by companies, government and semi-government
organizations are sold and bought.

15. OPERATIONAL STOCK EXCHNAGES
Operational Stock Exchanges in
India
Bombay Stock Exchange (BSE)
National Stock Exchange (NSE)
Calcutta Stock Exchange (CSE)
MCX Stock Exchange (MCX-SX)
United Stock Exchange Of India Ltd. (USE)

16. FEATURES OF STOCK EXCHANGE
OrganizedMarket
DealsinSecuritiesIssuedby various Concerns
Dealsonly throughauthorizedmembers
Necessarytoobey therulesandBye-Laws

17. TRADINGPROCEDUREOF STOCK EXCHANGE
Selectionofabroker
OpeningofDematAccountwithadepository
Placinganorder
Executingtheorder
Settlement

18. FUNCTIONS OF STOCK EXCHANGE
Provides Liquidity andMarketabilitytoExisting Securities
Pricingof Securities
Safety of Transactions
Contribution toEconomic Growth
SpreadingEquity Cult
ProvidingScopeof Speculation

19. STOCK MARKET INDEX
Index showing the rise and fall in the market price of shares on the
basis of the selected companies listed in the various stock
exchanges is called Index.
SENSEX of BSE and NIFTY of NSE are the two major stock market
indexes in India.

20. DEPOSITORY SERVICES & D’MAT ACCOUNT
Depository Services ?
It refers to that service through which the transfer of ownership in shares
takes place by means of book entry without physical delivery of shares.
Participants in Depository Services:
The Depository
The Depository Participant
The Investor
The Issuing Company

21. DEPOSITORY SERVICES & D’MAT ACCOUNT
• Demat Account ?
 It refers to that account which is opened by the investors with the
depository through a depository participant for the purpose of
trading in shares.
• Name of Depositories in India
 National Security Depository Limited (NSDL)
 Central Depository Services Limited (CDSL)

22. SEBI: SECURITIES ANDEXCHANGEBOARDOF INDIA
Securities & Exchange Board of India (SEBI) formed under the
SEBI Act, 1992 focus being the greater investor protection acts as a
vigilant watchdog

23. OBJECTIVES OF SEBI
Regulation of Stock Exchanges
ProtectionOf Investors
CheckingtheInsider Trading
Control over Brokers

24. FUNCTIONS OF SEBI
ProtectiveFunction
Regulatory Function
Developmental Function

25. 1. PROTECTIVEFUNCTIONS OF SEBI
Tocheck theunfair tradepracticesinsecuritymarket
Tocheck Insider Trading
ToEducatetheInvestors
ToPromotetheCodeof Conduct inrelationto Security
Market

26. 2. REGULATORY FUNCTION OF SEBI
Toregulatebusiness being donein sharemarket
Toregister Brokers,SubBrokersetc.
Toregister andregulateCredit Rating Agencies
Toregister andregulateVentureCapital Funds
Toregister andregulateCollectiveInvestment Schemeeg. Mutual Fund.
Tocarryout Audits of ShareMarket

27. 3. DEVELOPMENTAL FUNCTION OF SEBI
• To impart training to the intermediaries
• To encourage Self Regulating
Organizations
• To carry out Research Work
• Publish Information for the
convenience of all the parties related to
stock market

28. Please be free to write query at:
Dr.Ramesh C Sharma
rameshchandersharma@gmail.com
http://rameshchandersharma.blogsspot.in
+91-94180-45154