Financial instruments- grading & trading environment

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SECURITIES – GRADING & TRADING ENVIRONMENT
Grading Trading
Regulatory Body
(SEBI, RBI, DEA, DCA etc)
CHCIL
(Clearing House
Corporation of India Ltd)
Transaction Costs Forms & Types
•Trade
•Clearing
•Settlement
•Day – Day-to-Day trading
•Floor – On exchange Floor
•Insider
•Scrip less trading
•Internet trading (WA)
•Screen trading
(Dematerialized)
Investment grade
(High quality & paying capacity)
Speculative grade
(Default, Risk obligations, Bankruptcy)
Credit Rating Agency(s)
CRISIL, ICRA, SEBI, S&P, CARE
SECURITY MARKETS
Primary Dealers (STCI, DFHI)
• Securities Trading Corporation of India Ltd
• Discount & Finance House of India Ltd
Securities
Appellate Tribunal
Financial Intermediaries
• Commercial banks (HDFC, Cooperative bank etc)
• Merchant banks (SBI, ICICI, IDBI etc)
•Mercantile Agents
• Brokers
• Commission agent
• Clearing & shipping agent
•Fund managers
(includes custodians, sponsors, trustees)
• Merchants (Wholesaler & retailers)
National
_________________________
Debenture AAA, AA, A
Fixed deposit FA AA, FA A
Stock (long term) LAAA, LAA
Commercial papers PR-1, PR-2, PR-3
International
Moody’s S&P
Aaa, Aa1, Aa2,Aa3 AAA, AA+, AA,
A1, A2,A3 AA-, A+, A-, A
Baa1, Baa2, Baa3 BBB+, BBB
BBB-
National
_____________________
Debenture BBB, BB, B
Fixed deposit FB. FC, FD
Stock (long term) LBBB, LBB, LB, LC, LD
Commercial papers PR-4, PR-5
International
Moody’s S&P
Ba1, Ba2, Ba3 BB+, BB, BB-
B1, B2, B3 B+, B, B-
Caa, Ca, D CCC+, CCC, CCC-
C, D
DEPOSITORY
SYSTEM
NSDL
(National Securities
Depository Limited)
CDSL
Central Depository
Securities Limited
•Depository(s)
•Participant (s)
•Registrars, Transfer agents (brokers)
•Stock exchanges
•Clearing house
SHCIL
(Stock Holding
Corporation of India Limited)
S
E
C
U
R
I
T
I
E
S
INVESTOR/ CLIENT
(Investors, Companies,
Organizations, Firms etc)
Deposited in
SECURITY ISSUERS
(Organizations, Firms, Enterprises etc)
Electronic & paperless
Traded on computer via
networks
ECDS
(Electronic
Clearing &
Depository
System
Bombay Stock Exchange
National Stock Exchange
Other Regional Exchanges
(ISS) INTERCONNECTED SECURITY SERVICES
Issues, Terms & Conditions via the security markets
Ratings of
securities
Unlawful
or trading
via Insider
information
i.e price sensitive
• Order driven (Auction)
• Quote driven
Types
Forms
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2
3
4
5
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2. 12/17/2014 2
SAT – Securities Appellate Tribunal. It is the Apex body related to the matters of securities traded.
DCA – Department of Company Affairs
DEA – Department of Economic Affairs
RBI – Reserve Bank of India
SEBI – Securities Exchange Board of India
CRISIL – Credit Rating Investment Information & Securities of India Limited
ICRA – Investment & Credit Rating Agency
S&P – Standard’s & Poor
CARE - Credit Rating Agency & Regulation
ISS – Interconnected Security Services. It deals with services related to deposit, transfer & clearing of the securities
traded on the stock exchanges
ICMS – Interconnected Market System
ISE – Interconnected Stock Exchange. Links with several national and international stock exchanges.
Continued …
ABBREVIATIONS