ABOUT OTCEI.

2. SUBMITTED TO –
MRS. ANANDITA CHAKRABORTY
SUBMITTED BY –
KUMAR PARIMAL (MBA 2ND SEM.)
{ FOC, BHU (INDIA)/ MARCH 2019 }

3. WHAT WE ARE GOING TO EXPLORE —
WHAT IS OTCEI ?
SIGNIFICANCES & FUNCTIONS OF OTCEI
PROCEDURES OF LISTING & TRADING ON OTC
CONCLUSION

4. OTCEI is an electronic exchange, provides an alternate market for
the securities, which assists the/is comprised of small and medium sized
firms looking to gain access to the capital market for raising finance
in a cost effective manner and investors with a convenient, transparent
and efficient avenue for capital market. It was established in 1990 with
an authorised capital of 10cr. and a paid up capital of 5cr. rupees. The
corporate office is situated in Bombay. It started functioning in 1992.
The OTCEI is ‘floor-less exchange’ where all the activities like
trading, billing, payments, etc. are computerised. OTC designated dealers
operate through their computer terminals which are hooked to a central
computer. All quotes and transactions are recorded and processed here.
WHAT IS OTCEI ?

5. The reason for which a stock is traded over-the-counter is usually
because the company is small, making it unable to meet exchange listing
requirements like listing fees and minimum capital requirement. Also
known as "unlisted stock", these securities are traded by broker-dealers
who negotiate directly with one another over computer networks and by
phone.
It has a national network and there is no geographical barrier for
listing. Dealers and Investors can take decisions on the spot more quickly
than on the regular stock exchanges. It is a great boom to the small and
marginal investors who are greatly neglected till today.
LET’S EXPLORE WHY OTCEI

6. The aim at creating a fully decentralized and transport market. Over the
counter exchange means trading across the counter in scrip. The counter
refers to the location of the member or dealer of the OTCEI where the
deal or trade takes place. Every counter is treated as trading floor for
OTCEI where the investor buy or sell.
PROMOTERS OF OTCEI
OTCEI is incorporated as company under
section 25 of the Indian companies' act
1956. Promoters are as followings:
• UTI • ICICI • IDBI• IFCI • GIC
• CANBANK FINANCIAL SERVICES
•SBI CAPITAL MARKET

7. SIGNIFICANCES OF OTC
A company at once gets nationwide listing.
Small and growth oriented companies would be able to grow faster as they would raise
required capital through OTCEI market at a low cost.
Provides definite liquidity to investors. The market making system will have two way
prices which are quoted regularly to provide sufficient opportunity for investors to exit.
 It is a ring less and electronic national floor-less stock exchange, so anyone can avail the
services of this platform while presenting anywhere in the country.
There is a transparency in the transactions. The bids of the sale and purchase are
accepted on the screen of the computer, so the clients can see it themselves.
It will encourage closely held companies across the country to boost entrepreneurship.
For companies, it provides a method of funds raising through capital market
instruments which are priced fairly & save unnecessary issue expenses on raising funds
from capital market.
OTC Exchange will help to spread the stock exchange operations geographically and
integrate capital market investment into a forum.

8. FUNCTIONS OF OTCEI
Listing of small and medium sized companies
Quick settlement
Liquidity
Providing knowledge about prices
Procurement of capital
Registration of investors
Appointment of dealers

9. The procedure adopted for the listing of shares at OTCEI is as follows:
• OTCEI appoints a member as a sponsor for the company's issue. The sponsor
appraises the project or company on various aspects, such as technical, managerial,
commercial, economical and financial. After appraisal, the sponsor certifies the
OTCEI regarding its appraisal.
• The sponsor determines the price of shares to be offered to the public,
members and dealers of OTCEI.
• The sponsor after compliance with all SEBI guidelines gets all statutory consent.
• The sponsor registers the issue with OTCEI and makes the listing
application to the OTCEI as per rules and regulations.
• After getting the approval, the allotment is made.
• Once the allotment is over, the equity is listed and trading commences.
PROCEDURES OF LISTING

10. Trading at OTCEI will be permitted only in respect of the securities
of the listed companies. Listing may be obtained by (i) Companies with
issued equity capital between Rs. 30 lacs to 25 crores; (ii) Closely held
companies interested in listing; (iii) Venture capital companies; (iv)
Companies which are not listed on any other recognised stock
exchange provided:
(a) they offer to the public at least 40% of the issued equity or Rs. 20
lacs, whichever is higher, where the issued equity ranges between Rs. 30
lacs to less than Rs. 300 lacs (i.e. 3 crores),
(b) they offer to the public at least 60% of the issued equity v. .ore
issued equity is between 3 crores to 25 crores of rupees,
(c) they offer at least 25% of the issued equity to the public in case of
a venture capital company and so on.

11. Investor visualizes the price on OTC screen placed in the office
of every dealer. Investor conveys decision of purchases to the dealer.
The dealer confirms the deal and blocks the scrip on OTC computer.
Investor makes a cheque for the amount. Temporary counter Receipt
(TCR) is given to investor. After cheque clearance, Permanent Counter
Receipt (PCR) is issued in place of TCR.
For sale, investor watches price on OTC screen and conveys the
decision to sell to the dealer. Sales Confirmation Slip (SCS) is given by
the dealer to investor. Investor gives his PCR and Transfer Deed to the
dealer. PCR and TD are validated by the Registrar and a cheque is issued
to investor in exchange for SCS.
The Mechanism of Trade – OTCEI:

12. CONCLUSION :
Despite being in existence for a number of years, the exchange
does not have a major presence amongst stock exchanges of the
country.
However, OTCEI has played an important role in Indian
Financial system. The counter aimed at providing screen based ring
less trading facilities cross the country. OTCEI is different from other
stock exchanges in that it offers system thereby the trading is user
friendly, smooth and computer based.

13. THANK YOU FOR YOUR
TIME , PATIENCE & EXCITEMENT
TO KNOW A LITTLE ABOUT OTCEI.