Capital Markets- De-Recognised by SEBI

1. Over-the-
Counter
Exchange of
India OTCEI
Pros and
cons

2. OTCEI Over-the-Counter Exchange of India
 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.
Why OTCEI?

3. History:
 It was Incorporated as a Company at Maharashtra on 20th September 1990 under
Section 25 of Companies Act 1956
 It was Authorized Capital of 10 Crores and Paid-up Capital of 5 Crores
 It was based on the Model of NASDAQ, USA. o It is India's First Exchange for Small
Companies. o It is the First Screen-based Nationwide Stock Exchange in India
 It is the First Electronic Stock Exchange in India. o De-recognised by SEBI in 31st
March 2015.

4. Trading mechanism
 An investor can buy and sell any listed scrip at any OTC Exchange counter.
The investor can also make an application for services like transfer of shares,
splitting and consolidation of shares, nomination and revocation of
nomination, registering power of attorney etc.
 The parties involved in trading on OTC are investor, Counter, Settler
Registered Custodian, Company and Bank

5. Trading involved during OTCEI
transactions
 Temporary Counter Receipt (TCR)
 Permanent Counter Receipt (PCR)
 Sales Confirmation Slip (SCS)
 Transfer Deed (TD)
 Service Application Form (SAF)
 Application Acknowledgement Slip (AAS and
 Deal Form (DF)

6. FEATURES OF OTCEI:
 NATIONWIDE TRADING
 RINGLESS TRADING
 TOTALLY COMPUTERISED
 TRANSPARENT TRADING
 ONLY AUTHORIZED DEALERS
 TWO WAY OF MAKING A PUBLIC OFFER
 FASTER TRANSFER AND TRADING OF SHARES
 INVESTOR REGISTRATION
 TRADING IN UNLISTED EQUITY SHARES
 TRADING IN FUTURES AND OPTIONS AND FORWARD CONTRACT ON
STOCK

7. LISTING REQUIREMENTS
Guidelines issued by SEBI for the listing of the securities at OTCEI are as follows:
1. The company should be a public company;
2. 1. The minimum equity share capital of the company should be ofRs 30 lakh, subject to
a minimum public offer of 25% of equity shares worth Rs. 20 lakhs in face value;
3. 2. The existing companies with issued capital of Rs. 25 crore could be listed on OTCÈI,
SEBI has now removed upper limit of Rs. 25 crore of issued capital and allowed all
companies to list on OTCEI.The Ministry of finance has allowed the listing of
4. 3. The company to be listed must must track record of paying dividends in the previous
three years;
5. 5.Companies with issued capital of more than Rs. 3 crore have to comply with listing
requirements and guideline as applicable on the companies listed on other stock
exchanges;

8. 6. Trading of 20% equity of public sector units that are offered for for sale on the stock
markets are allowed as permitted securities on OTCEI.
7. Earlier it was mandatory that the companies listed on OTCEI make a minimum public
offer of 40%. This minimum relicompanies and heve borspanieusht down to 20% for
closely-
8. A company which listed on any other recognized stock exchange in India is not eligible
for listing on simultaneously except the scrips of those companies will be allowed o be
traded only under permitted category on OTCEI;
9. MRTP/FERA companies may be listed on OTCEI if these satisfy guidelines for listing on
other stock exchanges;
10. A property company which is listed on any other recognized stock exchange in the
country is eligible for listing on OTCEI simultaneously;
11. The companies which do not have track record of paying dividends and which have not
been apprised by financial institution are also eligible for listing on OTCEI Subject of
following two conditions;(a) They must be sponsored by any member; and (b)They must
appoint at least two market makers to provide continuous liquidity to the stocks;

9. Listing Fee
 The fee structure for listing is as follows:
 Initial Listing Fees -7500
 Annual Listing Fees
Paid-up capital•Upto Rs. 3 crore Amount of annual fees
 Less than 3 crore -7500
 Rs. 3 crore- Rs. 10 crore -15000
 Rs. 10 crore- Rs. 20 crore -12500
 Rs. 20 crore- Rs. 50 crore -25000
 Rs. 50 crore- Rs. 100 crore -40000
 Above Rs. 100 crore -85000 or 1000 for every crore

10. For Companies
 It will provides a method of funds raising through capital market instruments
which are priced fairly
 In OTCEI the companies will be able to negotiate the issue price the sponsor
who will market the issue
 It will also help to save unnecessary issue expenses on raising funds from
capital market.

11. For Investor:
 Investment in stock will become easier. Its wide network will bring the stock
exchange to every street corner
 It will provide greater confidence and fidelity of trade.
 Investor can look up the price displayed at the OTC counter.
 It will enable transaction complete quickly.
 It also provide liquidity to investors
 It will quoted regularly to provide sufficient opportunities for investor to
exist.
 Investors may get greater sense of security.

12. NSEI VS OTCEI

13. Benefits for listed companies
 Negotiability
 Fixation of premium
 Saving in cost
 Shares of unlisted companies
 Platform for first level user :financial investors,fin corporations,foregn
institutional investors

14. Securities traded on OTCEI
 Listed equity(debt)
 Listed debt
 Gilts
Securities issued by central and state are called guilts.treasury bills,secuirites
and provident funds etc
 Permited secuirities

15. Promoters