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OTCEI
The Over-the-Counter Exchange of India (OTCEI) is an electronic stock exchange designed to help small and medium-sized firms access capital markets without a traditional trading floor. It utilizes modern technology for transactions, offers benefits such as cost-effective fundraising for companies and safeguards for investors, including transparency and liquidity. The OTCEI facilitates a national network for the trading of various securities, including exclusively listed equities, listed debt instruments, and government securities.
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Overview of OTCEI, its definition, and meaning as an electronic stock exchange for SMES in India.
Establishment details, committees involved, objectives focusing on small companies and investor confidence.
Identification of key parties including companies, dealers, investors, and regulatory bodies involved in OTCEI.
Advantages for listed companies including cost savings, negotiation opportunities, and aiding small company growth.
Safety, transparency, liquidity, appraisal, and access benefits investors gain from transactions through OTCEI.
OTCEI's role in integrating capital markets, stimulating venture capital, and encouraging small investor participation.
Description of various securities, including listed equities, debts, gilts, and mutual funds traded on OTCEI.
Listing reference sources related to OTCEI for further information.
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OTCEI
- 1.
- 2. Meaning The over-the-counter exchangeof 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 TheCounter 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 ofModern Technology. • Minimum issued capital requirements. • Restrictions for large companies. • Base Capital requirement for members. • All India network. • Computerization of transactions
- 6. OBJECTIVES • Assisting andguiding 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 investorsthe 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.
- 10. Benefits to ListedCompanies • 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 incosts: 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… • Helpfulto 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: OTCscreens 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: OTCmembers 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: EveryOTC 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 FinancialSystem • 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 widerdispersal 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 membersof 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 Tradedon 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: Thesecurities 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 MUTUALFUNDS: 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/.