OTCEI meaning, OTCEI definition, OTCEI features, OTCEI objective, parties in OTCEI, OTCEI promoters, benefits of listed company in OTCEI, benefits of investors in OTCEI,

1. OTCEI

2. Meaning
The over-the-counter exchange of India
(OTCEI) is an electronic stock exchange
based in India that is comprised of small-
and medium-sized firms looking to gain
access to the capital markets.

3. Definition
• Over The Counter Exchange of India
(OTCEI) can be defined as a stock
exchange without a proper trading floor.
All stock exchange have a specific place
for trading their securities through
counters. But the OTCEI is connected
through a computer network and the
transactions are taking place through
computer operations. Thus, the
development in information technology
has given scope for starting this type of

4. Committee
Functioning
Incorporated
Capital
G.S patel
committee,
Abid Hussain
committee .
October 1990
September
1992
8 crore.

5. FEATURES
• Use of Modern Technology.
• Minimum issued capital requirements.
• Restrictions for large companies.
• Base Capital requirement for members.
• All India network.
• Computerization of transactions

6. OBJECTIVES
• Assisting and guiding small companies to
raise funds from the capital market in a
cost-effective manner.
• Providing a convenient and an efficient
avenue of capital market investments for
small investors.
• Ensuring transparency, redressing.

7. Cont..
• Strengthening investors the confidence
financial market by offering them the two-
way best prices to them.
• Providing liquidity advantage to the
securities traded.
• Promoting organized trading in Unlisted
Securities.

8. Parties of OTCEI
• Companies
• Dealers
• Members
• Investors
• Custodian or Settlers
• Transfer agents
• OTCEI Government and
• SEBI.

9. UTI
IDBI
GIC
Canbank
Financial
services

10. Benefits to Listed Companies
• Negotiability: The Company can negotiate
the issue price with the sponsors who have
to market the issue. It provides an
opportunity for fair pricing of an issue
through negotiation with the sponsors.
• Fixation of premium: In consultation with
the sponsors, the company can fix an
optimum level of premium on issue with
minimum risk of non-subscription of the
issue.

11. Cont..
• Savings in costs: Lots of costs associated
with public issue of capital are saved through
this mode. It provides an opportunity to
companies to raise funds through capital
market instruments at an extremely low cost
as compared to a public issue. The method of
sponsors placing the scrip‘s with members
who in turn will offload the scrip‘s to public
will obviate the need for a public issue and its
associated costs.

12. Other benefits…
• Helpful to small companies.
• Shares of all unlisted companies can now
be traded on OTCEI.
• Platform for issuers and first-level investors
like financial institutions, state level
financial corporations, Foreign Institutional
Investors, etc.
• System for defining benchmark for
securities.
• Increasing business for the market
constituents

13. Benefits to Investors
• SAFETY: OTCEI singles and scrip less electronic trading
ensure safety of transactions of the investor. For instance,
every-OTC investor-Card free. This code is allotted on a
permanent basis and should be used in all OTC transactions
and applications of OTC issues. This card provides for the
safety and security of the investors investments. The
mechanism offers greater security to investors as the
sponsors investigate into the company and
the projects, before accepting sponsorship thus building
up much needed greater investor confidence.

14. • TRANSPARENCY: OTC screens at every
OTC counter display the best buy/sell
prices. The exact trading prices are printed
in the trading documents for confirmations.
This protects the investor interest and there
by minimize disputes.
• LIQUIDITY: A great advantage of the OTC
is that the scrip‘s traded are liquid. This is
because there are at least two market-
makers who indulge in continuous buying
and selling. This enables investors to buy
and sell the scrip‘s any time.

15. • APPRAISAL: OTC members sponsor each
scrip listed in an OTC counter. The sponsor
makes an appraisal of the scrip‘s for investor
worthiness. This ensures quality of
investments.

16. • ACCESS: Every OTC counter serves as a
single window to the entire OTC exchange
throughout the country and throughout the
world too. Therefore, buying and selling
may be resorted to from any part of the
world. It offers the facility of faster deal
settlement for investors across the counters
spread over the entire country.

17. Benefits to Financial System
• National network of OTCEI operations
facilitates the integration of capital market
in the country.
• Boon to closely-held companies as they are
encouraged to go public because scrip‘s
can be listed even if only 40 percent of
capital (now a minimum of 20 percent in
case of closely held and new companies) is
offered for public trading

18. • Facilities wider dispersal of economic
activities by encouraging small companies
and small investors.
• Promoting savings and investments by
offering easier avenues for raising capital.
• Providing over-all stimulation to venture
capital activities thereby promoting
entrepreneurship.
• Spread of stock exchange operations
geographically all over India.

19. • Those members of the OTCEI who did not
have multiple memberships can now have
an opportunity to trade in some of the
large capital index stocks.
• Encourage venture capital activities and
boost entrepreneurship

20. Securities are Traded on
OTCEI
• LISTED EQUITY (EXCLUSIVE): These are
equity shares of the companies listed
exclusively on the OTCEI. The shared can
be bought or sold at any of the member/
dealers office all over India. The securities,
which are listed exclusively on the OTCEI,
cannot be traded on other stock
exchanges.

21. • LISTED DEBT: These are the
debentures/bonds that are issued through a
public issue or a private placement and are
listed on OTCEI. Any entity holding the
entire series of a particular debt instrument
can also offer them for trading on the
OTCEI, by appointing an OTCEI
member/dealer to carry out compulsory
market making in those securities.

22. • GILTS: The securities issued by the Central and State
Governments are called ‘gilts’. Government of India Dated
Securities, Treasury Bills and special securities are traded in this
segment. Banks, Foreign Investors, Foreign Institutional
Investors, NBFCs and Provident Funds can trade in these
securities through OTCEI designated members/dealers.. PSU
Bonds, Commercial Paper, and Certificates of Deposit will also
be traded in this segment.
• PERMITTED SECURITIES: These are the securities listed on
other exchanges, which are permitted for trading on OTCEI.
Securities of Blue Chip companies like ACC, Reliance Industries
Ltd., State Bank of India, ITC, etc. are traded in this segment.

23. • LISTED MUTUAL FUNDS: Listed mutual funds are units of
mutual funds that are listed on OTCEI. Mutual fund units like
units of Unit-64, Monthly Income Plan, and under this
category. To counter the influence of Bombay Stock Exchange
and reduce the influence of certain powerful intermediaries in
the stock market, a new stock market was promoted in which
both securities of companies and debt instruments are traded,
namely the National Stock Exchanges. NSE takes into account
the screen based trading and so it is the most advanced. The
success of this stock exchange is quite evident that within a
few years of its promotion the volume and the value of
transactions have surpassed the BSE.

24. References
• http://www.brainkart.com/article/OTCEI--Over-the-
Counter-Exchange-of-India-_6167/
• http://www.investopedia.com/terms/o/otcei.asp#ixzz4uV
CyhGYc
• http://www.otcei.net/entrepreneur/benefit.htm.
• http://www.otcei.net/entrepreneur/benefit.htm.
• http://www.brainkart.com/article/Benefits-for-Investors-
Offered-by-OTCEI_6169/.
• http://www.brainkart.com/article/OTCEI--Benefits-to-
Listed-Companies_6168/.