Trading of securities
Download as PPTX, PDF16 likes13,274 views
This document provides an overview of the Indian securities market, detailing its various components including primary and secondary markets, stock exchanges, and financial instruments. It highlights the roles of major exchanges like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), as well as the significance of regulatory bodies such as the Securities and Exchange Board of India (SEBI). Additionally, it covers aspects of trading, investor behavior, and recent market developments, indicating a complex and dynamic financial ecosystem.
Trading of securities
- 1. Presented by Abhishek Iyer (070) Kartikeya Sharma (002) Peeyush Manuja (056) Rohit Kharkwal (035) Trading ofSecurities
- 2. TYPES OF SECURITIES MARKETS In the context of equity products, which this publication seeks to cover in depth, the following markets could be defined: Primary Market Secondary Market Derivative Market The Indian securities market, considered one of the most promising emerging markets, is one of the top eight markets of the world. The market comprises of equity, debt and derivative segments and has a large investor base. The investor base comprises of individuals, corporates and foreign institutional investors and has been rapidly rising over the past decade after financial market deregulation and economic liberalization. INTRODUCTION
- 3. Securities Market Equity Market Primary Equity Market Secondary Equity Market(Stock Market) Debt Market Govt. Securities Market Corporate Debt Market Money Market Derivatives Market Options Market Futures Market STRUCTURE OF SECURITIES MARKET
- 4. It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital. This market is concerned with new issues. Therefore, the primary market is also called NEW ISSUE MARKET. PRIMARY MARKET
- 5. SECONDARY MARKET The secondary market is that market in which the buying and selling of the previously issued securities is done. The transactions of the secondary market are generally done through the medium of stock exchange. The chief purpose of the secondary market is to create liquidity in securities.
- 6. WHAT ISA STOCK MARKET? In simple words a Stock market is a place where stocks, bonds, options and futures, and commodities are traded. Buyers and sellers exchange trade together via platform provided by stock exchange through computers. A stock market is a primarily a virtual exchange of securities (that is, shares and debentures, which companies use as a means of raising finance) and derivatives (i.e. virtual instruments such as contracts that relate to assets and securities and can be traded)
- 7. WHAT ARE STOCKS? Stock is a share in the ownership of a company. Stock represents a claim on the company's assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.
- 8. Why do people buy stocks? Investors buy stocks for various reasons. Here are some of them: • Capital appreciation, which occurs when a stock rises in price • Dividend payments, which come when the company distributes some of its earnings to stockholders • Ability to vote shares and influence the company
- 9. WHAT IS A STOCK EXCHANGE ? • A stock exchange is an exchange or stock market where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. • Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.
- 11. ECONOMY STOCK EXCHANGE US & EUROPE NYSE US & EUROPE (NORTH) NASDAQ JAPAN TOKYO STOCK EXCHANGE UNITED KINGDOM LONDON STOCK EXCHANGE EUROPE EURONEXT CHINA SHANGHAI STOCK EXCHANGE HONG KONG HONGKONG STOCK EXCHANGE CANADA TORONTO STOCK EXCHANGE BRAZIL BM&F BOVESPA MAJORSTOCKEXCHANGES
- 12. ECONOMY STOCK EXCHANGE AUSTRALIA AUSTRALIAN SECURITIES EXCHANGE GERMANY DEUTSCHE BORSE SWITZERLAND SIX SWISS EXCHANGE CHINA SHENZHEN STOCK EXCHANGE SPAIN BME SPANISH EXCHANGES INDIA BOMBAY STOCK EXCHANGE(BSE), NATIONAL STOCK EXCHANGE(NSE) SOUTH KOREA KOREA EXCHANGE RUSSIA MICEX – RTS SOUTH AFRICA JSE LIMITED
- 13. SOMEMAJORINDIANSTOCKEXCHANGES EXCHANGE BOMBAY STOCK EXCHANGE (BSE) NATIONAL STOCK EXCHANGE(NSE) JAIPUR STOCK EXCHANGE UP STOCK EXCHANGE ASSOCIATION MADRAS STOCK EXCHANGE COCHIN STOCK EXCHANGE BANGLORE STOCK EXCHANGE GAUHATI STOCK EXCHANGE LUDHIANA STOCK EXCHANGE CALCUTTA STOCK EXCHANGE LOCATION MUMBAI MUMBAI JAIPUR KANPUR CHENNAI COCHIN BENGULURU GAUHATHI LUDHIANA KOLKATA NSE AND BSE ARE THE MAJOR STOCK EXCHANGES IN INDIA. Total number of stock exchanges in India: 22
- 14. NATIONAL STOCK EXCHANGE The National Stock Exchange (NSE) is stock exchange located at Mumbai, India. It is the 16th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading. NSE has a market capitalization of around US 985 billion and over 1,646 listings as of December 2011. NSE and BSE are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions.
- 15. Currently, NSE has the following major segments of the capital market: • Equity • Futures and Options • Retail Debt Market • Wholesale Debt Market • Currency futures • Mutual Fund • Stocks lending and borrowing
- 16. BOMBAY STOCK EXCHANGE BSE Limited formerly known as Bombay Stock Exchange (BSE) , is the oldest stock exchange in Asia. Location: Dalal Street, Mumbai.
- 18. Whatis meantby Merchant bank? • Merchant Banking is a combination of Banking and advisory services. It provides advisory services to its clients like Project Promotion Syndication of Loan Underwriting of securities Placement of securities Corporate Counselling Venture Capital
- 19. WhatareInvestmentBank ? Investment bank is a financial institution that helps to government, corporate, HNI (high net worth) individual in raising capital. They provide services like: Research Raising capital Underwriting Merger and acquisition Restructuring Sales and Trading
- 20. Merchant bank and Investment bank both are the financial institution that provide different types of services. However there are some key differences between merchant banks and investment banks.
- 21. DifferencesbetweenInvestmentBanks andMerchantBanks • Basisb Basis Merchant Bank Investment Bank Trading Investment Banks are engaged in the Underwriting of shares and issue of shares Investment Bank assist companies in the merger and acquisition . Merchant Bank are well known in International Financial Activity Traditional Merchant bank not assist companies in merger and acquisition Activity Merger and Acquisition
- 23. MAIN REGULATORY BODIESOF INDIA THE TWO MAIN REGULATORY BODIES OF INDIA ARE: • SECURITY EXCHANGE BOARD OF INDIA (SEBI) • SECURITIES TRADING CORPORATIONS OF INDIA LTD.(STCI)
- 24. PURPOSE AND ROLE OF SEBI • SEBI was set up with the main purpose of keeping a check on malpractices and protect the interest of investors. It was set up to meet the needs of three groups. • 1. Issuers: • For issuers it provides a market place in which they can raise finance fairly and easily. • 2. Investors: • For investors it provides protection and supply of accurate and correct information. • 3. Intermediaries: • For intermediaries it provides a competitive professional market.
- 25. OBJECTIVES OF SEBI • 1. To regulate the activities of stock exchange. • 2. To protect the rights of investors and ensuring safety to their investment. • 3. To prevent fraudulent and malpractices by having balance between self regulation of business and its statutory regulations. • 4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc.
- 26. FUNCTIONS OF SEBI • i. Protective functions • ii. Developmental functions • iii. Regulatory functions.
- 27. PROTECTIVE FUNCTIONS • SEBI prohibits fraudulent and Unfair Trade Practices • It Checks Price Rigging • It Prohibits Insider trading
- 28. DevelopmentalFunctions • SEBI promotes training of intermediaries of the securities market. • SEBI tries to promote activities of stock exchange by adopting flexible and adoptable approach in following way: • SEBI has permitted internet trading through registered stock brokers. • SEBI has made underwriting optional to reduce the cost of issue. • Even initial public offer of primary market is permitted through stock exchange.
- 29. Regulatory Functions • SEBI registers and regulates the working of mutual funds etc. • SEBI regulates takeover of the companies. • SEBI conducts inquiries and audit of stock exchanges. • SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as merchant bankers, brokers, underwriters, etc.
- 31. OBJECTIVES OF LISTING • ENSURE PROPER SUPERVISION AND CONTROL OF DEALING . • PROTECT INTEREST OF INVESTORS BY ENSURING FULL DISCLOSURES • MOBILIZE SAVINGS FOR ECONOMIC DEVELOPMENT • PROVIDE LIQUIDITY AND NEGOTIABILITY TO SECURITIES
- 32. ADVANTAGES OF LISTING 1. LIQUIDITY 2. BEST PRICE FOR SECURITIES 3. TRANSPARENCY IN DEALING 4. HELPS IN RISING ADDITIONAL CAPITAL 5. ENABLES THE MANAGEMENT TO BROADEN AND DIVERSIFY SHAREHOLDING 6. HELPS THE COMPANY TO GAIN NATIONAL IMPORTANCE
- 33. KEY PROVISION IN LISTING AGREEMENT (BSE) • MINIMUM LISTING REQUIREMENT FOR NEW COMPANIES IN RESPECT OF LARGE CAPITAL COMPANIES 1. THE MINIMUM PAID-UP CAPITAL SHALL BE RS. 3 CRORE, 2. THE MINIMUM ISSUE SIZE SHALL BE 10 CRORE AND 3. THE MINIMUM MARKET CAPITALIZATION OF THE COMPANY SHALL BE RS. 25 CRORE
- 34. IN RESPECT OF SMALL CAPITAL COMPANIES 1. THE MINIMUM PAID-UP CAPITAL OF THE COMPANY SHALL BE RS. 3 CRORE 2. THE MINIMUM ISSUE SIZE SHALL BE RS. 3 CRORE 3. THE MINIMUM MARKET CAPITALIZATION SHALL BE RS. 5 CRORE 4. THE MINIMUM NO. OF PUBLIC SHAREHOLDERS AFTER ISSUE SHALL BE 1000 5. THE MINIMUM INCOME/TURNOVER OF THE COMPANY SHOULD BE RS. 3 CRORE IN EACH OF THE PRECEDING THREE 12 MONTHS PERIOD
- 35. SUBMISSION OF LETTER OF APPLICATION • AS SECTION 73 OF THE COMPANIES ACT ,1956 “A company seeking listing of its securities on the exchange is required to submit a letter of application to all the stock exchanges where it proposes to have its securities listed before filing the prospectus with the registrar of companies”.
- 36. • All companies listed on BSE are required to pay to BSE the annual listing fees by 30th April of every financial year. • Schedule of listing fees . PAYMENT OF LISTING FEES
- 37. SR.NO. PARTICULARS AMOUNT(RS.) 1 INITIAL LISTING FEES 20,000.00 2 ANNUAL LISING FEES • COMPANIES WITH LISTED CAPITAL UPTO 5 CRORES 10,000.00 • ABOVE 5 CRORE AND UPTO 10 CRORE 15,000.00 • ABOVE 10 CRORE AND UPTO 20 CRORE 30,000.00
- 38. TRADING SYSTEM
- 39. DEPOSITORIES • A depository is an institution which holds the shares of an investor in electronic form. • It facilitates transactions in securities simply by means of book entry.
- 40. DEPOSITORIES in INDIA There are two main depositories in India: • CENTRAL DEPOSITORY SERVICE LIMITED (CDSL) • NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)
- 41. DEPOSITORY PARTICIPANTS • A Depository Participant (DP) is an agent of the depository. He functions as a mediator between the issuing company and the investors through the depository. • He opens the accounts and maintains the securities account balance of the investors and conveys them the status of their holding from time to time. • As per SEBI guidelines, banks, stock brokers, etc. can become depository participants. • Every Depository Participant(DP) needs to be registered under a Depository before it begins its operation or trade in the market.
- 42. SERVICESPROVIDED BY DEPOSITORIES • Dematerialisation (usually known as demat) is converting physical certificates of Securities to electronic form • Rematerialisation, known as remat, is reverse of demat, i.e. getting physical certificates from the electronic securities • Transfer of securities, change of beneficial ownership • Settlement of trades done on exchange connected to the Depository • Pledging and Unpledging of Securities for loan against shares • Corporate action benefits directly transfer to the Demat and Bank account of customer
- 43. THE INVESTOR The investor is a person who wants to deal in shares and whose name is recorded with a depository. The investor is the real owner of the shares who has lodged them with the depository through book entry till the day he sells them.
- 44. THE STOCK MARKETS There are two major stock exchanges in India: • Bombay Stock Exchange (BSE). The BSE publishes the SENSEX. • National Stock Exchange (NSE). The NSE publishes the NIFTY.
- 45. TRADING Trade in stock markets means the transfer for money of a stock or security from a seller to a buyer. This requires these two parties to agree on a price. Equities (Stocks or shares) confer an ownership interest in a particular company.
- 46. TRADING PROCESS Approach a broker or a bank. Enquire about their DP. If you feel they are trustworthy, open up a demat account with them. You will be provided a username. You can either ask them to do the trading on your behalf or have the online trading option enabled for yourself. HAPPY TRADING!!!!
- 47. Trading shares
- 49. TRADING OPTIONS An investor wanting to trade can invest his money in the following ways in the markets: • Equities • Derivatives • Mutual funds
- 50. EQUITIES • An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises.
- 51. DERIVATIVES • The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, which are derived from other forms of assets.
- 52. MUTUAL FUNDS A mutual fund is a type of professionally managed investment fund that pools money from many investors to purchase securities. The four main categories of funds are – money market funds, bond or fixed income funds, stock or equity funds, and hybrid funds.
- 53. RECENT STOCK MARKET CRASH I #BlackMonday: the bloodbath isn't over yet. Here's what's going on… |24 August 2015|
- 54. Slippery markets •The Indian stock market fell the most on Monday since 2008 •Almost all the world's major stock indices were down •The reason seems to be the Chinese stock market crash China bubble •Chinese bull run was unsustainable -- 300% rise in one year •The ensuing crash led to panic among investors •The Chinese govt. clamped down, leading to more panic What next •Indian markets are much more stable than China •Dollar flowing out of China may come to India •Indian investors should remain cautious for the time-being
- 55. •#Sensex and #BlackMonday trended on Twitter throughout Monday as the Indian stock markets crashed with a thud. The benchmark BSE Sensex closed down 1,624.5 points, losing nearly 6% of its value. •This is its biggest fall since the the 2008 global economic meltdown. Even the more broad-based NSE Nifty mirrored the slide. The Indian equities market, by the way, is not the only one in a bear grip: From the Nikkei in Tokyo to the FTSE 100 in London, all major international indices were in the red on Monday and the US markets looked set to follow suit. •In India, as Rs 7 lakh crore of investors' money got wiped off the charts, Finance Minister Arun Jaitley had to step in to soothe the nerves. "There is not a single domestic factor in India which has either contributed to it or added to it. These are external factors," he said. •Raghuram Rajan, RBI Gov. said India is better of than other emerging market economies. The macro economic problems are under control, low inflation will give investors turst in markets, he added. •Most fingers point to China, where markets have started tumbling.
- 56. Below are the reasons why Sensex fell over 1,600 points on 24th Aug 2015: 1. Global markets and China stocks crashing: Asian markets were trading in deep red in early trade on Monday with Shanghai shares crashing 8 per cent sparking widespread unrest in global financial markets. The Dow Jones industrial average on Friday fell 530.94 points, or 3.12 per cent, to 16,459.75, the S&P 500 lost 64.84 points, or 3.19 per cent, to 1,970.89 and the Nasdaq Composite dropped 171.45 points, or 3.52 per cent, to 4,706.04. For the week, the Dow dropped 5.8 percent and the Nasdaq tumbled 6.8 per cent. 2. Indian rupee fall: Indian rupee fell to two year low and plunged by 66 paisa to trade below Rs 66 level against the dollar for the first time in almost two years in opening trade on sustained capital outflows even as the US currency weakened overseas. At the Interbank Foreign Exchange Market, the rupee fell by 66 paisa to 66.49 a dollar in early trade. 3. Crude prices: Crude prices fell after slipping below $40 barrel for the first time in six years after weak Chinese manufacturing data. 4. IOC offer for sale(OFS): The government’s 10 per cent stake sale in Indian Oil Corp was over-subscribed despite high market turmoil.
- 57. THANK YOU