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Program delivered by
FINANCIAL EDUCATION FOR YOUNG CITIZEN
Kona Kona Siksha
(A Kotak Securities CSR initiative)
Commemorative Plague of commencement of
Construction of NISM Campus by Hon'ble Prime
Minister of India, Dr. Manmohan Singh
NISM Campus inaugurated by Hon'ble Prime
Minister of India, Shri Narendra Modi
2016
2013
Academic Programs | Certifications Training Programs
NISM - Schools of Excellence
School for Securities Education
School for Certification of Intermediaries
School for Regulatory Studies and Supervision
School for Investor Education and Financial Literacy
School for Corporate Governance
School for Securities Information and Research
Objectives of this Initiative
• Creating awareness of personal finance framework.
• Awareness of pre-requisites for investing in securities markets.
• Understanding of precautions and awareness of risk involved while
investing in securities markets
• Capacity building for evaluation of investment opportunities in securities
markets.
• Awareness of employment opportunities in financial service industries.
• Creating awareness of self- employment opportunities viz. investment
advisors or authorized persons of brokers.
• Empowerment of students for facing interviews with financial services
industry employment opportunities.
Program Outline – Eight Comprehensive Sessions
• Session I – Importance of Investment
• Session II – Financial Investment Opportunities
• Session III – Process & Pre- requisites to invest in Securities Markets
• Session IV – Investment in Primary Markets
• Session V – Investing in Secondary Markets
• Session VI – Introduction to Mutual funds and ways to invest in them
• Session VII – Precautions while investing in Securities Markets
• Session VIII – Career in Securities Markets
Importance of Financial Education
• “Financial Education fuels financial literacy which enables an inclusive
financial system”
• OECD defines financial education as:
“the process by which financial consumers/ investors improve their
understanding of financial products, concepts and risks and, through
information, instruction and/or objective advice develop the skills and
confidence to become more aware of (financial) risks and opportunities to make
informed choices, to know where to go for help, and take other effective actions
to improve their financial wellbeing”.
Financial
Education
Objectives
increased awareness of investment products;
increased knowledge of investment products;
increased usage of investment products;
enhanced ability to recognise financial goals and match
investment strategies with these goals;
demonstrated ability to gauge fraudulent players and
schemes in the financial market;
demonstrated ability to adopt appropriate precautions
before making investments;
Importance of Investment
Session - I
Life Goals…
Building your home
Buying agricultural land
Setting up a small business
Children’s Education
Marriage
Retirement
…are also Financial Goals
Building your home
Buying agricultural land
Setting up a small business
Children’s Education
Marriage
Retirement
Financial Concepts
which have an impact on
your life
INCOME
Where Does Your Money Come From?
 Salary
Business
House Property
Agriculture
Investments
Expense Budgeting
Where Does Your Money Go?
 Track expenses for one month
 What did you buy
 Which were needs vs. wants
 Categorize spending (clothing, food, etc.)
 Patterns of spending
 Identify impulsive spending (malls)
Inflation
Savings
and
Investment
Planting seeds
Keeping them in a
box
Mango trees which give
you more mangoes
Boxes full of mango seeds
Investing
Saving
Wealth Grows
Wealth does not grow
This is exactly the difference between Savings and Investment.
Useful tips on Saving
Savings are not done once; save regularly
Spend less to save more; record your expenses
Save to avoid debt
Save and invest first and spend later
Classify Expenses in Need and Want
Monthly Surplus = Income – Expenses
Atleast 25% of your monthly income should be saved and invested
1 kg sugar
10 years ago
Rs.16 Rs.50 Rs.80
Today 8 years from now
Inflation
Inflation !! …. How does it affect us ???
1 yrs Inflation
7%
After one year
1 Kg = Rs 107
1 Kg = Rs 100
Money Deposited
Rs. 100
Saving Interest Rate 4 %
Balance after
one Year
Rs.104
Inflation !! …. How does it affect us ???
Short by Rs. 3/-
1 yrs Inflation
7%
After one year
1 Kg = Rs 107
1 Kg = Rs 100
Money Deposited
Rs. 100
Saving Interest Rate 4 %
Balance after
one Year
Rs.104
Inflation !! …. How does it affect us ???
Invest some portion
of your saving in
Financial products
which can match or
beat inflation !!!
Very Important !!
1 yrs Inflation
7%
After one year
1 Kg = Rs 107
1 Kg = Rs 100
Money Deposited
Rs. 100
Saving Interest Rate 4 %
Balance after
one Year
Rs.104
Investment
for Various
Goals
Long-term investments give higher returns
A monthly investment of Rs. 5000 at 8% p.a.
Rs.
5000
per
month
Value:
Rs. 17.60
lakh
Value:
Rs. 30 lakh
Investment
In 15 years
In 20 years
Amount invested
Rs. 9 lakh Amount invested
12 lakh
In 30 years
Value:
Rs. 75 lakh
Amount invested 18 lakh
Rule of 72
Delay in Investing can be Costly (example)
Goal: Children Education
Amount Required:- 15,00,000 /-
Expected Return:- 8% p.a
Duration 20 Years
For 20 Years
Investment per month
Rs. 2,546 /-
(Delay by 3 Years) For 17 Years
Investment per month
Rs. 3,474 /- (928)
(Delay by 5 Years) For 15 Years
Investment per month
Rs. 4,335 /- (1,789)
(Delay by 10 Years) For 10 Years
Investment per month
Rs. 8,200 /- (5,654)
(Delay by 15 Years) For 5 Years
Investment per month
Rs. 20,415 /- (17,869)
Popular Asset Classes
• Equity
• Direct Equity
• Equity Mutual Funds
• Fixed Income
• PPF
• EPF/VPF
• Fixed Deposits
• Small Savings Investments
• Debt Mutual Funds
• Tax Free Bonds
• Gold
• Physical Gold
• Gold ETF
• Gold Mutual Funds
• Real Estate
• Physical
• Real Estate Mutual Funds
Three Pillars of Investment
Safety Liquidity Return
END of Session - I
Financial Investment
Opportunities
Session - II
Financial Instruments to Realise financial Goals
• To realise various financial goals, an investor may invest into different
asset classes.
• The selection of any Assets class should be based on:
- Investor Risk Appetite
- Investor Time Horizon
- Investor Income and Expenses
- Investor Liabilities
Small Savings Schemes
Product Return
Tenure
(yrs)
Tax benefits
Minimum
Investments
Maximum
Investments
Interest
earned
Maturity
Public Provident Fund 7.10% 15
Yes
under
Section 80C
500 1.5 Lac
Tax
exempt
Tax
exempt
National Savings
Certificate
6.80% 5
Yes
under
Section 80C
100
no maximum
Investment
Taxable
Tax
exempt
Sukanya Samriddhi
Scheme
7.60% 21
Max
Yes
under
Section 80C
250
1.5 Lac Tax
exempt
Tax
exempt
Liquidity is limited for all the products mentioned above
Fixed Deposits
Product Return Risk Liquidity Tenure Tax Benefits
Interest
earn
Maturity Ease
Bank Fixed
Deposits
4-6% Low High
7 days to
10 years
Yes – for
selective
FDs only
Taxable
Tax
exempt
Medium
Post Office
Fixed Deposits
5% - 7% Low Limited 1-5 years Yes
Tax
exempt
Tax
exempt
Low
Company
Fixed Deposits
5-7%
Medium to
High
Limited 1-5 years No Taxable
Tax
exempt
Low
Mutual Funds
 Professional Investment Managers
 Minimum Investment at Rs. 500 per month
 Regulated by SEBI
 ELSS – Tax Saving Mutual Funds
 Different solutions to fulfill GOALS
Equity Market Debt Market
Gold as Investments ???
Gold Jewellery Gold Bar & Coins
Gold Mutual Funds Sovereign Gold Bonds
Particulars
Returns/
earnings
Safety Purity Gains Tradability
Storage
expenses
Physical
Gold
Lower than real
return due to
making charges
Unregulated
and Risk of
theft
Purity
always
remains a
question
LTCG after 3 years Limited High
Gold ETF
Little less than
actual return
High High LTCG after 3 years
Tradable on
Exchange
Minimum
Sovereign
Gold Bond
More than actual
return on gold
High High
LTCG post 3 years. (No
capital gain tax if
redeemed after
maturity)
Can be traded
and redeemed
from the 5th
year with
government
Minimum
Gold as Investments ….
Direct Investment in Equity Requires
Investment via Mutual Fund Route
Merits of MF Investing over Direct Equity Investment
Role of Securities Markets
Securities market is a market where companies raise financial resources
through issue of shares and debentures.
The shareholders who subscribe to the shares of companies become
owners of the companies. Such shares can be traded in the market and
serve as an investment vehicle for investors.
Products available in Securities Markets
Stock Market
Shares
Bonds
Debentures
Mutual
Funds
Derivatives
Alternate
Investment
Funds
END of Session - II
Process and perquisite to
invest in Securities Markets
Session - III
Participation in Securities Markets
• In order to participate in Securities Market, an Investor needs to have
following three accounts :
- Bank Account
- Trading account with a broker
- Demat account with a Depository Participant
To open all these accounts one must be comply with KYC (Know your
Customer) norms ie., proof of identity, proof of address, email ID and
Contact number etc.
Accounts
needed to
trade in
securities
market
Savings Bank Account
- Savings Account can be in any bank
- Transfer/ receipt of funds from buying/ selling of securities
Demat Account
- With a SEBI registered Depository
Participant (DP)
- To hold shares in Demat
(electronic) mode
Trading Account
- With SEBI registered Stock
Broker( Trading Member/ TM)
- To buy/ sell securities
Forms to be Filled to open a new
Trading & Demat Account
A new investor has to register with a Stock Broker through whom the trades
are executed on the Exchange.
The investor needs to fill two forms for Opening of Trading & Demat Account :
1. Know Your Client (KYC) Form: To provide basic information of the
new investor. Two modes for KYC are :
• Physical KYC
• e-KYC (online KYC)
2. Account Opening Form: Details of various services and charges being applied
on the new investor.
Trading / Demat Account Opening Form
 Documents to open Trading / Demat account:
 PAN Card: Mandatory Document & also Proof of Identity.
 Same document like Driving License/ Passport.
PROOF OF IDENTITY
- Permanent Account Number
(PAN) Card – Mandatory
- Voter ID Card
- Driving License
- Passport
- Aadhaar Card
- Any other valid identity card issued
by Central or State Government
PROOF OF ADDRESS
- Voter ID Card
- Driving License
- Passport
- Ration Card
- Aadhaar Card
- Bank account statement or bank
passbook
- Utility bills, e.g. electricity bill or
gas bill.
Trading/ Demat Account Opening Form
Proof of Income (for investors who
chose to trade in Derivatives – F&O/
Commodities/ Currency)
Proof of Bank Account (any one)
Bank account statement for last 6 months Cancelled Cheque
(with name of investor above sign here
section)
Latest Salary Slips/ Form 16 in case of
salaried person
Bank Passbook
{with Indian Financial System Code (IFSC)}
Copy of ITR Acknowledgement
Passport
Copy of Net-worth Certificate issued by a
Chartered Accountant
Statement of Demat holdings
 Documents to open Trading/ Demat account:
 If investor is unable to produce the originals of these documents for
verification, he may submit self-attested photocopies.
Documents in Account Opening Forms - Trading & Demat Account
 Do’s and Don’ts for trading on
Exchanges.
 Policies and Procedures of Stock
Broker.
 Tariff Sheet.
**(to be submitted only if investor is availing of additional services
Account Opening Form has two type of documents :
MANDATORY DOCUMENTS VOLUNTARY DOCUMENTS**
 Rights & Obligations of Stock Broker Running Account Authorization.
and Investor.
 Power of Attorney (PoA).
 Uniform Risk Disclosure Documents.
 Electronic Contract Note (ECN)
Declaration.
 Consent for electronic
communication and receiving alerts
(Email/ SMS).
In-Person Verification (IPV)
Compulsory for opening trading/ demat account.
It can be done through physical verification/ online verification using webcam at the
Stock Broker’s office.
In case of e-KYC, Video In Person Verification (VIPV) for Individuals is also
available.
In-person verification of the client is not required to be carried out, if:
KYC of the investor is completed using the Aadhaar authentication/
verification of UIDAI.
KYC form has been submitted online, documents have been provided
through DigiLocker or any other source which could be verified online.
e-KYC
.
e-KYC Process - Outline
Fill the account opening details/ form online in the
Stock Broker’s website.
Submit scanned images of the mandatory documents/
POA (Proof of address) / POI(Proof of Identity).
Complete IPV (In Person Verification) process over
video call.
Digitally Sign the document.
Account gets activated.
Benefits of e-KYC
Benefits
of e-KYC
No need to
visit the
Stock
Broker’s
office Convenient
Registration
and
Paperless
Process
Easy
Retrieval of
KYC
Documents
Digital
Authentication
Quickly
start
investing
Time
Saving
Process Outline:
Verification :
Mobile and Email through One Time Password (OTP)
Aadhaar through UIDAI’s authentication/ verification mechanism
PAN through Income Tax Database
Bank account details by initiating small transfer (usually Re.1/-) which would
provide details on name of account holder, bank and IFSC code, also called Penny
Drop Mechanism.
Documents other than Aadhaar through Digilocker/ e-Sign mechanism
e-KYC Process
Visit Website/
App/ Digital
platform of
Stock Broker
Fill online KYC
Form
Submit documents
online as
photograph/ scan of
original documents,
under e-Sign
Centralized KYC (C-KYC) in Securities Market
 KYC registration is centralized through KYC Registration
Agencies (KRAs) registered with SEBI.
 Each investor to undergo KYC process only once in securities market
and details would be shared with other intermediaries by the KRAs.
 Standard Account Opening form (AOF) has 2 parts:
- Part I : Basic and uniform KYC details of the investor
- Part II : Additional KYC information as may be sought
by various Intermediaries
14
 Read all documents in KYC carefully before signing.
 Select the Segment and Stock Exchange on which you wish to trade by affixing your
signature instead of a Tick mark or YES. Strike off which ever is not opted.
 Sign on the Tariff Sheet.
 Select / Unselect Online Trading Option.
 Power of Attorney (PoA) should only be given to access your accounts to the extent of
the obligation. No POA to be given to trade on your behalf.
 Policies, Procedures, Brokerage Rates, Other Charges vary for every Stock Broker.
 Investors have to sign only on one document while opening any account and are
supposed to submit KYC documents only once.
 Give your own email id/mobile number while submitting the KYC documents.
 Please remember that no one can guarantee assured returns in the securities market.
Points to remember for new investors
Important Intermediaries in Securities Market
• An Intermediary is an important link in any Securities Market.
• They perform various functions which enable the smooth and
efficient functioning of Securities Markets and Capital formation as
given below:
• KYC of clients
• Educate investment opportunities to investors.
• Help investors invest in public issues.
• Execute investor’s instructions for trade and settlement.
• Some qualified intermediaries render investment advise.
• Brokers perform some risk bearing functions.
Indian Securities Market – Structure
SEBI – Regulator
Securities Appelate
Tribunal (SAT)
Stock Exchanges
Brokers
Clearing Corporations Depositories
Depository Participants
(DPs)
Companies (also called
as issuers)
Other Intermediaries
(Merchant Bankers,
RTAs, mutual funds,
investment advisors etc.
Three I’s of Securities Market
Entities Who issues Securities and Raise Money
Issuers
• Companies, Central and State Govt, Local Govt and Municipalities, Financial Institution and Banks,
Public Sector companies, Mutual Funds
Entities Who Connected Investors with Issuers
Intermediaries
• Stock Exchanges, Merchant Bankers, Under-Writers, Stock Brokers, Authorised Persons (AP),
Depository & Depository participants, Registrar & Transfer Agents, Credit Rating Agencies,
Investment Advisors, Research Analyst, Asset Mgmt Companies and Portfolio Managers
Entities Who Invests in Securities Market
Investors
• Retail Individual Investors, Non Institutional Investors, Qualified Institutional Buyer (QIBs), Anchor
Investors
Merchant Bankers
Underwriters
• Primary market specialists who promise to pick up that portion of an offer of
securities which may not be bought / subscribed by investors
Stock Brokers
• Registered trading members of stock exchanges.
• Facilitates new issuance of securities to investors.
• Enables all buy and sell transactions of investors on stock exchanges.
• All secondary market transactions on stock exchanges have to be conducted through
registered brokers.
• Plays a pivotal role in Initial Public Offering
• Advise the promoter entity during raising of finance
• Launch a suitable money raising instrument (IPO, Debenture, FPO)etc. after assessing
promotor’s needs
• manage the entire issue process until the securities are issued and listed on a stock
exchange
• Conduct due diligence on statements made in prospectus
Intermediaries in Securities Markets 1/4
Authorized
persons (AP)
Depository and
Depository
Participants
• Enable investors to hold and transact securities in the dematerialised (Electronic) form.
• Depository participants (DPs) open investor accounts, in which they hold the securities
that they have bought in dematerialised form.
• DPs help investors receive and deliver securities when they trade in them.
• Investor-level accounts in securities are held and maintained by the DP, the company
level accounts of securities issued is held and maintained by the depository. In other
words, DPs act as agents of the Depositories.
Registrar and
Transfer Agents
• Maintains records of Investors accounts and transactions
• Receive and Disburse funds from Investor transactions
• Prepare and Distribute account statements
• Provides transaction service to Investors
• Agents of the brokers (previously referred to as sub-brokers) and are registered with
the respective stock exchanges.
• help in reaching the services of brokers to a larger number of investors.
• provide various services such as research, analysis and recommendations about
securities to buy and sell, to their investors
Intermediaries in Securities Markets 2/4
Asset Mgmt
Companies
Credit Rating
Agencies
• Credit rating agencies evaluate a debt security to provide a professional opinion about
the ability of the issuer to meet the obligations for payment of interest and return of
principal as indicated in the security.
• They use rating symbols to rank debt issues, which enable investors to assess the
default risk in a security.
• Credit Ratings impact the valuation of Debt Securities
Portfolio
Managers
• A portfolio manager ideates and implements investment strategies for individuals or
institutional investors.
• In most situations, a portfolio manager implements a predetermined investment
strategy defined by an Investment Policy Statement (IPS) in order to achieve
investment goals of their Investors
• Asset Mgmt companies are a vehicle to pool investment of various investors for a
common objective. They charge a fee for their services
• Asset management companies are permitted to offer securities (called units) that
represent participation in a pool of money, which is used to create the portfolio.
• They act on behalf of the investor in creating and managing a portfolio.
Intermediaries in Securities Markets 3/4
Investment
Advisors
Research Analyst
• Specialist who analyze Economy, Industry and Companies before offering their
investment Advice and recommendations.
• Research Analysts are supposed to make the stock markets safer and healthier with
their expertise and unbiased advice.
• Investment adviser work with investors to help them make a choice of securities that
they can buy, based on an assessment of their needs, time horizon return expectation
and ability to bear risk.
• They may also be involved in creating financial plans for investors, where they define
the goals for which investors need to save money and propose appropriate investment
strategies to meet the defined goals.
Intermediaries in Securities Markets 4/4
Investors in Securities Market - 1/2
Retail
Individual
Investor (RII)
• Resident Indian Individuals, NRIs and HUFs who apply for less than Rs 2 lakhs in an IPO under RII category.
• Not less than 35% of the Offer is reserved for RII category.
• RII category allows bid at cut-off price.
Non-
institutional
Investors (NII)
•Resident Indian individuals, Eligible NRIs, HUFs, companies, corporate bodies, scientific institutions, societies and trusts who
apply for more than Rs 2 lakhs of IPO shares falls under NII category. High Net-worth Individual (HNI) who applies for over Rs
2 Lakhs in an IPO falls under this category.
• Not less than 15% of the Offer is reserved for NII category.
• NII's are not eligible to bid at cut-off price.
Qualified
Institutional
Bidders (QIB's)
•Public financial institutions, commercial banks, mutual funds and Foreign Portfolio Investors etc can apply in QIB category.
SEBI registration is required for institutions to apply under this category.
•50% of the Offer Size is reserved for QIB's
•QIB's are not eligible to bid at cut-off price.
Investors in Securities Market - 2/2
Anchor Investor
• An anchor investor in a public issue refers to a qualified
institutional buyer (QIB) making an application for a value of Rs 10
crores or more through the book-building process.
• The minimum application size for each anchor investor should be
Rs 10 crores. No merchant banker, promoter or their relatives can
apply for shares under the anchor investor category.
• Up to 60% of the QIB Category can be allocated to Anchor
Investors
• Anchor investor's are not eligible to bid at cut-off price.
Cut – Off Price
• Companies coming up with Book Building Public Issue decided a price band for
the issue. The price band usually contains an upper level and a lower level.
• Cut-off price means the investor is ready to pay whatever price is decided by the
company at the end of the book building process.
“For ex. An ABC ltd. has come up an issue of 2000 cr. with a price band of Rs 400 –Rs 480 per share. An investor
can choose any price in this range while subscribing for the company share.
Apart from price range, investors also get an option to apply at Cut – off Price instead of selecting any price. If
an investor selects Cut –off price, that means s/he is willing to subscribe the issue at the price being decided by
the company at the end of the Book Building process. “
END of Session - III
Investment in Primary Markets
Session - IV
Primary market : Channel for offer of new
securities, while the secondary market
deals in securities previously issued.
The issuer of securities offers the securities
in the primary market to raise capital.
Securities can also be offered in the market
by existing shareholders / promoters of the
company, which is called as offer for sale.
Introduction to Primary Market (1/2)
Examples of objects of the Issue (Use of
Funds) :
• new projects
• Expansion / Diversification or
modernisation.
• Working capital requirement
• Repayment of debt.
The objects of the issue and intended
utilization of funds are distinctly stated by
issuers in the Offer Document
In primary markets securities are offered to
the public for the first time
Introduction to Primary Market (2/2)
Modes of Capital Issuances (1/3)
Issues
Public Issues
IPO
Fresh Issues Offer for sale
FPO
Fresh Issues Offer for sale
Rights Issues Bonus Issues
Private
Placements
Preferential
Issue
Qualified
Institutional
Placement
IPO
FPO
• Further Public Offer / Follow-on Offer
• Done by already listed company
• Fresh issue of securities / Offer for sale of securities to public
Rights Issue
• Done by already listed company
• Issue of securities to its existing shareholders (as on a Record date)
• Record Date is fixed by the issuer
• The rights offered in a particular ratio to the number of securities held by existing
shareholders as on the record date.
• Initial Public Offering
• Done by unlisted company
• Fresh issue of securities / offers its existing securities for sale / Both
• Securities issued for the first time to the public
• Paves way for listing and trading of the issuer’s securities in the Stock
Exchange(s).
Modes of Capital Issuances (2/3)
Modes of Capital Issuances (3/3)
Preferential Issue
Qualified
Institutional
Placement
• Done by already listed company
• Issue of shares / convertible securities (like warrants) to Qualified Institutional
Buyers (QIBs), it is called as Qualified Institutional Placement.
• It is subject to prescribed norms such as minimum pricing and minimum public
shareholding.
• Done by already listed company
• Issue of shares / convertible securities (like warrants) to a select group of
persons
• It is subject to prescribed norms such as minimum pricing, minimum public
shareholding and lock-in.
Bonus Issue
• Done by already listed company
• Issue of shares to existing shareholders (as on a record date)
• Existing shareholders need not make any payment for “Bonus” shares
• The shares are issued out of the company’s free reserve or share premium
account
• Issued in a particular ratio to the number of securities held on record date.
What is IPO?
 IPO means Initial Public Offering
 It is a process by which a company becomes a publicly listed and traded company by
offering its shares to the public for the first time
 An Issuer has to file a Draft Offer Document in a prescribed format with the Securities
and Exchange Board of India, Stock Exchanges and the Registrar of Companies (ROC) for
listing on the stock exchanges
 Once the Issuer receives observations from regulatory authorities, the issuer can open
the offer inviting general public to invest in the IPO
 Post successful completion of the Offer the shares of the company are traded on the
stock exchange(s) where they get listed (I e., becomes eligible to be traded on stock
exchange)
 An IPO can be for fresh issue of shares of the company or an offer for sale of shares by
the existing owners or a combination of both. For an investor, IPO or OFS will make no
difference.
Process to participate in Primary Markets
• Investors who want to acquire shares in primary market do so only when a
company announces offer of its shares. Announcements are usually made
on news papers and your broker may also give information.
• The companies issue Prospectus where detailed announcement,
instructions, pricing, modalities of application, subscription opening and
closing days, basis of allotment etc. are available.
• Investors will have to fill the Application Form indicating the number of
shares applied for.
• Investors need not part with the application money immediately, rather,
can use the service of ASBA. ASBA means Application Supported by
Blocked Amount. Investors can earmark required application money
amount in their SB account and the bank will debit the amount only after
allotment of shares.
How to apply in Public Issue?
ONLINE MODE
ASBA
- Application Supported by Blocked Amount.
- Facility provided by Self Certified Syndicate Banks (SCSCBs)
- Full Bid Amount blocked in the bank account of the bidder.
UPI in ASBA
- For  a) Retail Individual Investors.
b) Bidding for retail investors reserved up to
Rs.2,00,000/-.
- Application via UPI facility of Sponsor Bank.
3-in-1 Account - Applying in IPO through 3-in-1 account (demat, trading and bank
account).
OFFLINE MODE
Filled Form
- To open a Demat Account first.
- Investors may obtain Application Form from Stock Broker/ Sponsor
Bank/ Exchange Website.
- Form submitted to Stock Broker/ Sponsor Bank.
ASBA Application via Online Mode
Source : https://www.onlinesbi.com/
IPO Application Form via UPI
Create UPI ID
with any of IPO
enabled BHIM
UPI apps
Enter UPI ID on
IPO Application
Check
notification on
your BHIM UPI
app and approve
Check
application
details and
proceed
Enter UPI PIN to
approve the
mandate block
Confirmation of
transaction
Source : https://www.bhimupi.org.in/
Post Issuance
• Post Issuance, the securities get listed at Recognised stock exchange.
• An investor can buy / sell securities at these exchanges as per their
needs.
Investing - Due Diligence
Why Due Diligence?
 Investment without analysis is like driving on a highway blindfolded.
 Pro active approach enabling investors to know about prospective investment.
 Better understanding about the past performance.
 Your own assessment about possibility of future growth of the company and thus of
investment made in the company.
What questions to ask before investing?
 Is the company’s revenue increasing?
 Is the company actually making a profit?
 Is the company able to repay its debts?
 Is the company in a position strong enough to compete with its peers?
 What is the price offered by institutional or Qualified investors (This price get divulge
one day before the issue open for retail investors.)
Information in Offer Document (1/4)
Below are the table of contents of an Offer Document for illustrative reference:
Any Investor,
who is willing
to invest in any
prospective
offering of
shares, must
go through
such offer
documents.
Information in Offer Document (2/4)
About the company
 Business: Details of the company’s business model, its strategies and manufactured
products/process/services
 History and Corporate Matters: Details on the material events taken place in the history
of the company and other corporate matters
Management and Promoter Section
 Background and the experience of the company’s management team in the industry.
Financials
 Contains the company's income statement and balance sheet from
 Enables investor to understand the company’s performance in the past few years and its
growth potential.
Information in Offer Document (3/4)
Risk Factors
 Mentions about risks associated with the business, industry etc.
Capital Structure
 Contains details of capital formation of the company, the existing shareholders and their
percentage shareholdings etc.
Objects of the Issue
 Informs about basic purpose of the company for going public and / or raising funds.
 This section enables Investor to ascertain as to how the funds will be utilized.
Basis for Issue Price
 Helps to understand the basis for pricing and to compare it with other listed entities in
the same / similar segment.
Information in Offer Document (4/4)
Managements discussions and Analysis of financial conditions and results of operations
 Information related to the strength of the company's business plan, recent developments,
performance etc.
 Has analysis of performance with qualitative and quantitative measures.
 This only represents the thoughts and opinions of management.
Litigation and Dispute matters
 Details of litigations in which the issuer company, subsidiary(ies), group company(ies),
promoter(s) are involved.
Sources of Information for Analysis
Key sources of information alongside offer documents / public announcements /
statutory releases :
Research Reports;
ROC Filings made by the Company since Inception;
Industry Reports;
Credit Ratings;
Third Party Reports/certification on project;
Techno Economic Viability Reports of their projects etc.
Price Discovery of Shares in a Public Offering
Mode of Price
Discovery
Type of Issue
IPO
Fixed Price
issue
Book Building
Issue
More common
mode of IPO
Price Discovery of Shares in a Public Offering - Fixed price issue (1/2)
Fixed price issue:
Company along with Merchant banker fix a price at which the
securities are offered and would be allotted to investors
This price which is fixed per issue is printed in the Offer
Document. Usually the Offer document also contains reasoning
behind the price at which shares are offered.
Demand for the securities offered is known only after the
closure of the issue
50 % of the shares offered are reserved for applications below
Rs. 2 lakh and the balance for higher amount applications.
This form of issuing securities is no longer popular and being
used by issuers
Price Discovery of Shares in a Public Offering
- Fixed price issue (2/2)
Illustration of Fixed Price Issue:
The number of shares to be issued and price of issuance are mentioned on the forst
page of the prospectus
The price is already fixed prior to the IPO. No price discovery mechanism is used.
All application for shares have to be made at the price mentioned else they are
considered as invalid bids.
Price Discovery of Shares in a Public Offering
(1/3)
Book Built Issue:
Company may offer a maximum of 20% price band in which one can bid for shares.
The lower end of this Price Band is called “Floor Price”, while the higher end is called
“Cap Price”. Eg: Rs 100 to Rs 120
Price at which share is finally issued to investor is discovered on the basis of demand
at various price levels (within Price band),
Investors must specify the number of shares they want to buy and how much they
are willing to pay per share (within the price band range).
Price Discovery of Shares in a Public Offering (2/3)
Stages in Book Building:
The Company who is planning an IPO nominates the Lead Merchant banker(s) as “Book Runner”
The bids for these shares have to be given by investors to “Syndicate Members”
The syndicate members input the orders into an “Electronic Book”. This process is called “Bidding”.
The book normally remains open for a period of 5 days.
QIB’s place their bid a day before the issue open for Retail Investors. The subscription to QIB portion
give a hint to Retail investors about the interest of market in an IPO
Bids have to be entered within the specified price band. Investor can revise a bid before the book
closes.
On the close of the book building period, the Book Runner evaluates the bids on the basis of the
demand at various price levels.
The book runners and the issuing Company decide the final price at which the securities shall be
issued.
Finally allocation of securities is made to the successful bidders. The rest of bidders get refund of
their money.
Price Discovery of Shares in a Public Offering
(3/3)
Illustration of Book Building issue:
Assume a price band of Rs. 20.00 (Floor Price) to Rs. 24.00 (Cap Price) per share, and
total available shares (issue size) is 3,000 shares.
 Company received five bids from bidders, details of which are shown in the table
below.
The price discovery is a function of demand at various prices.
The highest price at which the issuer is able to issue the entire size of 3000 shares is
the price at which the “book cuts off”, i.e., Rs. 22.00
The issuer, in consultation with the Book Running Lead Manager will finalize the
issue price at or below such cut-off price, i.e., at or below Rs.22.00
All bids at or above this issue price and cut-off bids (allowed for retail investors only)
are valid bids and are considered for allocation in the respective categories.
Bid Quantity Bid Price (Rs.) Cumulative Bid Quantity Subscription
500 24 500 16.67%
1,000 23 1,500 50.00%
1,500 22 3,000 100.00%
2,000 21 5,000 166.67%
2,500 20 7,500 250.00%
Allotment Intimation, Transfer of Shares and Debit/Credit of
Funds
 The Company with the Lead Mangers, Registrar, and Stock Exchanges finalize the basis of
allotment
 Intimation of allotment to applicants is made through ordinary post / email and the
allotment information are available on the website of the Registrar
 The Basis of Allotment is published and gives details of category wise demand for shares
and how shares have been allotted.
 Registrar prepares and releases the fund transfer instruction for transfer of funds to
Public Issue and unblocking of funds wherein bidders have not received allotment.
 Registrar also gives instructions to NSDL and CDSL for credit of Equity Shares to the
successful Bidders as specified in the Offer documents
 Investor and check the date of allotment and date of listing of the shares in the Offer
Document
Illustration for checking details of Allotment and Listing Dates
These details can be found in the Section on “Offer related information – Terms of the
offer”
Checking Allotment Status in IPO
 Investors are normally informed by email/letter about the status of allotment
/ refund with regard to their IPO application.
 Investor can also check the status of Allotment of shares by visiting the
“Investor Services” section on the website of the Registrar for the Issue (RTA)
on the indicative Allotment Date mentioned in the Offer Document.
 In case of any issue with regard to Non-allottment of shares / Refund etc,
investor should contact the RTA immediately.
 The Contact details of the RTA is always provided in the Offer Document of
the IPO and is also available at :
https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&i
ntmId=10
 In the event of non-satisfactory resolution of the issue by the RTA, investor
can file a complaint with SEBI on the SEBI Complaints Redress System
(SCORES) at :
https://scores.gov.in/
END of Session - IV
Investment in Secondary Markets
Session - V
Secondary Market – Meaning
• Securities issued by a company for the first time are offered to the public in the primary market. Once the IPO is done and the stock is
listed, they are traded in the secondary market.
• The main difference between the two is that in the primary market, an investor gets securities directly from the company through
IPOs, while in the secondary market, one purchases securities from other investors who willing to sell the same.
• An investor can trade in securities through the stock exchange with the help of SEBI’s registered brokers who aid their client for
buying and selling of various securities.
• Some brokers offer internet trade facility or mobile trading facility where investor may place order directly
through internet facility offered;
• Some brokers receive trade orders through telephone or cell phone;
• Some brokers have offices to which investor may physically go, place orders and see that such order is actually
executed on the trading terminal.
• Some brokers offer all the above facilities.
Functions and Utilities
 Economic Barometer.
 Efficient Pricing of Securities.
 Safety of Transactions.
 Contributes to Economic Growth.
 Spreading of Equity Cult.
 Promotes Healthy Speculation.
 Improves Liquidity.
 Efficient Capital Allocation.
 Encourages Savings and Investments.
Primary v/s Secondary Market : Key Differentiation
Primary market Secondary market
Features Primary Market Secondary Market
Definition Securities are issued for the first time to public Trading of already issued securities
Also known as New Issue Market Post Issue Market
Pricing Prices are determined by Issuer company Prices are determined by market (demand and
supply forces)
Key Intermediaries Merchant Bankers , RTAs AND DEPOSITORIES. Stock Brokers, CLEAING MEMBER,
DEPOSITORY PARTICIPANTS
Purpose To raise capital for expansion, diversification, etc. Trading of securities and thereby providing
liquidity to investors; COMPANY WILL NOT
GET MONEY; EXISTING INVESTOR WILL BE
ABLE TO EXIT FROM THE INVESTMENT.
Process to Invest through Secondary Markets
• An investor who desires to invest in shares of companies has to open three accounts –
popularly known as 3 in One Accounts.
• These are Savings Bank account with a Bank, a Trading Account with a Stock Broker, and a
Demat account with Depository Institution.
• For opening the trading account and Demat account, your nearest stock broker will help
you for which KYC documents – documents of Identity Proof and Address Proof are
required.
• Once trading account and demat account are opened, an investor can through the stock
broker buy and sell the shares. The buying and selling of shares are done at the then
prevailing market rate.
• Before selecting a broker, check broker’s track record on stock exchange website – number
of investor grievances, number of investor accounts, whether the broker has a branch
office in your town/city, etc.
How can one begin trading in Secondary market?
• Open a demat account with a DP
• Open a Savings / Current account in a bank
• Open a Trading account with a Stock broker/ Authorized Person
• Begin giving orders for buy / sale; Pay margin money to broker
• Get confirmation for order placed; get confirmation for trade executed and a
contract note. You can confirm if the trade is done on your behalf on the stock
exchange web site as well.
• Receive /give securities in / from your demat account if you have bought / sold
• Pay / receive funds for securities you have bought/sold
Due Diligence to be done
 Underlying factors that affect a company’s actual business and its future
prospects
 Questions to ask before investing include -
o Is the company’s revenue growing?
o Is the company actually making a profit?
o Is the company able to repay its debts?
o Is the company in a position strong enough to compete with its peers?
o Does the company pay dividends?
o What has been the trend of prices of the shares?
o Check recent development in the company on stock exchange website.
112
Due Diligence to be done Through
Stock
Exchange
Website
Company
Website
Industry
Research
Newspapers/
Magazines Social Media
Important factors and metrics for Due Diligence
 Details of Promoters & Shareholding / pledged shares of the Company. (available on company/stock
exchange website)
 Scope/Growth/Competition/Profitability/Structure of Industry of the Company. (quarterly and annual
disclosures made to stock exchange - available on company/stock exchange website)
 Financials of the Company viz. Earnings per Share (EPS), Price to Earnings, Ratio (P/E), Book Value, etc
(all this available in quarterly results published on stock exchange web site).
 Cash Flows from operations. ( a part of financial statements every year; available on company/stock
exchange website)
 Past Growth track record of sales turnover & profitability. ( a part of financial statements every year;
available on company/stock exchange website)
 Dividends paid by company in last 5 years.
 Debt of the Company. (( a part of financial statements every year; available on company/stock exchange
website)
 Corporate Governance Track record. ( a part of financial statements every year; available on
company/stock exchange website) 11
3
How to Place
Orders?
Modes of Placing Orders to trade
Modes
of
placing
orders to
Trade
Visit to
Broker’s
Office
Trade via
Phone
Call
Through
an email
to Stock
Broker
By using
Stock
Broker’s
website
By using
Stock
Broker’s
Mobile
App
 While placing order to trade you receive SMS/ Email alerts on your registered mobile number
and email account.
Place Order : Visit to Broker’s Office
Steps for Trading by visit to Stock Broker’s Office
Visit the Designated Branch of the Stock broker and make an
entry in the visitor’s register at the premises of the Stock
Broker.
Get quote for the scrip you want to trade on.
Mention scrip, price, quantity, type of order you want to
place, the exchange on which you want to execute, while
placing order to the Stock broker.
Provide proof of placement of order to the Trading Member.
Verify trades at the end of the trading session.
Trades are subject to payment of Margins
11
6
1
Place Order : By Phone “Call & Trade”
 Check whether Stock Broker offers facility to trade via Phone Call. All phone
calls for placing orders with dealers are recorded.
Steps for Trading by Phone Call
Call the phone number given by the Stock Broker for placing of Orders from the Mobile number registered with the Stock
broker
Call should connect to the “Call & Trade” facility desk of the Stock Broker
Confirm identity details – Name, Date of birth, PAN number etc
Place your Order – Scrip details, Quantity, Type of order etc Trading
account will be updated on successful execution of the order. Trades are
subject to payment of Margins (Explained in later slides)
Place Order : By Email
 Check whether Stock Broker offers facility to trade via Email. All phone calls
for placing orders with dealers are recorded.
Steps for Trading by Email
Select “Email
based trading”
in the Account
Opening Form.
Send Email with
details of trade
– name of scrip,
Price, Order
Type, Quantity,
etc.
Email must be
sent from the
same email ID
as provided in
the KYC form
Trades are
subject to
payment of
Margins
(Explained in
later slides)
11
8
Place Order : Online (Website/ App)
Steps for Trading Online
Link your Trading, Demat and Bank Account.
Sign the IBT (Internet based trading) agreement after checking the costs involved and the facilities provided.
Visit website of the Stockbroker / Install the Online Trading app.
Investor must login using Username and Password provided.
Some Stock Brokers also have 2-Factor verification system where additional OTP also needs to be entered.
Check current price and volume details of stock you want to buy/ sell on Market Watch Section of the
Stock broker’s terminal.
12
0
Place Order : Online (Website/ App)
Market Watch Section :
 Allows investor to check details of the stock that he wants to buy/ sell.
 Information Displayed in Market Watch:
- Last Traded Price (LTP).
- Percentage change – % Change from previous day close.
- Previous day close – At what price did the stock closed the previous day.
- O.H.L.C – Open, High, Low and Close Prices.
- Volumes – How many shares are being traded at a particular point of
time?
- Bid and ask price ladder.
Place Order : Online (Website / App)
 Always check the Orders available for the shares of the scrip before placing
your order.
 This gives idea of supply and demand (what quantity available for what price) of
the shares.
Sample Order Availability Screen
 Select the stock you want to trade in.
 Place the order for Buy / Sell for a specified quantity and a specified price
SCRIP NAME
BID ORDERS QTY BID ORDERS QTY
240 15 5000 241 6 500
239 50 10000 242 54 264
238 36 6800 243 38 398
237 52 2400 244 21 8500
236 35 9000 245 56 412
Open 250
High 251
Low 240
Close 246
Volume 65000
AvgPrice 248
LTQ 635
 Stock Quote:
- Contains data points about stock of a company.
- Valuable tool to get a brief snapshot of a company.
 Details in a Stock Quote
Place Order : Stock Quote
Company
name and
symbol
Stock
Price
High /
Low
Close
Price
52 week
High /
Low
Net
Change
PE Ratio Volume
12
2
Place Order : Types of Orders
20
PRODUCT CODES
MIS – Margin Intraday Square- off - For Intraday training.
- Investor needs to pay margin uner intraday
framework to use leverage provided by Stock
Broker.
- Positions automatically squared off at EOD.
CNC – Cash and Carry - For delivery based trades.
- No leverage.
- Investor must have stock in his Demat account for
selling.
- Positions not automatically squared off at EOD.
NRML – Normal (For F&O
Trading)
- For overnight trading of futures and options.
- Investor needs to pay margin under overnight
framework to use leverage provided by Stock
Broker.
- Positions not automatically squared off at EOD.
Placing order to trade
A Stock Order is simply the instruction given by the trader / Investor to buy or sell stocks from their
trading platform. While placing an order, you might find the various types of orders available on
your trading screen like :
• Limit Order
• Market Order
• Stop Loss Order
• AMO (After Market order)
• GTC (Good Till Cancelled order)
• IOC (Immediate or Cancel order)
• Cover Order (CO)
• Bracket order (BO)
Type of Orders and their Utility
• Limit Order - A limit order is where the trader can set a
predetermined price to buy or sell a share.
• Market Order - A market order buys or sells at the current market
price of the share.
• AMO (After Market Order) - AMO’s are the trades which are placed
after the market is closed. AMO can also be placed at Market Price.
• IOC (Immediate or Cancel Order) - As the name suggests, when you
place an IOC trade, if the trade isn’t executed immediately as soon as
it is placed on the exchange, it gets cancelled.
Type of Orders and their Utility
• Stop Loss Order - A stop loss is where a trader can limit his losses by
exiting the trade if the share reaches the trigger price. By placing a
stop loss, you can save yourself from heavy losses if the price of a
share rises or falls suddenly.
• Cover Order (CO) - Cover order is one of the types of orders where
you can enter into a position along with stop loss in the same trade.
• Bracket Order (BO) - Bracket order is a trade where 3 orders bundled
into one. Here, you can place a trade with a target price and a stop
loss.
Trading Terminal Features
The login process
Access to Market Watch List
Creation of Customised Watch List
Placing of Buy / Sell Order
Access to Trade Book
Access to Order Book
Seamless Fund Transfer
 Purpose of Order Book :
o Keeps a record of all the orders put by the client
o Check order details of past orders
o Modify the orders
o Check Status of Order (Open / Completed / Rejected)
 Trading History :
o Once Order is placed and trade get executed, details are
trade are visible on Trade history Page.
o Prior to execution of trade one can Modify Order.
Place Order : Client Order Book
 Fully understand the system , features and meaning of each option.
 Good practices for Trading Password
 Make your trading password complicated and difficult to guess.
 Avoid simple hack-able passwords like your name, your surname, date of birth,
marriage anniversary etc. Do not ever write down your password on a piece of
paper for the sake of future reference. Above all, never share your log in details
with anybody else.
 Web browsers offer you the facility to remember your password. Investors are
advised to avoid using this.
Place Order : Precautions to be taken
for online modes (website/apps) (1/3)
 Avoid accessing your internet account from cyber cafes. Most of the cyber cafes do not
use proper anti-virus and anti-phishing software, which means your password can be
easily stolen. On your personal PC or laptop always ensure that the virus protection is
up-to-date.
 Be wary of fraudulent phone calls and emails which try to elicit details of your trading
and bank accounts.
 Never let your trading screen remain unattended at any point of time.
 Make it a point to log out of your trading account when you are through instead of just
closing the window.
 Take additional care while filling in quantity and price; if quantity is typed in price
columns and price on quantity column, great disaster can happen; once trade is done –
it cannot be reversed. Broker also cannot help in this.
Place Order : Precautions to be taken
for online modes (website/apps) (2/3)
 Avoid accessing your internet trading account through free wi-fi offered at
airports, malls etc. These are often unsecure networks.
 Before you trade ensure that your trading address starts with https:// and
not http:// to be doubly sure that it is a secured site.
 Regularly cross check your personal trade sheet, your order book and your
trade book. Also, check the contract notes and reconcile it with your bank
account and demat account at least once a week.
Place Order : Precautions to be taken
for online modes (website/apps) (3/3)
Post Trade
Checks
Post-Trade: Trade Confirmation by
Stock Exchange
 Trade Confirmation by SMS
- At End of Day, Exchange sends SMS & Email
containing information of trade.
- SMS: Contains value traded on a day (Sample SMS
provided)
Example of Trade Confirmation:
“Dear (PAN No.), Your Traded Value for <Date> <Seg> <Rs.------- >. Check
your registered email id. For details contact broker.”
13
3
Post Trade: Trade Confirmation
by Stock Exchange
 Trade Confirmation by Email
• Contains breakup of trades executed through a TM on a day
• Email will come from domain of Stock Exchange
Source : https://www.nseindia.com/
Post Trade: Trade check / verification
on Stock Exchange Website (1/3)
 Trade verification facility available on the Exchange Website
• The data on trades would be available on T+1 day.
• At any given point in time 10 trading days' data would be available for verification.
• Please ensure to provide / update latest email address and mobile number to
trading members.
• Review with trading members the status of upload of email address and mobile
numbers on the NSE UCI Online System to ensure receipt of trade alerts
Post Trade: Trade check / verification
on Stock Exchange Website (2/3)
Source : https://www.nseindia.com/
Post Trade: Trade check / verification
on Stock Exchange Website (3/3)
Source : https://www.bseindia.com/
Post Trade: Contract Note
What is a Contract note?
• Record of any transaction.
• Confirmation of trade done.
• In case of discrepancy, contact your broker immediately.
What does a Contract Note contain?
• Details of transaction.
• Date, Time, Price, Quantity, Trade ID, various charges/ levies, etc.
How to receive a Contract Note?
• Within 24 hours from the date of trade execution.
• E-Contract Note sent to registered email ID.
• Can opt for Physical Contract Note.
• Quarterly statement of funds and securities .
13
8
Basic details:
Details for each trade executed (Buy/ Sell):
Any discrepancies observed in the Contract Notes should be brought to the notice of your TM in writing,
immediately
Post Trade: What should a Contract Note
Contain?
Client
Code Client PAN Trade Date
Order No. Trade No. Trade Time
Scrip Code/
ISIN/
Contract
Details
Traded
Price
Trade
Quantity
Brokerage &
Charges (as
per Tarriff
Sheet)
Net Rate
Brought
forward
Position (only
in derivatives)
13
9
Post Trade: Sample Contract Note (1/2)
14
0
Post Trade: Sample Contract Note (2/2)
14
1
Post Trade: How to make payment to Stock Broker (Buy
Trade)?
PAY-IN OF FUNDS:
- Stocks: Before T+2
- Derivatives: Before T+1
- Only Cheque / NEFT / RTGS to TM
- Transfer from the bank account linked
with client code only
- In 3-in-1 Accounts, funds are
automatically deducted from linked
Bank Account
- Confirmation to be obtained from the
TM for receipt of funds
PAY OUT OF SECURITIES:
- Shares should be received in
Beneficiary Account of investor within
24 hours of payout.
CASH DEALING IS STRCTLY PROHIBITTED
Post Trade: How to make
payment to Stock Broker (Sell Trade)?
PAY-OUT OF FUNDS:
- Stocks: On T+2
- Derivatives: On T+1
- Stock Broker to transfer funds to the
client (investor) within 24 hours of
payout.
PAY-IN OF SECURITIES:
- Investor is advised to confirm the
availability of shares prior to executing
sale of shares.
- In case POA has not been given,
ensure transfer of shares by giving a
filled in DIS Slip
Post Trade: Default of pay-in obligation
and short delivery of shares
Default of Pay- In Obligation and Short Delivery of Shares
Delayed payment
Charges:
• Levied when investor delays the payment
beyond the pay-in time on the settlement day.
• Levied to discourage delayed payment from
investors.
Auction of securities in
case of default:
• When investor does not deliver securities by pay-
in time on the settlement day.
• For all such “short deliveries”, Clearing
Corporation conducts a “buying-in auction” on the
settlement day (T+2), after completion of the pay-
out, through the exchange trading system.
Post Trade: Settlement Process & Running A/C
• Settlement of Funds:
- Pay-Out happens on T+2 Basis.
- Settlement of funds and / or securities to be done within one working day of the pay-out
(unless it is a “RunningAccount”).
• Running Account Authorization :
- Authorize by Client to the Broker (in
account.
writing) to maintain a running
- Funds and securities maintained on a running account basis have to be
settled by Broker on a monthly / quarterly basis, as per the client mandate.
- Broker has to ensure that there is a gap of maximum 30/ 90 days (as per
the client mandate) between two running account settlements.
Credit of shares happens on T+2 day
Shares debited from Seller Client A/C: Around 11 AM.
Subsequently shares come to Pool A/C of Broker
Broker credit these shares to Account of Buyer by EOD.
Investor should insist that shares be transferred to his own Demat A/C and
avoid leaving shares in Stock Broker’s Pool Account.
On T+3 day, client should check his Demat A/C for the receipt of shares
 Check your Demat statement on Depository website :
 NSDL – NSDL IDeAS Speed-e: https://eservices.nsdl.com/
 CDSL– CDSL Easi: https://www.cdslindia.com/Footer/Easi.html 14
6
Post
Trade:
Checking
Credit of
Shares
(Delivery
Trades)
Post Trade: Do's and Don'ts of keeping
funds in Trading Account
Dos:
• Investor should make sure funds to the extent of obligation (Pay-in & Margin) is
available in your trading account
• Investor should transfer funds to the Stock broker for obligation only.
• Investor should ask Stock broker for Quarterly / Monthly settlement of both funds and
securities from the TM; investor can ask for money immediately after sale as well.
• Check you ledger account periodically.
• In case of any suspicious entries kindly raise the alert to Stock Broker / Exchange / SEBI
immediately
Post Trade: Do's and Don'ts of keeping
funds in Trading Account
Don’ts:
• Investors are advised not to keep idle funds lying with the Stock
Broker
• Investors are advised not to provide cheques in the name of
any “Authorised Person ” / 3rd party
• Pre-Signed Blank Cheques and DIS Slips should NOT be
provided to the Stock Broker/ Authorized Person / Employee of
the Stock Broker
Pre Trade : Payment of Margins
 Payment Of Margin:
- Check your margin requirement on Stock Broker’s website while placing the trade.
- Pay the margin amount to the Stock broker / maintain the margin amount in the
linked Bank A/C before placing order.
- You may also pledge securities instead of depositing cash as margin money. This can be
done by submitting a pledge instruction by filling up the pledge form with the Depository.
On buying a
Stock, investor
may
Buy it on margin
or pay only a % of
its price (called
margin)
Pay Entire
price
upfront
How should you choose a broker/ DP?
• Always deal with a SEBI registered Intermediary
• Choose the broker/sub broker / DP on the basis of
• Character ( Trust)
• Any action taken by regulator in the past, involvement in dubious schemes
• Cost
• Brokerage, AMC
• Convenience
• Time , Location, Speed-E facility etc.
• Online broker?
• Are you comfortable with technology?
• Power supply
• Net connectivity
END of Session - V
Mutual Funds – An Overview
Session - VI
What is a Mutual Fund (MF)?
4
Common pool of funds contributed by investors and
invested in accordance to the objectives.
Investments are held in a trust of which the
investors alone are the joint beneficial owners.
Trustees oversee the management through
investment managers.
Structure of Mutual Fund
What is an Asset Management Company (AMC)?
• Investment manager of the mutual fund.
• Appointed by the trustees, with SEBI approval.
• Trustees and AMC enter into an investment management agreement.
• Required to invest seed capital of 1% of amount raised subject to a maximum of Rs.50 lakh in all open-
ended schemes.
• Should have a net worth of at least Rs.50 crore at all times.
• At least 50% of members of the board of an AMC have to be independent.
• AMC of one mutual fund cannot be an AMC or trustee of another fund.
• AMCs cannot engage in any business other than that of financial advisory and investment
management
1
5
5
How does a Mutual Fund Work?
• Pool of investors
money.
• Invested according
to pre-specified
investment objectives.
• Benefits accrue to
those that contribute to
this pool.
• There is thus mutuality
in the contribution and
the benefit.
• Hence the name
‘mutual’ fund.
15
6
Classification of Mutual Funds
Classification of Mutual Funds
Based on Structure
Based on Investment
Objective
Based on
Investment Style
Open Ended
Funds
Closed Ended
Funds
Interval Funds
Debt Funds
Equity Funds
Hybrid Funds
Passive Funds
Active Funds
Classification - Based on Structure
• No fixed maturity date.
• Accept continuous sale and re-purchase requests.
• Transactions are NAV-based.
• Unit capital is not fixed.
Open Ended
Funds
are closed for further
• Run for a specific period.
• Offered in an NFO but
purchases after NFO.
• Unit capital is kept constant.
Closed
Ended Funds
• Variant of closed-ended funds.
• Becomes open-ended at specific intervals.
• Have to be mandatorily listed.
Interval
Funds
Classification - Based on Investment Objective
• Invest in short and long term debt instruments.
• Aim to provide regular income.
Debt
Funds
• Invest in equity securities.
• Aim to provide growth and capital appreciation over
long term.
• Invest in a combination of equity and debt securities.
• Proportion of equity and debt may vary.
• Aim to provide for both income and capital
appreciation.
Equity
Funds
Hybrid
Funds
15
Classification - Based on Investment Style
• Replicate a market index.
• Invest in same securities and in same proportion as that of
index.
• No active selection of any stock / sector.
• Expenses are lower.
• Portfolio is modified every time index composition changes.
Passive
Funds
• Invests in securities and sectors that may offer a better return than
the index.
• Actively manage the allocation to market securities and cash.
• May perform better or worse than the market index.
• Incur a higher cost than passive funds.
Active
Funds
 Categorization of open-end mutual funds:
- To ensure uniformity in characteristics of similar type of schemes launched by
different mutual funds.
- Helps investors to evaluate different options available before making informed
decision to invest.
Hybrid
Schemes
Categorization of
Mutual Fund
Schemes
Equity
Schemes
Debt
Schemes Solution oriented
Schemes
Other
Schemes
Categorization of Mutual Fund Schemes
12
How to invest in Mutual Funds?
13
Via Physical Mutual
Fund Application
Form
Via Online Mode
(Website of Mutual
Fund)
Via Mobile App of
Mutual Fund
Via AMFI Registered
Mutual Fund
Distributor (using
physical form/ online/
mobile app)
Mutual Funds investment procedure
Indicate whether you are a First Time Investor/ Existing Investor.
Visit official website of KRA and check whether you are KYC compliant or not.
You must submit this KYC status.
Provide your details like name, address, etc.
Submit Bank account details and copy of “Cancelled Cheque”.
Once documents are accepted by Mutual Fund Company, you may start
making investment.
Investment Modes in Mutual Funds
Direct Mutual Fund
• Directly offered by fund house.
• No involvement of third party
agents – brokers or distributors.
• No commissions and brokerage.
• Have low Expense ratio
(because of no commissions).
• Have high NAV.
• Return is higher due to a lower
expense ratio
Regular Mutual Fund
• Bought through an intermediary.
• Intermediaries can be brokers,
advisors or distributors.
• Commissions and brokerage paid.
• High Expense ratio as there are
commissions to pay.
• Low NAV.
• Return is lower due to a higher
expense ratio
Regular Mutual Fund
Investment Modes in Mutual Funds
• One time investment.
• Usually, large sum of money is invested in one go.
• Investor faces risk of volatility in markets.
Lump-sum
Investment
• Staggered Investment.
• Period of commitment - 6 months, 1 / 3 / 5 years.
• Specific intervals - monthly, quarterly, half-yearly.
• Made on specific dates e.g. 1st, 5th, 10th, 15th of
every month.
Systematic
Investment
Plan (SIP)
Mutual Funds – Investment Modes
Lumpsum
 One time bulk investments (like salary Bonus, maturity of the
products)
 Minimum amount Rs. 5,000 approx
SIPs
• Regular Investments with fixed amount from
time to time
• Minimum amount to start is Rs. 500/-
• Buy More units @ low Price & Buy Fewer
units @ High Prices
Transactions in Mutual Funds
• Purchase
• One time (Min Rs 5000)
• SIP (Systematic Investment Plan) (Min Rs 100-500)
• Periodic transfer from Bank account to Selected Scheme
• STP (Systematic Transfer Plan)
• Periodic transfer from One Scheme to Other Scheme
• Redemption
• SWP (Systematic Withdrawal Plan)
Mutual Fund Investment and wealth creation
• Those investors who do not want to take risks in directly investing in equities can
go through mutual fund route.
• Mutual Funds are those institutions that mobilizes funds from large sections of
public and invest them in securities and transfer the benefits to the investors.
• Systematic Investment Plan (SIP) of Mutual Funds help salaried class and others
to invest a fixed sum regularly, say, every month and participate in the wealth
creation process.
• Disciplined Saving
• Flexibility
• Long term Gains
• Convenience
Benefits of SIP
Systematic Investment Plan
Advantages of investing through SIP are:
Discipline: Stay focused, invest regularly, and
maintain discipline
Power of Compounding: The larger the period,
higher the return
Rupee Cost Averaging: Investment at regular
intervals over time enable to buy more units when
the price is lower
Convenience : Through giving an ECS mandate to
your banker.
Merits of SIP over Lumpsum Investment
Lumpsum
Month
Monthly
Investment NAV Units Purchased
January 12000 10 1200
Feburary
March
April
May
June
July
Aug
Sep
Oct
Nov
Dec
Total 12000 11 1200
Current Market
Price of
Investment 13200
MF SIP – Route to wealth creation
SIP
Month
Monthly
Investment NAV Units Purchased
January 1000 10 100.00
Feburary 1000 9 111.11
March 1000 8.5 117.65
April 1000 9 111.11
May 1000 10.1 99.01
June 1000 8.5 117.65
July 1000 8.25 121.21
Aug 1000 8.75 114.29
Sep 1000 9.25 108.11
Oct 1000 10.1 99.01
Nov 1000 9 111.11
Dec 1000 11 90.91
Total 12000 1,301.16
Current Market
Price of
Investment 14312.78516
Mutual Fund Plans – Growth vs Dividend Options
18
• Gains made in portfolio are retained and reflected in NAV.
• Realized profit/loss is treated as capital gains or loss.
• No increase or decrease in number of units, except if units are
purchased or sold, by the investor.
Growth
Option
• Fund declares dividend from realized profits.
• Amount and frequency varies and depends upon distributable
surplus.
• NAV falls after dividend payout to the extent of dividend paid.
Dividend
Payout
Option
• Dividend is re-invested in same scheme by buying additional units
at ex-dividend NAV.
• Number of units standing to the credit of the investor, increases
each time a dividend is declared, and reinvested back into the
scheme.
Dividend
Reinvestment
Option
Information about the Mutual Funds (Offer Document)
• Contains generic and statutory information of
mutual fund.
• Contains financial information of mutual fund.
• Lays down rights of investor.
• Other additional information.
Statement
of additional
information
(SAI)
• Scheme type (open or closed end).
• Investment objective.
• Asset allocation.
• Investment strategies.
• Terms with regard to liquidity.
• Fees and expenses.
• Other information relating to the scheme.
Scheme
information
document
(SID)
• Contains generic and statutory information of
mutual fund.
• Contains financial information of mutual fund.
• Lays down rights of investor.
• Other additional information.
Statement
of additional
information
(SAI)
Riskometer and its importance
• Risko-meter - Introduced in 2015, riskometer for mutual funds is a tool to assign risk levels associated with
various mutual fund scheme.
• The riskometer methodology of equity funds factors in three parameters - market capitalisation,
volatility and impact cost (liquidity) to assign risk grades. A risk score is assigned to each of these
parameters.
“For example, a fund investing a higher portion of its assets in mid caps and small caps will earn a
higher risk score on the market capitalisation parameter. Similarly, funds whose underlying
investments are more volatile and less liquid will attract higher risk scores on those two parameters,
respectively.”
These three risk scores are then aggregated through a simple average to arrive at the fund's overall risk score,
which forms the basis of bucketing it into one of the six risk labels (Low, Low to Moderate, Moderate,
Moderately High, High and Very High).
Likewise, for debt funds, risk factors comprise credit risk, interest-rate risk and liquidity risk.
Risk-o-Meter and its importance
Six levels of risk for mutual fund
schemes:
i. Low Risk
ii. Low to Moderate Risk
iii. Moderate Risk
iv. Moderately High Risk
v. High Risk and
vi. Very High Risk
Importance of Risk-o-meter :
- Helps align risk that a fund carries with
the risk profile of the investor.
- Equity as asset class: Volatile: High risk
- Debt as asset class: Stable: Low risk
- Hybrid: Moderate: Depends on
allocation and concentration
Meaning of Net Asset Value (NAV)
• Net Asset Value (NAV) is the market value of all securities held by the
mutual fund scheme. You would find the performance of a mutual
fund scheme denoted by NAV or the Net Asset Value.
• NAV, in simple terms, is the price you pay for the units of the mutual
fund scheme. Generally, mutual fund units begin with a unit-cost of
₹10 and it rises as the fund’s assets under the management grow.
• Net Asset Value = [Assets – (Liabilities + Expenses)] / Number of
outstanding units
NAV Explanation
• If you invest Rs 5,000 in a mutual fund with a net asset value of Rs
500, then you can purchase 10 units of the mutual fund.
• For example, you put Rs 1 lakh in Mutual Fund Scheme A and Mutual
Fund Scheme B. The NAV of mutual fund scheme A is Rs 10 and that
of mutual fund scheme B is Rs 20.
• You have units of mutual fund scheme allocated as follows:
• Mutual Fund Scheme A : Rs 1,00,000 / Rs 10 = 10,000 units
• Mutual Fund Scheme B: Rs 1,00,000 / Rs 20 = 5,000 units.
NAV Explanation
• When the value of the securities in the fund increases, the NAV
increases. When the value of the securities in the fund decreases,
the NAV decreases. The NAV number alone offers no insight as to
how “good” or “bad” the fund may be.
• Investor can see the NAV on closing basis every trading day on
respective Mutual fund website or on AMFI website:
Fact Sheet and its utility
• A mutual fund fact sheet allows investor to be aware and up to date
on the key facts of a fund.
• A mutual fund fact sheet is a basic three-page document that gives an
overview of a mutual fund.
• For potential investors, this is a necessary and easy report to read
before investing.
“It's a great starting point when you're evaluating an investment,”
Sample FactSheet -
Sample Fact
Sheet
How to choose Mutual fund for Investment
• Think of your Investment horizon
• Check MF performance against benchmark over a period of time.
• Check MF performance vis a vis its categories of funds.
• Check whether MF performance is consistent over the years.
• Check Fund Manager Experience.
• Check AMC track record.
• Check fund’s Expense Ratio
• Read the Fact Sheet of MF and its various schemes.
END of Session - VI
Precautions while investing in
securities markets
Session - VII
Risk of Equity and Debt Investing
Risk in Equities
Can be classified as systematic risk and non-systematic risk
Systematic risk
 Systematic risk is the risk of market (macro-economic) itself and includes rising
inflation and interest rates, unfavorable foreign exchange rates, floods, famine,
tsunami, pandemics, elections, global crisis (sub-prime) etc.
 It cannot be diversified away.
 Beta is a measure of the systematic risk of the market.
 All investments are susceptible to such systemic risks and cannot be wished away.
Risk of Equity and Debt Investing
Non-Systematic risk
 Non-Systematic risk is peculiar to the company or to that sector.
 Rising input costs, new technology, new products from competitors, fragmented
market due to rising competition, unfavorable cost structure, saturation point in the
industry, exodus of key personnel / change in promoter, sale of company etc.
 It can be reduced by investing in a portfolio of stocks whose returns are not
correlated or poorly correlated ie., not concentrate all investment in the same or
similar stocks.
Risk of Equity and Debt Investing
Risk in Debt
 Credit Risk/Default Risk
 Interest Rate Risk
 Liquidity Risk
 Reinvestment Risk
 Inflation Risk
How risk is mitigated in Securities Market
1.Diversification of portfolio
2.Tweaking portfolio to mitigate interest rate risk
3.Hedging
4.Go long-term for getting through volatility times
5.Stick to low impact-cost names to beat liquidity risk
6.Fight horizon risk arising out of assets-liability mismatch
Dos and Don’ts of Investing
 Get started early and start small.
 Get an education on basics of investments.
 Research before investing.
 Invest only surplus amount and have an investment goal.
 Build a diversified stock portfolio and invest for the long term.
 Review your portfolio periodically.
 Invest only thru a SEBI registered entity.
 Be emotionless and weed out losers
Dos and Don’ts of Investing
Don’ts
Χ Do not confuse investment with gambling.
Χ Do not invest blindly on tips and recommendations.
Χ Do not have unrealistic expectations.
Χ Do not invest through unregulated entities.
Χ Do not follow the herd and over trade.
Χ Do not take emotional decisions.
Χ Do not trade beyond your risk-taking ability
Rights and Responsibilities of Investors 1/2
1.Get Unique Client Code (UCC) allotted
2.Get a copy of KYC and other documents executed
3.Get trades executed in only his/her UCC
4. Pay prescribed margins
5.Get the right price
6.Contract note for trades executed
7.Details of charges levied
8. Pay or deliver money or shares for buy and sale transactions
9.Receive funds and securities on time
10.Receive statement of accounts from trading member
11.Ask for settlement of accounts
Rights and Responsibilities of Investors 2/2
10.Right to attend AGM of listed companies
11.To receive communication from companies
12.Receive dividend , interest , corporate actions
Obligations of Investors
1.Execute Know Your Client (KYC) documents and provide
supporting documents
2.Understand the rights given to the market intermediaries
3.Read Risk Disclosure Document and other documents
4.Understand the product and operational framework and deadlines
5.Pay margins/funds and securities for settlement on time
6.Verify details of trades
7.Verify bank account and DP account for funds and securities movement
8.Review contract notes/DP statement and statement of account
9. Keep a record of all the above documents relating to transactions; will
be useful in case of dispute.
Right to remedies
1) Take up a complaint against market intermediaries with the
Exchange/Depositories/SEBI; Exchanges offer online grievance redressal facility;
SEBI offers SCORES for complaint against any intermediary.
2) Take up a complaint against listed company.
3) File a complaint with stock exchange; if stock exchange does not resolve it, file
an arbitration against member/DP if there is dispute.
4) Challenge the arbitration award before appellate arbitration and then court of
law, if not satisfied.
5) Consumer Courts.
Obligations towards Remedies
1.Take up complaint within reasonable time
2.Complaint to be supported by appropriate documents
3.When additional information is called for provide the same
4.To participate in resolution meetings
5.Avoid unnecessary forum shopping
SEBI’s Role
• Securities and Exchange Board of India (SEBI) as a regulator in securities market
has been set up in 1988 and got the legal status in 1991 through SEBI Act 1992.
• The three functions of SEBI are;
• Protect the interest of Investors
• Create an orderly development of Indian Capital Market
• Regulate the various intermediaries in stock market , and
SEBI’s Mandate
•
INVESTOR
PROTECTION
REGULATION
DEVELOPMENT
ENSHRINED IN PREAMBLE TO THE SEBI ACT
Measures taken by SEBI for investor protection
1.Systemic changes -Anonymous trading,
demat, CCP , ASBA
2.Preventive- Education, awareness ,
surveillance
3.Punitive- Inspection/Investigation /orders
4.Remedial-SCORES/
Arbitration/IPF/Disgorgement/IGRC
Investor Protection
The core focus area of SEBI’s policy-making
Financial Education – Regional Seminars, Resource Persons
Grievance Redressal - SCORES
Investor Awareness – 24 Hour Help Line
Local Offices
Reforms / Regulations in Securities Market– Objectives
Enhance
• Safety
• Transparency
• Efficiency – Speed, Cost
• Fairness
Investor Protection
Retail Investors – Initiatives of SEBI
• A Retail Investor is defined by SEBI as an investor who
apply for an IPO Issue up to the amount of Rs 2 lakhs.
• SEBI mandates Retail Investor Quota of 35 per cent in
all IPOs.
• ASBA facility introduced by SEBI wherein investors need
not part with their money till allotment of shares
• SCORES – SEBI Complaint Redressal System, introduced
wherein investors can seek SEBI Intervention in
redressing their complaints against any market
intermediary.
• SEBI Helpline – A dedicated toll free telephone line
where investors can clarify their doubts on matters
related to stock market investment
Sebi Complaint Redress System
(SCORES)
http://scores.gov.in
1.SEBI has put in place a web based centralized grievance redress system
called SEBI Complaint Redress System (SCORES) on June 8, 2011.
2.SCORES is web enabled and provides online access 24 x 7.
SCORES
 Online platform to enable investors to lodge
their complaints pertaining to securities market
 Complaints against listed companies and SEBI registered intermediaries
 Status of every complaint can be viewed online in the SCORES website (Status
can also be obtained from toll free helpline)
 Entity/Investor can seek/provide clarification on complaint online
 Unique complaint registration number for future reference and tracking
 All complaints received by SEBI against listed companies and SEBI registered
intermediaries are dealt through SCORES.
Complaints that come under the purview of SEBI
Complaints arising out of issues that are covered under:
 SEBI Act,
 Securities Contract Regulation Act,
 Depositories Act and
 rules and regulation made there under and relevant provisions of Companies Act,
2013.
Matters that cannot be considered as complaints in SCORES
 Complaint not pertaining to investment in securities market
 Anonymous Complaints (except whistleblower complaints)
 Incomplete or un-specific complaints
 Allegations without supporting documents
 Suggestions or seeking guidance/explanation
 Not satisfied with trading price of the shares of the companies
 Non-listing of shares of private offer
 Disputes arising out of private agreement with companies/intermediaries
 Matter involving fake/forged documents
 Complaints on matters not in SEBI purview
 Complaints about any unregistered/ un-regulated activity
Complaints against companies that cannot be dealt on SCORES
 companies which are unlisted/delisted, placed on the Dissemination Board of Stock
Exchange
 sick companies, company where a moratorium order is passed in winding up /
insolvency proceedings
 vanishing company.
 suspended companies, companies under liquidation
 Under sub-judice
 companies, falling under the purview of other regulatory bodies
Timeline for lodging complaint in SCORES
 Investor may lodge a complaint on SCORES within three years from the date of cause
of complaint.
 In case investor fails to lodge a complaint within the stipulated time:
a. He may take up the complaint with the entity concerned
b. He may approach appropriate court of law
Mandatory information required
For lodging a complaint in SCORES, the following personal information has to be
mandatorily provided by investors/complainants:
 Name
 Address
 E-mail Address
 PAN and
 Mobile Number
SEBI SCORES APP
Investors may lodge their grievances with SEBI through SEBI
SCORES mobile App.
Investor can access SCORES at the convenience of a
smartphone.
Enables investors to track the status of the complaint redressal.
Investor has to register first in order to lodge complaints
 Toll free Investor Helpline no's 1800 266 7575/ 1800 22 7575
 Operational hours: 9:00 a.m. to 6:00 p.m. [except public holidays declared in the state of
Maharashtra]
 Operates in English, Hindi, Bengali, Gujarati, Marathi, Kannada, Telugu and Tamil
 Facilitate replies to various queries of the general public on matters relating to securities
market
SEBI Toll Free Helpline
What type of complaints are not handled by SEBI?
1.Complaints against unlisted/delisted/wound up/liquidated/sick companies
2.Loan transactions with brokers
3.Fraud committed by brokers on private transactions (ex: purchase of flat)
4.Multilevel marketing companies /Gold loan by Jewelers
5.Complaints that are sub-judice (relating to cases which are under consideration by
court of law, quasi- judicial proceedings etc.)
6.Complaints falling under the purview of other regulatory bodies viz.RBI, IRDA,
PFRDA, CCI, etc., or under the purview of other ministries viz., MCA, etc.
• Fraudulent investment operation
• Promises abnormally high rate of return
• The scheme generates returns for older investors from their own money
or money paid by subsequent investors, rather than any actual profit
earned.
• Scheme collapses when the earnings, if any, are less than the payments to
investors.
• Usually, the scheme interrupted by legal authorities before it collapses
• The promoter vanishes taking all the remaining investment money
Ponzi Schemes
Do’s Don’ts
1. Do not invest with borrowed money
2. Do not expect unrealistic / guaranteed
returns
3. Do not be influenced by advertisement /
advices / rumours /unauthentic news
promising unrealistic gains and windfall
profits in mass media
4. Do not be guided by astrological
predictions for your investments
5. Do not invest on any explicit / implicit
promises made by anyone
6. Do not invest in any scheme just
because of incentives / gifts /
inducements etc. offered
7. Do not be swayed by market
sentiments.
1. Check for the Registration of
Broker/Agent Distributor/ Company –
distributing financial product
2. Read all the documents carefully.
3. Strike off all blank / irrelevant fields /
clauses in Know Your Customer (KYC)
registration form
4. Ask for the list of fees and charges
applicable, before investing.
5. Make payments only – through A/c
payee cheques / drafts / EFT to the
company (selling product)/ scheme
and not to distributor / agent.
6. In case of change in address, update
your KYC immediately
Various methods of raising money from Public & Agencies regulating them
Sl.
No.
Activities Respective Regulators/ Agencies
1 Deposits taken by fraudulent financial establishments State Governments under PID Act
2 Prize Chits/ Money Circulation/ Multilevel Marketing
Schemes
State Governments under PCMCB
Act, 1978
3 Fraud/cheating State Governments under IPC
4 Chit Business under Chit Fund Act State Governments under Chit
Fund Act, 1982
5 Acceptance of deposit by Cooperative Societies State Governments under
cooperative societies Act 1992
6 Deposits accepted by NBFCs, Micro Finance Co. RBI
7 Deposits under Companies Act including deemed
deposits
MCA
8 Nidhi or Mutual Benefit Society MCA
9 Mutual fund, CIS, AIF, PMS, Public issue or deemed
public issue of securities
SEBI
10 Multi State Cooperative Societies MoA, GoI
11 Contract of Insurance IRDAI
12 Pension Scheme or Insurance Scheme IRDA/EPFO
13 Others: Housing, timeshare, goat/emu farming etc Not clearly defined
Who regulates what?
# Nature of Business Regulator
1 Banking companies, NBFCs RBI
2 Nidhi Companies
MCA, RBI ( For acceptance of
deposit)
3 Cooperative Credit Societies Registrar of Cooperatives of state
4 Chit Funds
Registrar of Chit Funds for the
state
5 Equity market, Mutual Funds, CIS SEBI
6
Company Deposits and matters related
to unlisted Companies
Ministry of Corporate Affairs and
ROC
7
Insurance products IRDAI
8 NPS, APY and Other Pension Products PFRDA
END of Session - VII
Session - VIII
Career in Securities Markets
Suitable Profiles
Creative, social, energetic
a. Relationship Manager
b. Business Development Manager
c. Mutual Fund Distributor / Stock Broker
Analytical, deep-thinking, logical
a. Research Analyst
b. Investment Advisor
c. Fund Manager
Diligent, conservative, meticulous
a. Back-office Manager
b. Investor Grievances
c. Compliance Officer
How to pursue a career in the Indian
Securities Markets?
• By enrolling for NISM’s Long term
/weekend / Short term Academic
Programs.
• By obtaining various mandatory NISM
Certifications to become eligible to
operate in Securities Markets.
• By setting up own Securities Markets
business (Distributor/Advisor/Analyst etc)
Mandated and Aspirational Certifications on
Currency Derivatives | Equity Derivatives | Interest Rate Derivatives | Mutual Funds
Depository Operations | Compliance | Investment Advisory | Research Analysis
Merchant Banking | Securities Operations | Risk Management | Retirement Advisory
& more
NISM Certifications
Brokerage Mutual fund Advisory
• Equity derivatives • Mutual fund • Investment advisory
(level 1 & 2)
• Currency derivatives • Investment advisor
• Securities operation
and risk management
• Research analysts
Securities markets foundation (Basic examination)
Why take NISM Certification?
Authentic, Practical &
Contemporary Curriculum
Career Enhancement
Regulatory Mandate
Nation-wide Recognition
Self-study, MCQ Type,
Nominal Fees
Valid for 3 years; Renewal
Mechanism
Post Graduate Diploma in Management
(Securities Markets)
Two-year |Full-time Residential | Career-oriented Programme
Placement Opportunities
Segments
• Equity Markets, Debt
Markets
• Research
• Analytics
• Broking and Dealing
• Corporate Advisory
• Banking
Types of Organizations
(Where students gets placed)
• Banks
• Stock exchanges
• Depository
• Mutual Funds
• Commodities Exchanges
• Research Analysts firms
• Investment Advisories
• Fintech Companies
• IT Companies
• Algo trading firms
• Data analytics
LL.M. in Investment and Securities Laws
One-year |Full-time Residential | Career-oriented Programme
for Legal Professionals
List of Companies where students
undertaken Internship
Law Firms Non Law Firms
• Alliance Law
• DMD & Associates
• Fox & Mandal
• K.J.John & Co. Advocates
• King & Partridge
• Parinam Law Associates
• Trilegal
• BSE Ltd.
• Keynote Financial Services Ltd.
• Kotak Securities
• Mark Corporate Advisors
• National Stock Exchange of
India Ltd.
• Prabhudas Lilladher
• Stakeholders Empowerment
Services
• Sundae Capital Advisors Private
Ltd.
• Capital Square
• Central Depository Services Ltd.
• JM Financial Ltd.
Post Graduate Certificate in Management (Data Science in
Financial Markets)-PGCM(DSFM)
14 months |Weekend programme| Fusion of data science
techniques and financial analytics
Where does PGCM (DSFM) lead to?
• Credit Research and Ratings
• Investment Evaluation and Portfolio
Management
• Risk Modelling
• Claim Processing
• Fraud Detection
• Analysing Financial Statements
• Equity Research
NISM Entrepreneurship Cell(E-Cell)
Vision
To create a coherent E-Cell and foster the spirit of
Entrepreneurship
Mission
Our mission is to build an environment that would illuminate
ideas about entrepreneurship development and creative
deduction, establish a business culture and reach out to a wider
audience in both the academic community and the industry for
the incubation of business ideas.
Purpose
1. To raise awareness among students about entrepreneurship.
2. To instill desire and spirit among students to pursue
entrepreneurship.
3. To encourage students to create their own start-ups.
4. To identify the brightest ideas and give them a platform to
turn those ideas into a working business (Atal Incubation
Centre, NITI Aayog, Government of India.
5. To function as an institutional framework for offering a
wide range of resources, including information to
emerging entrepreneurs, whether students or alumni.
6. To help entrepreneurs grow viable businesses capable of
competing in global industry.
List of Activities conducted by E-Cell?
1.Sessions by entrepreneurs on the following topics:
• Entrepreneurial opportunities in Securities Markets
• Is college the right time to startup’
• Opportunities in Algo trading for an entrepreneur
2.Quiz on Finance and entrepreneurship to make students aware
of nuances relating to any enterprise
3.Business Idea competition to allow students to ideate and sell
their ideas
NISM Social Media Handles-Facebbok
NISM Social Media Handles-Linkedin
NISM Social Media Handles-Instagram
NISM Social Media Handles-Twitter
NISM Social Media Handles-Linkedin for KKS
Thank You

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FINANCIAL EDUCATION FOR YOUNG CITIZEN – Session 1 to 8 30112022.pptx

  • 1. Program delivered by FINANCIAL EDUCATION FOR YOUNG CITIZEN Kona Kona Siksha (A Kotak Securities CSR initiative)
  • 2. Commemorative Plague of commencement of Construction of NISM Campus by Hon'ble Prime Minister of India, Dr. Manmohan Singh NISM Campus inaugurated by Hon'ble Prime Minister of India, Shri Narendra Modi 2016 2013 Academic Programs | Certifications Training Programs
  • 3. NISM - Schools of Excellence School for Securities Education School for Certification of Intermediaries School for Regulatory Studies and Supervision School for Investor Education and Financial Literacy School for Corporate Governance School for Securities Information and Research
  • 4. Objectives of this Initiative • Creating awareness of personal finance framework. • Awareness of pre-requisites for investing in securities markets. • Understanding of precautions and awareness of risk involved while investing in securities markets • Capacity building for evaluation of investment opportunities in securities markets. • Awareness of employment opportunities in financial service industries. • Creating awareness of self- employment opportunities viz. investment advisors or authorized persons of brokers. • Empowerment of students for facing interviews with financial services industry employment opportunities.
  • 5. Program Outline – Eight Comprehensive Sessions • Session I – Importance of Investment • Session II – Financial Investment Opportunities • Session III – Process & Pre- requisites to invest in Securities Markets • Session IV – Investment in Primary Markets • Session V – Investing in Secondary Markets • Session VI – Introduction to Mutual funds and ways to invest in them • Session VII – Precautions while investing in Securities Markets • Session VIII – Career in Securities Markets
  • 6. Importance of Financial Education • “Financial Education fuels financial literacy which enables an inclusive financial system” • OECD defines financial education as: “the process by which financial consumers/ investors improve their understanding of financial products, concepts and risks and, through information, instruction and/or objective advice develop the skills and confidence to become more aware of (financial) risks and opportunities to make informed choices, to know where to go for help, and take other effective actions to improve their financial wellbeing”.
  • 7. Financial Education Objectives increased awareness of investment products; increased knowledge of investment products; increased usage of investment products; enhanced ability to recognise financial goals and match investment strategies with these goals; demonstrated ability to gauge fraudulent players and schemes in the financial market; demonstrated ability to adopt appropriate precautions before making investments;
  • 9.
  • 10. Life Goals… Building your home Buying agricultural land Setting up a small business Children’s Education Marriage Retirement
  • 11. …are also Financial Goals Building your home Buying agricultural land Setting up a small business Children’s Education Marriage Retirement
  • 12. Financial Concepts which have an impact on your life
  • 13. INCOME Where Does Your Money Come From?  Salary Business House Property Agriculture Investments
  • 14. Expense Budgeting Where Does Your Money Go?  Track expenses for one month  What did you buy  Which were needs vs. wants  Categorize spending (clothing, food, etc.)  Patterns of spending  Identify impulsive spending (malls) Inflation
  • 16. Planting seeds Keeping them in a box Mango trees which give you more mangoes Boxes full of mango seeds
  • 17. Investing Saving Wealth Grows Wealth does not grow This is exactly the difference between Savings and Investment.
  • 18. Useful tips on Saving Savings are not done once; save regularly Spend less to save more; record your expenses Save to avoid debt Save and invest first and spend later Classify Expenses in Need and Want Monthly Surplus = Income – Expenses Atleast 25% of your monthly income should be saved and invested
  • 19. 1 kg sugar 10 years ago Rs.16 Rs.50 Rs.80 Today 8 years from now Inflation
  • 20. Inflation !! …. How does it affect us ??? 1 yrs Inflation 7% After one year 1 Kg = Rs 107 1 Kg = Rs 100 Money Deposited Rs. 100 Saving Interest Rate 4 % Balance after one Year Rs.104
  • 21. Inflation !! …. How does it affect us ??? Short by Rs. 3/- 1 yrs Inflation 7% After one year 1 Kg = Rs 107 1 Kg = Rs 100 Money Deposited Rs. 100 Saving Interest Rate 4 % Balance after one Year Rs.104
  • 22. Inflation !! …. How does it affect us ??? Invest some portion of your saving in Financial products which can match or beat inflation !!! Very Important !! 1 yrs Inflation 7% After one year 1 Kg = Rs 107 1 Kg = Rs 100 Money Deposited Rs. 100 Saving Interest Rate 4 % Balance after one Year Rs.104
  • 24.
  • 25.
  • 26. Long-term investments give higher returns A monthly investment of Rs. 5000 at 8% p.a. Rs. 5000 per month Value: Rs. 17.60 lakh Value: Rs. 30 lakh Investment In 15 years In 20 years Amount invested Rs. 9 lakh Amount invested 12 lakh In 30 years Value: Rs. 75 lakh Amount invested 18 lakh
  • 27.
  • 28.
  • 30. Delay in Investing can be Costly (example) Goal: Children Education Amount Required:- 15,00,000 /- Expected Return:- 8% p.a Duration 20 Years For 20 Years Investment per month Rs. 2,546 /- (Delay by 3 Years) For 17 Years Investment per month Rs. 3,474 /- (928) (Delay by 5 Years) For 15 Years Investment per month Rs. 4,335 /- (1,789) (Delay by 10 Years) For 10 Years Investment per month Rs. 8,200 /- (5,654) (Delay by 15 Years) For 5 Years Investment per month Rs. 20,415 /- (17,869)
  • 32. • Equity • Direct Equity • Equity Mutual Funds • Fixed Income • PPF • EPF/VPF • Fixed Deposits • Small Savings Investments • Debt Mutual Funds • Tax Free Bonds • Gold • Physical Gold • Gold ETF • Gold Mutual Funds • Real Estate • Physical • Real Estate Mutual Funds
  • 33. Three Pillars of Investment Safety Liquidity Return
  • 36. Financial Instruments to Realise financial Goals • To realise various financial goals, an investor may invest into different asset classes. • The selection of any Assets class should be based on: - Investor Risk Appetite - Investor Time Horizon - Investor Income and Expenses - Investor Liabilities
  • 37.
  • 38.
  • 39. Small Savings Schemes Product Return Tenure (yrs) Tax benefits Minimum Investments Maximum Investments Interest earned Maturity Public Provident Fund 7.10% 15 Yes under Section 80C 500 1.5 Lac Tax exempt Tax exempt National Savings Certificate 6.80% 5 Yes under Section 80C 100 no maximum Investment Taxable Tax exempt Sukanya Samriddhi Scheme 7.60% 21 Max Yes under Section 80C 250 1.5 Lac Tax exempt Tax exempt Liquidity is limited for all the products mentioned above
  • 40. Fixed Deposits Product Return Risk Liquidity Tenure Tax Benefits Interest earn Maturity Ease Bank Fixed Deposits 4-6% Low High 7 days to 10 years Yes – for selective FDs only Taxable Tax exempt Medium Post Office Fixed Deposits 5% - 7% Low Limited 1-5 years Yes Tax exempt Tax exempt Low Company Fixed Deposits 5-7% Medium to High Limited 1-5 years No Taxable Tax exempt Low
  • 41. Mutual Funds  Professional Investment Managers  Minimum Investment at Rs. 500 per month  Regulated by SEBI  ELSS – Tax Saving Mutual Funds  Different solutions to fulfill GOALS Equity Market Debt Market
  • 42. Gold as Investments ??? Gold Jewellery Gold Bar & Coins Gold Mutual Funds Sovereign Gold Bonds
  • 43. Particulars Returns/ earnings Safety Purity Gains Tradability Storage expenses Physical Gold Lower than real return due to making charges Unregulated and Risk of theft Purity always remains a question LTCG after 3 years Limited High Gold ETF Little less than actual return High High LTCG after 3 years Tradable on Exchange Minimum Sovereign Gold Bond More than actual return on gold High High LTCG post 3 years. (No capital gain tax if redeemed after maturity) Can be traded and redeemed from the 5th year with government Minimum Gold as Investments ….
  • 44.
  • 45. Direct Investment in Equity Requires
  • 46. Investment via Mutual Fund Route
  • 47.
  • 48. Merits of MF Investing over Direct Equity Investment
  • 49. Role of Securities Markets Securities market is a market where companies raise financial resources through issue of shares and debentures. The shareholders who subscribe to the shares of companies become owners of the companies. Such shares can be traded in the market and serve as an investment vehicle for investors.
  • 50. Products available in Securities Markets Stock Market Shares Bonds Debentures Mutual Funds Derivatives Alternate Investment Funds
  • 52. Process and perquisite to invest in Securities Markets Session - III
  • 53. Participation in Securities Markets • In order to participate in Securities Market, an Investor needs to have following three accounts : - Bank Account - Trading account with a broker - Demat account with a Depository Participant To open all these accounts one must be comply with KYC (Know your Customer) norms ie., proof of identity, proof of address, email ID and Contact number etc.
  • 54. Accounts needed to trade in securities market Savings Bank Account - Savings Account can be in any bank - Transfer/ receipt of funds from buying/ selling of securities Demat Account - With a SEBI registered Depository Participant (DP) - To hold shares in Demat (electronic) mode Trading Account - With SEBI registered Stock Broker( Trading Member/ TM) - To buy/ sell securities
  • 55. Forms to be Filled to open a new Trading & Demat Account A new investor has to register with a Stock Broker through whom the trades are executed on the Exchange. The investor needs to fill two forms for Opening of Trading & Demat Account : 1. Know Your Client (KYC) Form: To provide basic information of the new investor. Two modes for KYC are : • Physical KYC • e-KYC (online KYC) 2. Account Opening Form: Details of various services and charges being applied on the new investor.
  • 56. Trading / Demat Account Opening Form  Documents to open Trading / Demat account:  PAN Card: Mandatory Document & also Proof of Identity.  Same document like Driving License/ Passport. PROOF OF IDENTITY - Permanent Account Number (PAN) Card – Mandatory - Voter ID Card - Driving License - Passport - Aadhaar Card - Any other valid identity card issued by Central or State Government PROOF OF ADDRESS - Voter ID Card - Driving License - Passport - Ration Card - Aadhaar Card - Bank account statement or bank passbook - Utility bills, e.g. electricity bill or gas bill.
  • 57. Trading/ Demat Account Opening Form Proof of Income (for investors who chose to trade in Derivatives – F&O/ Commodities/ Currency) Proof of Bank Account (any one) Bank account statement for last 6 months Cancelled Cheque (with name of investor above sign here section) Latest Salary Slips/ Form 16 in case of salaried person Bank Passbook {with Indian Financial System Code (IFSC)} Copy of ITR Acknowledgement Passport Copy of Net-worth Certificate issued by a Chartered Accountant Statement of Demat holdings  Documents to open Trading/ Demat account:  If investor is unable to produce the originals of these documents for verification, he may submit self-attested photocopies.
  • 58. Documents in Account Opening Forms - Trading & Demat Account  Do’s and Don’ts for trading on Exchanges.  Policies and Procedures of Stock Broker.  Tariff Sheet. **(to be submitted only if investor is availing of additional services Account Opening Form has two type of documents : MANDATORY DOCUMENTS VOLUNTARY DOCUMENTS**  Rights & Obligations of Stock Broker Running Account Authorization. and Investor.  Power of Attorney (PoA).  Uniform Risk Disclosure Documents.  Electronic Contract Note (ECN) Declaration.  Consent for electronic communication and receiving alerts (Email/ SMS).
  • 59. In-Person Verification (IPV) Compulsory for opening trading/ demat account. It can be done through physical verification/ online verification using webcam at the Stock Broker’s office. In case of e-KYC, Video In Person Verification (VIPV) for Individuals is also available. In-person verification of the client is not required to be carried out, if: KYC of the investor is completed using the Aadhaar authentication/ verification of UIDAI. KYC form has been submitted online, documents have been provided through DigiLocker or any other source which could be verified online.
  • 61. e-KYC Process - Outline Fill the account opening details/ form online in the Stock Broker’s website. Submit scanned images of the mandatory documents/ POA (Proof of address) / POI(Proof of Identity). Complete IPV (In Person Verification) process over video call. Digitally Sign the document. Account gets activated.
  • 62. Benefits of e-KYC Benefits of e-KYC No need to visit the Stock Broker’s office Convenient Registration and Paperless Process Easy Retrieval of KYC Documents Digital Authentication Quickly start investing Time Saving
  • 63. Process Outline: Verification : Mobile and Email through One Time Password (OTP) Aadhaar through UIDAI’s authentication/ verification mechanism PAN through Income Tax Database Bank account details by initiating small transfer (usually Re.1/-) which would provide details on name of account holder, bank and IFSC code, also called Penny Drop Mechanism. Documents other than Aadhaar through Digilocker/ e-Sign mechanism e-KYC Process Visit Website/ App/ Digital platform of Stock Broker Fill online KYC Form Submit documents online as photograph/ scan of original documents, under e-Sign
  • 64. Centralized KYC (C-KYC) in Securities Market  KYC registration is centralized through KYC Registration Agencies (KRAs) registered with SEBI.  Each investor to undergo KYC process only once in securities market and details would be shared with other intermediaries by the KRAs.  Standard Account Opening form (AOF) has 2 parts: - Part I : Basic and uniform KYC details of the investor - Part II : Additional KYC information as may be sought by various Intermediaries 14
  • 65.  Read all documents in KYC carefully before signing.  Select the Segment and Stock Exchange on which you wish to trade by affixing your signature instead of a Tick mark or YES. Strike off which ever is not opted.  Sign on the Tariff Sheet.  Select / Unselect Online Trading Option.  Power of Attorney (PoA) should only be given to access your accounts to the extent of the obligation. No POA to be given to trade on your behalf.  Policies, Procedures, Brokerage Rates, Other Charges vary for every Stock Broker.  Investors have to sign only on one document while opening any account and are supposed to submit KYC documents only once.  Give your own email id/mobile number while submitting the KYC documents.  Please remember that no one can guarantee assured returns in the securities market. Points to remember for new investors
  • 66. Important Intermediaries in Securities Market • An Intermediary is an important link in any Securities Market. • They perform various functions which enable the smooth and efficient functioning of Securities Markets and Capital formation as given below: • KYC of clients • Educate investment opportunities to investors. • Help investors invest in public issues. • Execute investor’s instructions for trade and settlement. • Some qualified intermediaries render investment advise. • Brokers perform some risk bearing functions.
  • 67. Indian Securities Market – Structure SEBI – Regulator Securities Appelate Tribunal (SAT) Stock Exchanges Brokers Clearing Corporations Depositories Depository Participants (DPs) Companies (also called as issuers) Other Intermediaries (Merchant Bankers, RTAs, mutual funds, investment advisors etc.
  • 68. Three I’s of Securities Market Entities Who issues Securities and Raise Money Issuers • Companies, Central and State Govt, Local Govt and Municipalities, Financial Institution and Banks, Public Sector companies, Mutual Funds Entities Who Connected Investors with Issuers Intermediaries • Stock Exchanges, Merchant Bankers, Under-Writers, Stock Brokers, Authorised Persons (AP), Depository & Depository participants, Registrar & Transfer Agents, Credit Rating Agencies, Investment Advisors, Research Analyst, Asset Mgmt Companies and Portfolio Managers Entities Who Invests in Securities Market Investors • Retail Individual Investors, Non Institutional Investors, Qualified Institutional Buyer (QIBs), Anchor Investors
  • 69. Merchant Bankers Underwriters • Primary market specialists who promise to pick up that portion of an offer of securities which may not be bought / subscribed by investors Stock Brokers • Registered trading members of stock exchanges. • Facilitates new issuance of securities to investors. • Enables all buy and sell transactions of investors on stock exchanges. • All secondary market transactions on stock exchanges have to be conducted through registered brokers. • Plays a pivotal role in Initial Public Offering • Advise the promoter entity during raising of finance • Launch a suitable money raising instrument (IPO, Debenture, FPO)etc. after assessing promotor’s needs • manage the entire issue process until the securities are issued and listed on a stock exchange • Conduct due diligence on statements made in prospectus Intermediaries in Securities Markets 1/4
  • 70. Authorized persons (AP) Depository and Depository Participants • Enable investors to hold and transact securities in the dematerialised (Electronic) form. • Depository participants (DPs) open investor accounts, in which they hold the securities that they have bought in dematerialised form. • DPs help investors receive and deliver securities when they trade in them. • Investor-level accounts in securities are held and maintained by the DP, the company level accounts of securities issued is held and maintained by the depository. In other words, DPs act as agents of the Depositories. Registrar and Transfer Agents • Maintains records of Investors accounts and transactions • Receive and Disburse funds from Investor transactions • Prepare and Distribute account statements • Provides transaction service to Investors • Agents of the brokers (previously referred to as sub-brokers) and are registered with the respective stock exchanges. • help in reaching the services of brokers to a larger number of investors. • provide various services such as research, analysis and recommendations about securities to buy and sell, to their investors Intermediaries in Securities Markets 2/4
  • 71. Asset Mgmt Companies Credit Rating Agencies • Credit rating agencies evaluate a debt security to provide a professional opinion about the ability of the issuer to meet the obligations for payment of interest and return of principal as indicated in the security. • They use rating symbols to rank debt issues, which enable investors to assess the default risk in a security. • Credit Ratings impact the valuation of Debt Securities Portfolio Managers • A portfolio manager ideates and implements investment strategies for individuals or institutional investors. • In most situations, a portfolio manager implements a predetermined investment strategy defined by an Investment Policy Statement (IPS) in order to achieve investment goals of their Investors • Asset Mgmt companies are a vehicle to pool investment of various investors for a common objective. They charge a fee for their services • Asset management companies are permitted to offer securities (called units) that represent participation in a pool of money, which is used to create the portfolio. • They act on behalf of the investor in creating and managing a portfolio. Intermediaries in Securities Markets 3/4
  • 72. Investment Advisors Research Analyst • Specialist who analyze Economy, Industry and Companies before offering their investment Advice and recommendations. • Research Analysts are supposed to make the stock markets safer and healthier with their expertise and unbiased advice. • Investment adviser work with investors to help them make a choice of securities that they can buy, based on an assessment of their needs, time horizon return expectation and ability to bear risk. • They may also be involved in creating financial plans for investors, where they define the goals for which investors need to save money and propose appropriate investment strategies to meet the defined goals. Intermediaries in Securities Markets 4/4
  • 73. Investors in Securities Market - 1/2 Retail Individual Investor (RII) • Resident Indian Individuals, NRIs and HUFs who apply for less than Rs 2 lakhs in an IPO under RII category. • Not less than 35% of the Offer is reserved for RII category. • RII category allows bid at cut-off price. Non- institutional Investors (NII) •Resident Indian individuals, Eligible NRIs, HUFs, companies, corporate bodies, scientific institutions, societies and trusts who apply for more than Rs 2 lakhs of IPO shares falls under NII category. High Net-worth Individual (HNI) who applies for over Rs 2 Lakhs in an IPO falls under this category. • Not less than 15% of the Offer is reserved for NII category. • NII's are not eligible to bid at cut-off price. Qualified Institutional Bidders (QIB's) •Public financial institutions, commercial banks, mutual funds and Foreign Portfolio Investors etc can apply in QIB category. SEBI registration is required for institutions to apply under this category. •50% of the Offer Size is reserved for QIB's •QIB's are not eligible to bid at cut-off price.
  • 74. Investors in Securities Market - 2/2 Anchor Investor • An anchor investor in a public issue refers to a qualified institutional buyer (QIB) making an application for a value of Rs 10 crores or more through the book-building process. • The minimum application size for each anchor investor should be Rs 10 crores. No merchant banker, promoter or their relatives can apply for shares under the anchor investor category. • Up to 60% of the QIB Category can be allocated to Anchor Investors • Anchor investor's are not eligible to bid at cut-off price.
  • 75. Cut – Off Price • Companies coming up with Book Building Public Issue decided a price band for the issue. The price band usually contains an upper level and a lower level. • Cut-off price means the investor is ready to pay whatever price is decided by the company at the end of the book building process. “For ex. An ABC ltd. has come up an issue of 2000 cr. with a price band of Rs 400 –Rs 480 per share. An investor can choose any price in this range while subscribing for the company share. Apart from price range, investors also get an option to apply at Cut – off Price instead of selecting any price. If an investor selects Cut –off price, that means s/he is willing to subscribe the issue at the price being decided by the company at the end of the Book Building process. “
  • 76. END of Session - III
  • 77. Investment in Primary Markets Session - IV
  • 78. Primary market : Channel for offer of new securities, while the secondary market deals in securities previously issued. The issuer of securities offers the securities in the primary market to raise capital. Securities can also be offered in the market by existing shareholders / promoters of the company, which is called as offer for sale. Introduction to Primary Market (1/2)
  • 79. Examples of objects of the Issue (Use of Funds) : • new projects • Expansion / Diversification or modernisation. • Working capital requirement • Repayment of debt. The objects of the issue and intended utilization of funds are distinctly stated by issuers in the Offer Document In primary markets securities are offered to the public for the first time Introduction to Primary Market (2/2)
  • 80. Modes of Capital Issuances (1/3) Issues Public Issues IPO Fresh Issues Offer for sale FPO Fresh Issues Offer for sale Rights Issues Bonus Issues Private Placements Preferential Issue Qualified Institutional Placement
  • 81. IPO FPO • Further Public Offer / Follow-on Offer • Done by already listed company • Fresh issue of securities / Offer for sale of securities to public Rights Issue • Done by already listed company • Issue of securities to its existing shareholders (as on a Record date) • Record Date is fixed by the issuer • The rights offered in a particular ratio to the number of securities held by existing shareholders as on the record date. • Initial Public Offering • Done by unlisted company • Fresh issue of securities / offers its existing securities for sale / Both • Securities issued for the first time to the public • Paves way for listing and trading of the issuer’s securities in the Stock Exchange(s). Modes of Capital Issuances (2/3)
  • 82. Modes of Capital Issuances (3/3) Preferential Issue Qualified Institutional Placement • Done by already listed company • Issue of shares / convertible securities (like warrants) to Qualified Institutional Buyers (QIBs), it is called as Qualified Institutional Placement. • It is subject to prescribed norms such as minimum pricing and minimum public shareholding. • Done by already listed company • Issue of shares / convertible securities (like warrants) to a select group of persons • It is subject to prescribed norms such as minimum pricing, minimum public shareholding and lock-in. Bonus Issue • Done by already listed company • Issue of shares to existing shareholders (as on a record date) • Existing shareholders need not make any payment for “Bonus” shares • The shares are issued out of the company’s free reserve or share premium account • Issued in a particular ratio to the number of securities held on record date.
  • 83. What is IPO?  IPO means Initial Public Offering  It is a process by which a company becomes a publicly listed and traded company by offering its shares to the public for the first time  An Issuer has to file a Draft Offer Document in a prescribed format with the Securities and Exchange Board of India, Stock Exchanges and the Registrar of Companies (ROC) for listing on the stock exchanges  Once the Issuer receives observations from regulatory authorities, the issuer can open the offer inviting general public to invest in the IPO  Post successful completion of the Offer the shares of the company are traded on the stock exchange(s) where they get listed (I e., becomes eligible to be traded on stock exchange)  An IPO can be for fresh issue of shares of the company or an offer for sale of shares by the existing owners or a combination of both. For an investor, IPO or OFS will make no difference.
  • 84. Process to participate in Primary Markets • Investors who want to acquire shares in primary market do so only when a company announces offer of its shares. Announcements are usually made on news papers and your broker may also give information. • The companies issue Prospectus where detailed announcement, instructions, pricing, modalities of application, subscription opening and closing days, basis of allotment etc. are available. • Investors will have to fill the Application Form indicating the number of shares applied for. • Investors need not part with the application money immediately, rather, can use the service of ASBA. ASBA means Application Supported by Blocked Amount. Investors can earmark required application money amount in their SB account and the bank will debit the amount only after allotment of shares.
  • 85. How to apply in Public Issue? ONLINE MODE ASBA - Application Supported by Blocked Amount. - Facility provided by Self Certified Syndicate Banks (SCSCBs) - Full Bid Amount blocked in the bank account of the bidder. UPI in ASBA - For  a) Retail Individual Investors. b) Bidding for retail investors reserved up to Rs.2,00,000/-. - Application via UPI facility of Sponsor Bank. 3-in-1 Account - Applying in IPO through 3-in-1 account (demat, trading and bank account). OFFLINE MODE Filled Form - To open a Demat Account first. - Investors may obtain Application Form from Stock Broker/ Sponsor Bank/ Exchange Website. - Form submitted to Stock Broker/ Sponsor Bank.
  • 86. ASBA Application via Online Mode Source : https://www.onlinesbi.com/
  • 87. IPO Application Form via UPI Create UPI ID with any of IPO enabled BHIM UPI apps Enter UPI ID on IPO Application Check notification on your BHIM UPI app and approve Check application details and proceed Enter UPI PIN to approve the mandate block Confirmation of transaction Source : https://www.bhimupi.org.in/
  • 88. Post Issuance • Post Issuance, the securities get listed at Recognised stock exchange. • An investor can buy / sell securities at these exchanges as per their needs.
  • 89. Investing - Due Diligence Why Due Diligence?  Investment without analysis is like driving on a highway blindfolded.  Pro active approach enabling investors to know about prospective investment.  Better understanding about the past performance.  Your own assessment about possibility of future growth of the company and thus of investment made in the company. What questions to ask before investing?  Is the company’s revenue increasing?  Is the company actually making a profit?  Is the company able to repay its debts?  Is the company in a position strong enough to compete with its peers?  What is the price offered by institutional or Qualified investors (This price get divulge one day before the issue open for retail investors.)
  • 90. Information in Offer Document (1/4) Below are the table of contents of an Offer Document for illustrative reference: Any Investor, who is willing to invest in any prospective offering of shares, must go through such offer documents.
  • 91. Information in Offer Document (2/4) About the company  Business: Details of the company’s business model, its strategies and manufactured products/process/services  History and Corporate Matters: Details on the material events taken place in the history of the company and other corporate matters Management and Promoter Section  Background and the experience of the company’s management team in the industry. Financials  Contains the company's income statement and balance sheet from  Enables investor to understand the company’s performance in the past few years and its growth potential.
  • 92. Information in Offer Document (3/4) Risk Factors  Mentions about risks associated with the business, industry etc. Capital Structure  Contains details of capital formation of the company, the existing shareholders and their percentage shareholdings etc. Objects of the Issue  Informs about basic purpose of the company for going public and / or raising funds.  This section enables Investor to ascertain as to how the funds will be utilized. Basis for Issue Price  Helps to understand the basis for pricing and to compare it with other listed entities in the same / similar segment.
  • 93. Information in Offer Document (4/4) Managements discussions and Analysis of financial conditions and results of operations  Information related to the strength of the company's business plan, recent developments, performance etc.  Has analysis of performance with qualitative and quantitative measures.  This only represents the thoughts and opinions of management. Litigation and Dispute matters  Details of litigations in which the issuer company, subsidiary(ies), group company(ies), promoter(s) are involved.
  • 94. Sources of Information for Analysis Key sources of information alongside offer documents / public announcements / statutory releases : Research Reports; ROC Filings made by the Company since Inception; Industry Reports; Credit Ratings; Third Party Reports/certification on project; Techno Economic Viability Reports of their projects etc.
  • 95. Price Discovery of Shares in a Public Offering Mode of Price Discovery Type of Issue IPO Fixed Price issue Book Building Issue More common mode of IPO
  • 96. Price Discovery of Shares in a Public Offering - Fixed price issue (1/2) Fixed price issue: Company along with Merchant banker fix a price at which the securities are offered and would be allotted to investors This price which is fixed per issue is printed in the Offer Document. Usually the Offer document also contains reasoning behind the price at which shares are offered. Demand for the securities offered is known only after the closure of the issue 50 % of the shares offered are reserved for applications below Rs. 2 lakh and the balance for higher amount applications. This form of issuing securities is no longer popular and being used by issuers
  • 97. Price Discovery of Shares in a Public Offering - Fixed price issue (2/2) Illustration of Fixed Price Issue: The number of shares to be issued and price of issuance are mentioned on the forst page of the prospectus The price is already fixed prior to the IPO. No price discovery mechanism is used. All application for shares have to be made at the price mentioned else they are considered as invalid bids.
  • 98. Price Discovery of Shares in a Public Offering (1/3) Book Built Issue: Company may offer a maximum of 20% price band in which one can bid for shares. The lower end of this Price Band is called “Floor Price”, while the higher end is called “Cap Price”. Eg: Rs 100 to Rs 120 Price at which share is finally issued to investor is discovered on the basis of demand at various price levels (within Price band), Investors must specify the number of shares they want to buy and how much they are willing to pay per share (within the price band range).
  • 99. Price Discovery of Shares in a Public Offering (2/3) Stages in Book Building: The Company who is planning an IPO nominates the Lead Merchant banker(s) as “Book Runner” The bids for these shares have to be given by investors to “Syndicate Members” The syndicate members input the orders into an “Electronic Book”. This process is called “Bidding”. The book normally remains open for a period of 5 days. QIB’s place their bid a day before the issue open for Retail Investors. The subscription to QIB portion give a hint to Retail investors about the interest of market in an IPO Bids have to be entered within the specified price band. Investor can revise a bid before the book closes. On the close of the book building period, the Book Runner evaluates the bids on the basis of the demand at various price levels. The book runners and the issuing Company decide the final price at which the securities shall be issued. Finally allocation of securities is made to the successful bidders. The rest of bidders get refund of their money.
  • 100. Price Discovery of Shares in a Public Offering (3/3) Illustration of Book Building issue: Assume a price band of Rs. 20.00 (Floor Price) to Rs. 24.00 (Cap Price) per share, and total available shares (issue size) is 3,000 shares.  Company received five bids from bidders, details of which are shown in the table below. The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the entire size of 3000 shares is the price at which the “book cuts off”, i.e., Rs. 22.00 The issuer, in consultation with the Book Running Lead Manager will finalize the issue price at or below such cut-off price, i.e., at or below Rs.22.00 All bids at or above this issue price and cut-off bids (allowed for retail investors only) are valid bids and are considered for allocation in the respective categories. Bid Quantity Bid Price (Rs.) Cumulative Bid Quantity Subscription 500 24 500 16.67% 1,000 23 1,500 50.00% 1,500 22 3,000 100.00% 2,000 21 5,000 166.67% 2,500 20 7,500 250.00%
  • 101. Allotment Intimation, Transfer of Shares and Debit/Credit of Funds  The Company with the Lead Mangers, Registrar, and Stock Exchanges finalize the basis of allotment  Intimation of allotment to applicants is made through ordinary post / email and the allotment information are available on the website of the Registrar  The Basis of Allotment is published and gives details of category wise demand for shares and how shares have been allotted.  Registrar prepares and releases the fund transfer instruction for transfer of funds to Public Issue and unblocking of funds wherein bidders have not received allotment.  Registrar also gives instructions to NSDL and CDSL for credit of Equity Shares to the successful Bidders as specified in the Offer documents  Investor and check the date of allotment and date of listing of the shares in the Offer Document
  • 102. Illustration for checking details of Allotment and Listing Dates These details can be found in the Section on “Offer related information – Terms of the offer”
  • 103. Checking Allotment Status in IPO  Investors are normally informed by email/letter about the status of allotment / refund with regard to their IPO application.  Investor can also check the status of Allotment of shares by visiting the “Investor Services” section on the website of the Registrar for the Issue (RTA) on the indicative Allotment Date mentioned in the Offer Document.  In case of any issue with regard to Non-allottment of shares / Refund etc, investor should contact the RTA immediately.  The Contact details of the RTA is always provided in the Offer Document of the IPO and is also available at : https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&i ntmId=10  In the event of non-satisfactory resolution of the issue by the RTA, investor can file a complaint with SEBI on the SEBI Complaints Redress System (SCORES) at : https://scores.gov.in/
  • 104. END of Session - IV
  • 105. Investment in Secondary Markets Session - V
  • 106. Secondary Market – Meaning • Securities issued by a company for the first time are offered to the public in the primary market. Once the IPO is done and the stock is listed, they are traded in the secondary market. • The main difference between the two is that in the primary market, an investor gets securities directly from the company through IPOs, while in the secondary market, one purchases securities from other investors who willing to sell the same. • An investor can trade in securities through the stock exchange with the help of SEBI’s registered brokers who aid their client for buying and selling of various securities. • Some brokers offer internet trade facility or mobile trading facility where investor may place order directly through internet facility offered; • Some brokers receive trade orders through telephone or cell phone; • Some brokers have offices to which investor may physically go, place orders and see that such order is actually executed on the trading terminal. • Some brokers offer all the above facilities.
  • 107. Functions and Utilities  Economic Barometer.  Efficient Pricing of Securities.  Safety of Transactions.  Contributes to Economic Growth.  Spreading of Equity Cult.  Promotes Healthy Speculation.  Improves Liquidity.  Efficient Capital Allocation.  Encourages Savings and Investments.
  • 108. Primary v/s Secondary Market : Key Differentiation Primary market Secondary market Features Primary Market Secondary Market Definition Securities are issued for the first time to public Trading of already issued securities Also known as New Issue Market Post Issue Market Pricing Prices are determined by Issuer company Prices are determined by market (demand and supply forces) Key Intermediaries Merchant Bankers , RTAs AND DEPOSITORIES. Stock Brokers, CLEAING MEMBER, DEPOSITORY PARTICIPANTS Purpose To raise capital for expansion, diversification, etc. Trading of securities and thereby providing liquidity to investors; COMPANY WILL NOT GET MONEY; EXISTING INVESTOR WILL BE ABLE TO EXIT FROM THE INVESTMENT.
  • 109. Process to Invest through Secondary Markets • An investor who desires to invest in shares of companies has to open three accounts – popularly known as 3 in One Accounts. • These are Savings Bank account with a Bank, a Trading Account with a Stock Broker, and a Demat account with Depository Institution. • For opening the trading account and Demat account, your nearest stock broker will help you for which KYC documents – documents of Identity Proof and Address Proof are required. • Once trading account and demat account are opened, an investor can through the stock broker buy and sell the shares. The buying and selling of shares are done at the then prevailing market rate. • Before selecting a broker, check broker’s track record on stock exchange website – number of investor grievances, number of investor accounts, whether the broker has a branch office in your town/city, etc.
  • 110. How can one begin trading in Secondary market? • Open a demat account with a DP • Open a Savings / Current account in a bank • Open a Trading account with a Stock broker/ Authorized Person • Begin giving orders for buy / sale; Pay margin money to broker • Get confirmation for order placed; get confirmation for trade executed and a contract note. You can confirm if the trade is done on your behalf on the stock exchange web site as well. • Receive /give securities in / from your demat account if you have bought / sold • Pay / receive funds for securities you have bought/sold
  • 111. Due Diligence to be done  Underlying factors that affect a company’s actual business and its future prospects  Questions to ask before investing include - o Is the company’s revenue growing? o Is the company actually making a profit? o Is the company able to repay its debts? o Is the company in a position strong enough to compete with its peers? o Does the company pay dividends? o What has been the trend of prices of the shares? o Check recent development in the company on stock exchange website.
  • 112. 112 Due Diligence to be done Through Stock Exchange Website Company Website Industry Research Newspapers/ Magazines Social Media
  • 113. Important factors and metrics for Due Diligence  Details of Promoters & Shareholding / pledged shares of the Company. (available on company/stock exchange website)  Scope/Growth/Competition/Profitability/Structure of Industry of the Company. (quarterly and annual disclosures made to stock exchange - available on company/stock exchange website)  Financials of the Company viz. Earnings per Share (EPS), Price to Earnings, Ratio (P/E), Book Value, etc (all this available in quarterly results published on stock exchange web site).  Cash Flows from operations. ( a part of financial statements every year; available on company/stock exchange website)  Past Growth track record of sales turnover & profitability. ( a part of financial statements every year; available on company/stock exchange website)  Dividends paid by company in last 5 years.  Debt of the Company. (( a part of financial statements every year; available on company/stock exchange website)  Corporate Governance Track record. ( a part of financial statements every year; available on company/stock exchange website) 11 3
  • 115. Modes of Placing Orders to trade Modes of placing orders to Trade Visit to Broker’s Office Trade via Phone Call Through an email to Stock Broker By using Stock Broker’s website By using Stock Broker’s Mobile App  While placing order to trade you receive SMS/ Email alerts on your registered mobile number and email account.
  • 116. Place Order : Visit to Broker’s Office Steps for Trading by visit to Stock Broker’s Office Visit the Designated Branch of the Stock broker and make an entry in the visitor’s register at the premises of the Stock Broker. Get quote for the scrip you want to trade on. Mention scrip, price, quantity, type of order you want to place, the exchange on which you want to execute, while placing order to the Stock broker. Provide proof of placement of order to the Trading Member. Verify trades at the end of the trading session. Trades are subject to payment of Margins 11 6 1
  • 117. Place Order : By Phone “Call & Trade”  Check whether Stock Broker offers facility to trade via Phone Call. All phone calls for placing orders with dealers are recorded. Steps for Trading by Phone Call Call the phone number given by the Stock Broker for placing of Orders from the Mobile number registered with the Stock broker Call should connect to the “Call & Trade” facility desk of the Stock Broker Confirm identity details – Name, Date of birth, PAN number etc Place your Order – Scrip details, Quantity, Type of order etc Trading account will be updated on successful execution of the order. Trades are subject to payment of Margins (Explained in later slides)
  • 118. Place Order : By Email  Check whether Stock Broker offers facility to trade via Email. All phone calls for placing orders with dealers are recorded. Steps for Trading by Email Select “Email based trading” in the Account Opening Form. Send Email with details of trade – name of scrip, Price, Order Type, Quantity, etc. Email must be sent from the same email ID as provided in the KYC form Trades are subject to payment of Margins (Explained in later slides) 11 8
  • 119. Place Order : Online (Website/ App) Steps for Trading Online Link your Trading, Demat and Bank Account. Sign the IBT (Internet based trading) agreement after checking the costs involved and the facilities provided. Visit website of the Stockbroker / Install the Online Trading app. Investor must login using Username and Password provided. Some Stock Brokers also have 2-Factor verification system where additional OTP also needs to be entered. Check current price and volume details of stock you want to buy/ sell on Market Watch Section of the Stock broker’s terminal.
  • 120. 12 0 Place Order : Online (Website/ App) Market Watch Section :  Allows investor to check details of the stock that he wants to buy/ sell.  Information Displayed in Market Watch: - Last Traded Price (LTP). - Percentage change – % Change from previous day close. - Previous day close – At what price did the stock closed the previous day. - O.H.L.C – Open, High, Low and Close Prices. - Volumes – How many shares are being traded at a particular point of time? - Bid and ask price ladder.
  • 121. Place Order : Online (Website / App)  Always check the Orders available for the shares of the scrip before placing your order.  This gives idea of supply and demand (what quantity available for what price) of the shares. Sample Order Availability Screen  Select the stock you want to trade in.  Place the order for Buy / Sell for a specified quantity and a specified price SCRIP NAME BID ORDERS QTY BID ORDERS QTY 240 15 5000 241 6 500 239 50 10000 242 54 264 238 36 6800 243 38 398 237 52 2400 244 21 8500 236 35 9000 245 56 412 Open 250 High 251 Low 240 Close 246 Volume 65000 AvgPrice 248 LTQ 635
  • 122.  Stock Quote: - Contains data points about stock of a company. - Valuable tool to get a brief snapshot of a company.  Details in a Stock Quote Place Order : Stock Quote Company name and symbol Stock Price High / Low Close Price 52 week High / Low Net Change PE Ratio Volume 12 2
  • 123. Place Order : Types of Orders 20 PRODUCT CODES MIS – Margin Intraday Square- off - For Intraday training. - Investor needs to pay margin uner intraday framework to use leverage provided by Stock Broker. - Positions automatically squared off at EOD. CNC – Cash and Carry - For delivery based trades. - No leverage. - Investor must have stock in his Demat account for selling. - Positions not automatically squared off at EOD. NRML – Normal (For F&O Trading) - For overnight trading of futures and options. - Investor needs to pay margin under overnight framework to use leverage provided by Stock Broker. - Positions not automatically squared off at EOD.
  • 124. Placing order to trade A Stock Order is simply the instruction given by the trader / Investor to buy or sell stocks from their trading platform. While placing an order, you might find the various types of orders available on your trading screen like : • Limit Order • Market Order • Stop Loss Order • AMO (After Market order) • GTC (Good Till Cancelled order) • IOC (Immediate or Cancel order) • Cover Order (CO) • Bracket order (BO)
  • 125. Type of Orders and their Utility • Limit Order - A limit order is where the trader can set a predetermined price to buy or sell a share. • Market Order - A market order buys or sells at the current market price of the share. • AMO (After Market Order) - AMO’s are the trades which are placed after the market is closed. AMO can also be placed at Market Price. • IOC (Immediate or Cancel Order) - As the name suggests, when you place an IOC trade, if the trade isn’t executed immediately as soon as it is placed on the exchange, it gets cancelled.
  • 126. Type of Orders and their Utility • Stop Loss Order - A stop loss is where a trader can limit his losses by exiting the trade if the share reaches the trigger price. By placing a stop loss, you can save yourself from heavy losses if the price of a share rises or falls suddenly. • Cover Order (CO) - Cover order is one of the types of orders where you can enter into a position along with stop loss in the same trade. • Bracket Order (BO) - Bracket order is a trade where 3 orders bundled into one. Here, you can place a trade with a target price and a stop loss.
  • 127. Trading Terminal Features The login process Access to Market Watch List Creation of Customised Watch List Placing of Buy / Sell Order Access to Trade Book Access to Order Book Seamless Fund Transfer
  • 128.  Purpose of Order Book : o Keeps a record of all the orders put by the client o Check order details of past orders o Modify the orders o Check Status of Order (Open / Completed / Rejected)  Trading History : o Once Order is placed and trade get executed, details are trade are visible on Trade history Page. o Prior to execution of trade one can Modify Order. Place Order : Client Order Book
  • 129.  Fully understand the system , features and meaning of each option.  Good practices for Trading Password  Make your trading password complicated and difficult to guess.  Avoid simple hack-able passwords like your name, your surname, date of birth, marriage anniversary etc. Do not ever write down your password on a piece of paper for the sake of future reference. Above all, never share your log in details with anybody else.  Web browsers offer you the facility to remember your password. Investors are advised to avoid using this. Place Order : Precautions to be taken for online modes (website/apps) (1/3)
  • 130.  Avoid accessing your internet account from cyber cafes. Most of the cyber cafes do not use proper anti-virus and anti-phishing software, which means your password can be easily stolen. On your personal PC or laptop always ensure that the virus protection is up-to-date.  Be wary of fraudulent phone calls and emails which try to elicit details of your trading and bank accounts.  Never let your trading screen remain unattended at any point of time.  Make it a point to log out of your trading account when you are through instead of just closing the window.  Take additional care while filling in quantity and price; if quantity is typed in price columns and price on quantity column, great disaster can happen; once trade is done – it cannot be reversed. Broker also cannot help in this. Place Order : Precautions to be taken for online modes (website/apps) (2/3)
  • 131.  Avoid accessing your internet trading account through free wi-fi offered at airports, malls etc. These are often unsecure networks.  Before you trade ensure that your trading address starts with https:// and not http:// to be doubly sure that it is a secured site.  Regularly cross check your personal trade sheet, your order book and your trade book. Also, check the contract notes and reconcile it with your bank account and demat account at least once a week. Place Order : Precautions to be taken for online modes (website/apps) (3/3)
  • 133. Post-Trade: Trade Confirmation by Stock Exchange  Trade Confirmation by SMS - At End of Day, Exchange sends SMS & Email containing information of trade. - SMS: Contains value traded on a day (Sample SMS provided) Example of Trade Confirmation: “Dear (PAN No.), Your Traded Value for <Date> <Seg> <Rs.------- >. Check your registered email id. For details contact broker.” 13 3
  • 134. Post Trade: Trade Confirmation by Stock Exchange  Trade Confirmation by Email • Contains breakup of trades executed through a TM on a day • Email will come from domain of Stock Exchange Source : https://www.nseindia.com/
  • 135. Post Trade: Trade check / verification on Stock Exchange Website (1/3)  Trade verification facility available on the Exchange Website • The data on trades would be available on T+1 day. • At any given point in time 10 trading days' data would be available for verification. • Please ensure to provide / update latest email address and mobile number to trading members. • Review with trading members the status of upload of email address and mobile numbers on the NSE UCI Online System to ensure receipt of trade alerts
  • 136. Post Trade: Trade check / verification on Stock Exchange Website (2/3) Source : https://www.nseindia.com/
  • 137. Post Trade: Trade check / verification on Stock Exchange Website (3/3) Source : https://www.bseindia.com/
  • 138. Post Trade: Contract Note What is a Contract note? • Record of any transaction. • Confirmation of trade done. • In case of discrepancy, contact your broker immediately. What does a Contract Note contain? • Details of transaction. • Date, Time, Price, Quantity, Trade ID, various charges/ levies, etc. How to receive a Contract Note? • Within 24 hours from the date of trade execution. • E-Contract Note sent to registered email ID. • Can opt for Physical Contract Note. • Quarterly statement of funds and securities . 13 8
  • 139. Basic details: Details for each trade executed (Buy/ Sell): Any discrepancies observed in the Contract Notes should be brought to the notice of your TM in writing, immediately Post Trade: What should a Contract Note Contain? Client Code Client PAN Trade Date Order No. Trade No. Trade Time Scrip Code/ ISIN/ Contract Details Traded Price Trade Quantity Brokerage & Charges (as per Tarriff Sheet) Net Rate Brought forward Position (only in derivatives) 13 9
  • 140. Post Trade: Sample Contract Note (1/2) 14 0
  • 141. Post Trade: Sample Contract Note (2/2) 14 1
  • 142. Post Trade: How to make payment to Stock Broker (Buy Trade)? PAY-IN OF FUNDS: - Stocks: Before T+2 - Derivatives: Before T+1 - Only Cheque / NEFT / RTGS to TM - Transfer from the bank account linked with client code only - In 3-in-1 Accounts, funds are automatically deducted from linked Bank Account - Confirmation to be obtained from the TM for receipt of funds PAY OUT OF SECURITIES: - Shares should be received in Beneficiary Account of investor within 24 hours of payout. CASH DEALING IS STRCTLY PROHIBITTED
  • 143. Post Trade: How to make payment to Stock Broker (Sell Trade)? PAY-OUT OF FUNDS: - Stocks: On T+2 - Derivatives: On T+1 - Stock Broker to transfer funds to the client (investor) within 24 hours of payout. PAY-IN OF SECURITIES: - Investor is advised to confirm the availability of shares prior to executing sale of shares. - In case POA has not been given, ensure transfer of shares by giving a filled in DIS Slip
  • 144. Post Trade: Default of pay-in obligation and short delivery of shares Default of Pay- In Obligation and Short Delivery of Shares Delayed payment Charges: • Levied when investor delays the payment beyond the pay-in time on the settlement day. • Levied to discourage delayed payment from investors. Auction of securities in case of default: • When investor does not deliver securities by pay- in time on the settlement day. • For all such “short deliveries”, Clearing Corporation conducts a “buying-in auction” on the settlement day (T+2), after completion of the pay- out, through the exchange trading system.
  • 145. Post Trade: Settlement Process & Running A/C • Settlement of Funds: - Pay-Out happens on T+2 Basis. - Settlement of funds and / or securities to be done within one working day of the pay-out (unless it is a “RunningAccount”). • Running Account Authorization : - Authorize by Client to the Broker (in account. writing) to maintain a running - Funds and securities maintained on a running account basis have to be settled by Broker on a monthly / quarterly basis, as per the client mandate. - Broker has to ensure that there is a gap of maximum 30/ 90 days (as per the client mandate) between two running account settlements.
  • 146. Credit of shares happens on T+2 day Shares debited from Seller Client A/C: Around 11 AM. Subsequently shares come to Pool A/C of Broker Broker credit these shares to Account of Buyer by EOD. Investor should insist that shares be transferred to his own Demat A/C and avoid leaving shares in Stock Broker’s Pool Account. On T+3 day, client should check his Demat A/C for the receipt of shares  Check your Demat statement on Depository website :  NSDL – NSDL IDeAS Speed-e: https://eservices.nsdl.com/  CDSL– CDSL Easi: https://www.cdslindia.com/Footer/Easi.html 14 6 Post Trade: Checking Credit of Shares (Delivery Trades)
  • 147. Post Trade: Do's and Don'ts of keeping funds in Trading Account Dos: • Investor should make sure funds to the extent of obligation (Pay-in & Margin) is available in your trading account • Investor should transfer funds to the Stock broker for obligation only. • Investor should ask Stock broker for Quarterly / Monthly settlement of both funds and securities from the TM; investor can ask for money immediately after sale as well. • Check you ledger account periodically. • In case of any suspicious entries kindly raise the alert to Stock Broker / Exchange / SEBI immediately
  • 148. Post Trade: Do's and Don'ts of keeping funds in Trading Account Don’ts: • Investors are advised not to keep idle funds lying with the Stock Broker • Investors are advised not to provide cheques in the name of any “Authorised Person ” / 3rd party • Pre-Signed Blank Cheques and DIS Slips should NOT be provided to the Stock Broker/ Authorized Person / Employee of the Stock Broker
  • 149. Pre Trade : Payment of Margins  Payment Of Margin: - Check your margin requirement on Stock Broker’s website while placing the trade. - Pay the margin amount to the Stock broker / maintain the margin amount in the linked Bank A/C before placing order. - You may also pledge securities instead of depositing cash as margin money. This can be done by submitting a pledge instruction by filling up the pledge form with the Depository. On buying a Stock, investor may Buy it on margin or pay only a % of its price (called margin) Pay Entire price upfront
  • 150. How should you choose a broker/ DP? • Always deal with a SEBI registered Intermediary • Choose the broker/sub broker / DP on the basis of • Character ( Trust) • Any action taken by regulator in the past, involvement in dubious schemes • Cost • Brokerage, AMC • Convenience • Time , Location, Speed-E facility etc. • Online broker? • Are you comfortable with technology? • Power supply • Net connectivity
  • 152. Mutual Funds – An Overview Session - VI
  • 153. What is a Mutual Fund (MF)? 4 Common pool of funds contributed by investors and invested in accordance to the objectives. Investments are held in a trust of which the investors alone are the joint beneficial owners. Trustees oversee the management through investment managers.
  • 155. What is an Asset Management Company (AMC)? • Investment manager of the mutual fund. • Appointed by the trustees, with SEBI approval. • Trustees and AMC enter into an investment management agreement. • Required to invest seed capital of 1% of amount raised subject to a maximum of Rs.50 lakh in all open- ended schemes. • Should have a net worth of at least Rs.50 crore at all times. • At least 50% of members of the board of an AMC have to be independent. • AMC of one mutual fund cannot be an AMC or trustee of another fund. • AMCs cannot engage in any business other than that of financial advisory and investment management 1 5 5
  • 156. How does a Mutual Fund Work? • Pool of investors money. • Invested according to pre-specified investment objectives. • Benefits accrue to those that contribute to this pool. • There is thus mutuality in the contribution and the benefit. • Hence the name ‘mutual’ fund. 15 6
  • 157. Classification of Mutual Funds Classification of Mutual Funds Based on Structure Based on Investment Objective Based on Investment Style Open Ended Funds Closed Ended Funds Interval Funds Debt Funds Equity Funds Hybrid Funds Passive Funds Active Funds
  • 158. Classification - Based on Structure • No fixed maturity date. • Accept continuous sale and re-purchase requests. • Transactions are NAV-based. • Unit capital is not fixed. Open Ended Funds are closed for further • Run for a specific period. • Offered in an NFO but purchases after NFO. • Unit capital is kept constant. Closed Ended Funds • Variant of closed-ended funds. • Becomes open-ended at specific intervals. • Have to be mandatorily listed. Interval Funds
  • 159. Classification - Based on Investment Objective • Invest in short and long term debt instruments. • Aim to provide regular income. Debt Funds • Invest in equity securities. • Aim to provide growth and capital appreciation over long term. • Invest in a combination of equity and debt securities. • Proportion of equity and debt may vary. • Aim to provide for both income and capital appreciation. Equity Funds Hybrid Funds 15
  • 160. Classification - Based on Investment Style • Replicate a market index. • Invest in same securities and in same proportion as that of index. • No active selection of any stock / sector. • Expenses are lower. • Portfolio is modified every time index composition changes. Passive Funds • Invests in securities and sectors that may offer a better return than the index. • Actively manage the allocation to market securities and cash. • May perform better or worse than the market index. • Incur a higher cost than passive funds. Active Funds
  • 161.  Categorization of open-end mutual funds: - To ensure uniformity in characteristics of similar type of schemes launched by different mutual funds. - Helps investors to evaluate different options available before making informed decision to invest. Hybrid Schemes Categorization of Mutual Fund Schemes Equity Schemes Debt Schemes Solution oriented Schemes Other Schemes Categorization of Mutual Fund Schemes 12
  • 162. How to invest in Mutual Funds? 13 Via Physical Mutual Fund Application Form Via Online Mode (Website of Mutual Fund) Via Mobile App of Mutual Fund Via AMFI Registered Mutual Fund Distributor (using physical form/ online/ mobile app)
  • 163. Mutual Funds investment procedure Indicate whether you are a First Time Investor/ Existing Investor. Visit official website of KRA and check whether you are KYC compliant or not. You must submit this KYC status. Provide your details like name, address, etc. Submit Bank account details and copy of “Cancelled Cheque”. Once documents are accepted by Mutual Fund Company, you may start making investment.
  • 164. Investment Modes in Mutual Funds Direct Mutual Fund • Directly offered by fund house. • No involvement of third party agents – brokers or distributors. • No commissions and brokerage. • Have low Expense ratio (because of no commissions). • Have high NAV. • Return is higher due to a lower expense ratio Regular Mutual Fund • Bought through an intermediary. • Intermediaries can be brokers, advisors or distributors. • Commissions and brokerage paid. • High Expense ratio as there are commissions to pay. • Low NAV. • Return is lower due to a higher expense ratio Regular Mutual Fund
  • 165. Investment Modes in Mutual Funds • One time investment. • Usually, large sum of money is invested in one go. • Investor faces risk of volatility in markets. Lump-sum Investment • Staggered Investment. • Period of commitment - 6 months, 1 / 3 / 5 years. • Specific intervals - monthly, quarterly, half-yearly. • Made on specific dates e.g. 1st, 5th, 10th, 15th of every month. Systematic Investment Plan (SIP)
  • 166. Mutual Funds – Investment Modes Lumpsum  One time bulk investments (like salary Bonus, maturity of the products)  Minimum amount Rs. 5,000 approx SIPs • Regular Investments with fixed amount from time to time • Minimum amount to start is Rs. 500/- • Buy More units @ low Price & Buy Fewer units @ High Prices
  • 167. Transactions in Mutual Funds • Purchase • One time (Min Rs 5000) • SIP (Systematic Investment Plan) (Min Rs 100-500) • Periodic transfer from Bank account to Selected Scheme • STP (Systematic Transfer Plan) • Periodic transfer from One Scheme to Other Scheme • Redemption • SWP (Systematic Withdrawal Plan)
  • 168. Mutual Fund Investment and wealth creation • Those investors who do not want to take risks in directly investing in equities can go through mutual fund route. • Mutual Funds are those institutions that mobilizes funds from large sections of public and invest them in securities and transfer the benefits to the investors. • Systematic Investment Plan (SIP) of Mutual Funds help salaried class and others to invest a fixed sum regularly, say, every month and participate in the wealth creation process.
  • 169. • Disciplined Saving • Flexibility • Long term Gains • Convenience Benefits of SIP
  • 170. Systematic Investment Plan Advantages of investing through SIP are: Discipline: Stay focused, invest regularly, and maintain discipline Power of Compounding: The larger the period, higher the return Rupee Cost Averaging: Investment at regular intervals over time enable to buy more units when the price is lower Convenience : Through giving an ECS mandate to your banker.
  • 171. Merits of SIP over Lumpsum Investment Lumpsum Month Monthly Investment NAV Units Purchased January 12000 10 1200 Feburary March April May June July Aug Sep Oct Nov Dec Total 12000 11 1200 Current Market Price of Investment 13200
  • 172. MF SIP – Route to wealth creation SIP Month Monthly Investment NAV Units Purchased January 1000 10 100.00 Feburary 1000 9 111.11 March 1000 8.5 117.65 April 1000 9 111.11 May 1000 10.1 99.01 June 1000 8.5 117.65 July 1000 8.25 121.21 Aug 1000 8.75 114.29 Sep 1000 9.25 108.11 Oct 1000 10.1 99.01 Nov 1000 9 111.11 Dec 1000 11 90.91 Total 12000 1,301.16 Current Market Price of Investment 14312.78516
  • 173.
  • 174. Mutual Fund Plans – Growth vs Dividend Options 18 • Gains made in portfolio are retained and reflected in NAV. • Realized profit/loss is treated as capital gains or loss. • No increase or decrease in number of units, except if units are purchased or sold, by the investor. Growth Option • Fund declares dividend from realized profits. • Amount and frequency varies and depends upon distributable surplus. • NAV falls after dividend payout to the extent of dividend paid. Dividend Payout Option • Dividend is re-invested in same scheme by buying additional units at ex-dividend NAV. • Number of units standing to the credit of the investor, increases each time a dividend is declared, and reinvested back into the scheme. Dividend Reinvestment Option
  • 175. Information about the Mutual Funds (Offer Document) • Contains generic and statutory information of mutual fund. • Contains financial information of mutual fund. • Lays down rights of investor. • Other additional information. Statement of additional information (SAI) • Scheme type (open or closed end). • Investment objective. • Asset allocation. • Investment strategies. • Terms with regard to liquidity. • Fees and expenses. • Other information relating to the scheme. Scheme information document (SID) • Contains generic and statutory information of mutual fund. • Contains financial information of mutual fund. • Lays down rights of investor. • Other additional information. Statement of additional information (SAI)
  • 176. Riskometer and its importance • Risko-meter - Introduced in 2015, riskometer for mutual funds is a tool to assign risk levels associated with various mutual fund scheme. • The riskometer methodology of equity funds factors in three parameters - market capitalisation, volatility and impact cost (liquidity) to assign risk grades. A risk score is assigned to each of these parameters. “For example, a fund investing a higher portion of its assets in mid caps and small caps will earn a higher risk score on the market capitalisation parameter. Similarly, funds whose underlying investments are more volatile and less liquid will attract higher risk scores on those two parameters, respectively.” These three risk scores are then aggregated through a simple average to arrive at the fund's overall risk score, which forms the basis of bucketing it into one of the six risk labels (Low, Low to Moderate, Moderate, Moderately High, High and Very High). Likewise, for debt funds, risk factors comprise credit risk, interest-rate risk and liquidity risk.
  • 177. Risk-o-Meter and its importance Six levels of risk for mutual fund schemes: i. Low Risk ii. Low to Moderate Risk iii. Moderate Risk iv. Moderately High Risk v. High Risk and vi. Very High Risk Importance of Risk-o-meter : - Helps align risk that a fund carries with the risk profile of the investor. - Equity as asset class: Volatile: High risk - Debt as asset class: Stable: Low risk - Hybrid: Moderate: Depends on allocation and concentration
  • 178. Meaning of Net Asset Value (NAV) • Net Asset Value (NAV) is the market value of all securities held by the mutual fund scheme. You would find the performance of a mutual fund scheme denoted by NAV or the Net Asset Value. • NAV, in simple terms, is the price you pay for the units of the mutual fund scheme. Generally, mutual fund units begin with a unit-cost of ₹10 and it rises as the fund’s assets under the management grow. • Net Asset Value = [Assets – (Liabilities + Expenses)] / Number of outstanding units
  • 179. NAV Explanation • If you invest Rs 5,000 in a mutual fund with a net asset value of Rs 500, then you can purchase 10 units of the mutual fund. • For example, you put Rs 1 lakh in Mutual Fund Scheme A and Mutual Fund Scheme B. The NAV of mutual fund scheme A is Rs 10 and that of mutual fund scheme B is Rs 20. • You have units of mutual fund scheme allocated as follows: • Mutual Fund Scheme A : Rs 1,00,000 / Rs 10 = 10,000 units • Mutual Fund Scheme B: Rs 1,00,000 / Rs 20 = 5,000 units.
  • 180. NAV Explanation • When the value of the securities in the fund increases, the NAV increases. When the value of the securities in the fund decreases, the NAV decreases. The NAV number alone offers no insight as to how “good” or “bad” the fund may be. • Investor can see the NAV on closing basis every trading day on respective Mutual fund website or on AMFI website:
  • 181. Fact Sheet and its utility • A mutual fund fact sheet allows investor to be aware and up to date on the key facts of a fund. • A mutual fund fact sheet is a basic three-page document that gives an overview of a mutual fund. • For potential investors, this is a necessary and easy report to read before investing. “It's a great starting point when you're evaluating an investment,” Sample FactSheet - Sample Fact Sheet
  • 182. How to choose Mutual fund for Investment • Think of your Investment horizon • Check MF performance against benchmark over a period of time. • Check MF performance vis a vis its categories of funds. • Check whether MF performance is consistent over the years. • Check Fund Manager Experience. • Check AMC track record. • Check fund’s Expense Ratio • Read the Fact Sheet of MF and its various schemes.
  • 183. END of Session - VI
  • 184. Precautions while investing in securities markets Session - VII
  • 185. Risk of Equity and Debt Investing Risk in Equities Can be classified as systematic risk and non-systematic risk Systematic risk  Systematic risk is the risk of market (macro-economic) itself and includes rising inflation and interest rates, unfavorable foreign exchange rates, floods, famine, tsunami, pandemics, elections, global crisis (sub-prime) etc.  It cannot be diversified away.  Beta is a measure of the systematic risk of the market.  All investments are susceptible to such systemic risks and cannot be wished away.
  • 186. Risk of Equity and Debt Investing Non-Systematic risk  Non-Systematic risk is peculiar to the company or to that sector.  Rising input costs, new technology, new products from competitors, fragmented market due to rising competition, unfavorable cost structure, saturation point in the industry, exodus of key personnel / change in promoter, sale of company etc.  It can be reduced by investing in a portfolio of stocks whose returns are not correlated or poorly correlated ie., not concentrate all investment in the same or similar stocks.
  • 187. Risk of Equity and Debt Investing Risk in Debt  Credit Risk/Default Risk  Interest Rate Risk  Liquidity Risk  Reinvestment Risk  Inflation Risk
  • 188. How risk is mitigated in Securities Market 1.Diversification of portfolio 2.Tweaking portfolio to mitigate interest rate risk 3.Hedging 4.Go long-term for getting through volatility times 5.Stick to low impact-cost names to beat liquidity risk 6.Fight horizon risk arising out of assets-liability mismatch
  • 189. Dos and Don’ts of Investing  Get started early and start small.  Get an education on basics of investments.  Research before investing.  Invest only surplus amount and have an investment goal.  Build a diversified stock portfolio and invest for the long term.  Review your portfolio periodically.  Invest only thru a SEBI registered entity.  Be emotionless and weed out losers
  • 190. Dos and Don’ts of Investing Don’ts Χ Do not confuse investment with gambling. Χ Do not invest blindly on tips and recommendations. Χ Do not have unrealistic expectations. Χ Do not invest through unregulated entities. Χ Do not follow the herd and over trade. Χ Do not take emotional decisions. Χ Do not trade beyond your risk-taking ability
  • 191. Rights and Responsibilities of Investors 1/2 1.Get Unique Client Code (UCC) allotted 2.Get a copy of KYC and other documents executed 3.Get trades executed in only his/her UCC 4. Pay prescribed margins 5.Get the right price 6.Contract note for trades executed 7.Details of charges levied 8. Pay or deliver money or shares for buy and sale transactions 9.Receive funds and securities on time 10.Receive statement of accounts from trading member 11.Ask for settlement of accounts
  • 192. Rights and Responsibilities of Investors 2/2 10.Right to attend AGM of listed companies 11.To receive communication from companies 12.Receive dividend , interest , corporate actions
  • 193. Obligations of Investors 1.Execute Know Your Client (KYC) documents and provide supporting documents 2.Understand the rights given to the market intermediaries 3.Read Risk Disclosure Document and other documents 4.Understand the product and operational framework and deadlines 5.Pay margins/funds and securities for settlement on time 6.Verify details of trades 7.Verify bank account and DP account for funds and securities movement 8.Review contract notes/DP statement and statement of account 9. Keep a record of all the above documents relating to transactions; will be useful in case of dispute.
  • 194. Right to remedies 1) Take up a complaint against market intermediaries with the Exchange/Depositories/SEBI; Exchanges offer online grievance redressal facility; SEBI offers SCORES for complaint against any intermediary. 2) Take up a complaint against listed company. 3) File a complaint with stock exchange; if stock exchange does not resolve it, file an arbitration against member/DP if there is dispute. 4) Challenge the arbitration award before appellate arbitration and then court of law, if not satisfied. 5) Consumer Courts.
  • 195. Obligations towards Remedies 1.Take up complaint within reasonable time 2.Complaint to be supported by appropriate documents 3.When additional information is called for provide the same 4.To participate in resolution meetings 5.Avoid unnecessary forum shopping
  • 196. SEBI’s Role • Securities and Exchange Board of India (SEBI) as a regulator in securities market has been set up in 1988 and got the legal status in 1991 through SEBI Act 1992. • The three functions of SEBI are; • Protect the interest of Investors • Create an orderly development of Indian Capital Market • Regulate the various intermediaries in stock market , and
  • 198. Measures taken by SEBI for investor protection 1.Systemic changes -Anonymous trading, demat, CCP , ASBA 2.Preventive- Education, awareness , surveillance 3.Punitive- Inspection/Investigation /orders 4.Remedial-SCORES/ Arbitration/IPF/Disgorgement/IGRC
  • 199. Investor Protection The core focus area of SEBI’s policy-making Financial Education – Regional Seminars, Resource Persons Grievance Redressal - SCORES Investor Awareness – 24 Hour Help Line Local Offices
  • 200. Reforms / Regulations in Securities Market– Objectives Enhance • Safety • Transparency • Efficiency – Speed, Cost • Fairness Investor Protection
  • 201. Retail Investors – Initiatives of SEBI • A Retail Investor is defined by SEBI as an investor who apply for an IPO Issue up to the amount of Rs 2 lakhs. • SEBI mandates Retail Investor Quota of 35 per cent in all IPOs. • ASBA facility introduced by SEBI wherein investors need not part with their money till allotment of shares • SCORES – SEBI Complaint Redressal System, introduced wherein investors can seek SEBI Intervention in redressing their complaints against any market intermediary. • SEBI Helpline – A dedicated toll free telephone line where investors can clarify their doubts on matters related to stock market investment
  • 202. Sebi Complaint Redress System (SCORES) http://scores.gov.in 1.SEBI has put in place a web based centralized grievance redress system called SEBI Complaint Redress System (SCORES) on June 8, 2011. 2.SCORES is web enabled and provides online access 24 x 7.
  • 203. SCORES  Online platform to enable investors to lodge their complaints pertaining to securities market  Complaints against listed companies and SEBI registered intermediaries  Status of every complaint can be viewed online in the SCORES website (Status can also be obtained from toll free helpline)  Entity/Investor can seek/provide clarification on complaint online  Unique complaint registration number for future reference and tracking  All complaints received by SEBI against listed companies and SEBI registered intermediaries are dealt through SCORES.
  • 204. Complaints that come under the purview of SEBI Complaints arising out of issues that are covered under:  SEBI Act,  Securities Contract Regulation Act,  Depositories Act and  rules and regulation made there under and relevant provisions of Companies Act, 2013.
  • 205. Matters that cannot be considered as complaints in SCORES  Complaint not pertaining to investment in securities market  Anonymous Complaints (except whistleblower complaints)  Incomplete or un-specific complaints  Allegations without supporting documents  Suggestions or seeking guidance/explanation  Not satisfied with trading price of the shares of the companies  Non-listing of shares of private offer  Disputes arising out of private agreement with companies/intermediaries  Matter involving fake/forged documents  Complaints on matters not in SEBI purview  Complaints about any unregistered/ un-regulated activity
  • 206. Complaints against companies that cannot be dealt on SCORES  companies which are unlisted/delisted, placed on the Dissemination Board of Stock Exchange  sick companies, company where a moratorium order is passed in winding up / insolvency proceedings  vanishing company.  suspended companies, companies under liquidation  Under sub-judice  companies, falling under the purview of other regulatory bodies
  • 207. Timeline for lodging complaint in SCORES  Investor may lodge a complaint on SCORES within three years from the date of cause of complaint.  In case investor fails to lodge a complaint within the stipulated time: a. He may take up the complaint with the entity concerned b. He may approach appropriate court of law
  • 208. Mandatory information required For lodging a complaint in SCORES, the following personal information has to be mandatorily provided by investors/complainants:  Name  Address  E-mail Address  PAN and  Mobile Number
  • 209. SEBI SCORES APP Investors may lodge their grievances with SEBI through SEBI SCORES mobile App. Investor can access SCORES at the convenience of a smartphone. Enables investors to track the status of the complaint redressal. Investor has to register first in order to lodge complaints
  • 210.  Toll free Investor Helpline no's 1800 266 7575/ 1800 22 7575  Operational hours: 9:00 a.m. to 6:00 p.m. [except public holidays declared in the state of Maharashtra]  Operates in English, Hindi, Bengali, Gujarati, Marathi, Kannada, Telugu and Tamil  Facilitate replies to various queries of the general public on matters relating to securities market SEBI Toll Free Helpline
  • 211. What type of complaints are not handled by SEBI? 1.Complaints against unlisted/delisted/wound up/liquidated/sick companies 2.Loan transactions with brokers 3.Fraud committed by brokers on private transactions (ex: purchase of flat) 4.Multilevel marketing companies /Gold loan by Jewelers 5.Complaints that are sub-judice (relating to cases which are under consideration by court of law, quasi- judicial proceedings etc.) 6.Complaints falling under the purview of other regulatory bodies viz.RBI, IRDA, PFRDA, CCI, etc., or under the purview of other ministries viz., MCA, etc.
  • 212. • Fraudulent investment operation • Promises abnormally high rate of return • The scheme generates returns for older investors from their own money or money paid by subsequent investors, rather than any actual profit earned. • Scheme collapses when the earnings, if any, are less than the payments to investors. • Usually, the scheme interrupted by legal authorities before it collapses • The promoter vanishes taking all the remaining investment money Ponzi Schemes
  • 213. Do’s Don’ts 1. Do not invest with borrowed money 2. Do not expect unrealistic / guaranteed returns 3. Do not be influenced by advertisement / advices / rumours /unauthentic news promising unrealistic gains and windfall profits in mass media 4. Do not be guided by astrological predictions for your investments 5. Do not invest on any explicit / implicit promises made by anyone 6. Do not invest in any scheme just because of incentives / gifts / inducements etc. offered 7. Do not be swayed by market sentiments. 1. Check for the Registration of Broker/Agent Distributor/ Company – distributing financial product 2. Read all the documents carefully. 3. Strike off all blank / irrelevant fields / clauses in Know Your Customer (KYC) registration form 4. Ask for the list of fees and charges applicable, before investing. 5. Make payments only – through A/c payee cheques / drafts / EFT to the company (selling product)/ scheme and not to distributor / agent. 6. In case of change in address, update your KYC immediately
  • 214. Various methods of raising money from Public & Agencies regulating them Sl. No. Activities Respective Regulators/ Agencies 1 Deposits taken by fraudulent financial establishments State Governments under PID Act 2 Prize Chits/ Money Circulation/ Multilevel Marketing Schemes State Governments under PCMCB Act, 1978 3 Fraud/cheating State Governments under IPC 4 Chit Business under Chit Fund Act State Governments under Chit Fund Act, 1982 5 Acceptance of deposit by Cooperative Societies State Governments under cooperative societies Act 1992 6 Deposits accepted by NBFCs, Micro Finance Co. RBI 7 Deposits under Companies Act including deemed deposits MCA 8 Nidhi or Mutual Benefit Society MCA 9 Mutual fund, CIS, AIF, PMS, Public issue or deemed public issue of securities SEBI 10 Multi State Cooperative Societies MoA, GoI 11 Contract of Insurance IRDAI 12 Pension Scheme or Insurance Scheme IRDA/EPFO 13 Others: Housing, timeshare, goat/emu farming etc Not clearly defined
  • 215. Who regulates what? # Nature of Business Regulator 1 Banking companies, NBFCs RBI 2 Nidhi Companies MCA, RBI ( For acceptance of deposit) 3 Cooperative Credit Societies Registrar of Cooperatives of state 4 Chit Funds Registrar of Chit Funds for the state 5 Equity market, Mutual Funds, CIS SEBI 6 Company Deposits and matters related to unlisted Companies Ministry of Corporate Affairs and ROC 7 Insurance products IRDAI 8 NPS, APY and Other Pension Products PFRDA
  • 216. END of Session - VII
  • 217. Session - VIII Career in Securities Markets
  • 218. Suitable Profiles Creative, social, energetic a. Relationship Manager b. Business Development Manager c. Mutual Fund Distributor / Stock Broker Analytical, deep-thinking, logical a. Research Analyst b. Investment Advisor c. Fund Manager Diligent, conservative, meticulous a. Back-office Manager b. Investor Grievances c. Compliance Officer
  • 219.
  • 220. How to pursue a career in the Indian Securities Markets? • By enrolling for NISM’s Long term /weekend / Short term Academic Programs. • By obtaining various mandatory NISM Certifications to become eligible to operate in Securities Markets. • By setting up own Securities Markets business (Distributor/Advisor/Analyst etc)
  • 221. Mandated and Aspirational Certifications on Currency Derivatives | Equity Derivatives | Interest Rate Derivatives | Mutual Funds Depository Operations | Compliance | Investment Advisory | Research Analysis Merchant Banking | Securities Operations | Risk Management | Retirement Advisory & more
  • 222. NISM Certifications Brokerage Mutual fund Advisory • Equity derivatives • Mutual fund • Investment advisory (level 1 & 2) • Currency derivatives • Investment advisor • Securities operation and risk management • Research analysts Securities markets foundation (Basic examination)
  • 223. Why take NISM Certification? Authentic, Practical & Contemporary Curriculum Career Enhancement Regulatory Mandate Nation-wide Recognition Self-study, MCQ Type, Nominal Fees Valid for 3 years; Renewal Mechanism
  • 224. Post Graduate Diploma in Management (Securities Markets) Two-year |Full-time Residential | Career-oriented Programme
  • 225. Placement Opportunities Segments • Equity Markets, Debt Markets • Research • Analytics • Broking and Dealing • Corporate Advisory • Banking Types of Organizations (Where students gets placed) • Banks • Stock exchanges • Depository • Mutual Funds • Commodities Exchanges • Research Analysts firms • Investment Advisories • Fintech Companies • IT Companies • Algo trading firms • Data analytics
  • 226. LL.M. in Investment and Securities Laws One-year |Full-time Residential | Career-oriented Programme for Legal Professionals
  • 227. List of Companies where students undertaken Internship Law Firms Non Law Firms • Alliance Law • DMD & Associates • Fox & Mandal • K.J.John & Co. Advocates • King & Partridge • Parinam Law Associates • Trilegal • BSE Ltd. • Keynote Financial Services Ltd. • Kotak Securities • Mark Corporate Advisors • National Stock Exchange of India Ltd. • Prabhudas Lilladher • Stakeholders Empowerment Services • Sundae Capital Advisors Private Ltd. • Capital Square • Central Depository Services Ltd. • JM Financial Ltd.
  • 228. Post Graduate Certificate in Management (Data Science in Financial Markets)-PGCM(DSFM) 14 months |Weekend programme| Fusion of data science techniques and financial analytics
  • 229. Where does PGCM (DSFM) lead to? • Credit Research and Ratings • Investment Evaluation and Portfolio Management • Risk Modelling • Claim Processing • Fraud Detection • Analysing Financial Statements • Equity Research
  • 230. NISM Entrepreneurship Cell(E-Cell) Vision To create a coherent E-Cell and foster the spirit of Entrepreneurship Mission Our mission is to build an environment that would illuminate ideas about entrepreneurship development and creative deduction, establish a business culture and reach out to a wider audience in both the academic community and the industry for the incubation of business ideas.
  • 231. Purpose 1. To raise awareness among students about entrepreneurship. 2. To instill desire and spirit among students to pursue entrepreneurship. 3. To encourage students to create their own start-ups. 4. To identify the brightest ideas and give them a platform to turn those ideas into a working business (Atal Incubation Centre, NITI Aayog, Government of India. 5. To function as an institutional framework for offering a wide range of resources, including information to emerging entrepreneurs, whether students or alumni. 6. To help entrepreneurs grow viable businesses capable of competing in global industry.
  • 232. List of Activities conducted by E-Cell? 1.Sessions by entrepreneurs on the following topics: • Entrepreneurial opportunities in Securities Markets • Is college the right time to startup’ • Opportunities in Algo trading for an entrepreneur 2.Quiz on Finance and entrepreneurship to make students aware of nuances relating to any enterprise 3.Business Idea competition to allow students to ideate and sell their ideas
  • 233. NISM Social Media Handles-Facebbok
  • 234. NISM Social Media Handles-Linkedin
  • 235. NISM Social Media Handles-Instagram
  • 236. NISM Social Media Handles-Twitter
  • 237. NISM Social Media Handles-Linkedin for KKS