capital market slides final
TRANSCRIPT
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Capital Market
Functions
Market Segments
Trading and Settlement
Fundamental Valuation Concepts
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Mobilize long-term savings to finance long-terminvestments
Provide risk capital
Encourage broader ownership
Provide liquidity
Lower the cost of transaction and information
Improve the efficiency of capital allocation
Enable quick valuation of financial instruments
Provide insurance against market risk or price risk derivative trading
Provide insurance against default risk investmentprotection fund
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Provide operational efficiency through
Simplified transaction procedures
Lowering settlement timings
Lowering transaction costs
Develop integration among
Real and financial sectors
Equity and debt
Long-term and short-term funds
Private and govt. sectors
Domestic and external funds
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Primary Market
Secondary Market
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Securities: Shares, Bonds, Debentures, Futures,
Options, Mutual Fund Units
Intermediaries: Brokers, Sub brokers,
Custodians, Share transfer agents, MerchantBankers
Issuers of Securities: Companies, Bodies
Corporate, Government, Financial Institutions,
Mutual Funds, Banks
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Particulars Number as on March 31, 2008
Securities Appellate Tribunal 1
Regulators 4Depositories 2
Stock Exchanges with equity
trading
19
Brokers 9487
Sub-brokers 44073
FIIs 1319
Portfolio Managers 205
Custodians 15
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Particulars Number as on March 31, 2008
R gistr rs to Iss d Sh r
r sf r g ts
76
rch t rs 1
rs to Iss 0
D t r r st s 28
U d rwrit rs 3
V t r pit l ds 106
t l ds 40oll ctiv I v stm t Sch m s 0
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Corporate Securities Market
SEBI Act, 1992
DIP Guidelines
Screen Based Trading Trading Cycle
Derivatives Trading
Demutualization
Depositories Act Risk Management
Investor Protection
Globalization
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Government Securities Market
Market Infrastructure
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Introduction
In past trading was done without use of Information
Technology
In order to provide efficiency, liquidity andtransparency NSE introduced Screen Based Trading
System (SBTS)
It cuts down on time, cost and risk of error, as well as
on fraud resulting in improved operational efficiency
It enables market participants, irrespective of their
geographical locations, to trade with one another
simultaneously, improving the depth liquidity of the
market
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Trading Network and NEAT System
Brokers premises to satellite to Exchange mainframe
Exchange mainframe to satellite to Brokers premises
Software Used: ODIN
IRIS
PROWESS
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Market Types:
Normal Market
Odd Lot Market
Red Debt Market Auction Market
Corporate Hierarchy:
Corporate Manager
Branch Manager
Dealer
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Order Management:
Entering Orders
Active Orders
Passive Orders Circuit Breakers
Order Conditions
Time Conditions
Quantity Conditions
Price Conditions
Other Conditions
Order Matching Priority
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Transaction Cycle
Decision to trade
Placing order
Trade execution Clearing and settlement of trades
Funds /securities
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Settlement Agencies:
National Securities Clearing Corporation Ltd.
(NSCCL)
Clearing Member Custodians
Clearing Banks
Depositories
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Risk in Settlement:
Counter Party Risk
System Risk
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Legislations:
Capital Issues (control) Act, 1947
Securities Contract (Regulation) Act, 1956
SEBI Act, 1992 Depositories Act, 1996
Companies Act, 1956
Prevention of Money Laundering Act, 2002
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Securities Contract (Regulation) Act, 1956
Securities Contract (Regulation) Rules, 1957
Securities and Exchange Board of India Act, 1992
SEBI (Stock Brokers and Sub- Brokers) Regulations, 1992
SEBI (Prohibition of Insider Trading) Regulations, 1992
SEBI (Prohibition of Fraudulent and Unfair Trade Practices
Relating to Securities Markets) Regulations, 2003
The Depositories Act, 1996
Indian Contract Act, 1872
The Companies Act, 1956
Income Tax Act, 1961
Prevention of Money Laundering Act, 2002
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Geometric Mean (GM)
Rate of Return (R)
Variance (2 R)
Standard Deviation of Return ( R)Co-efficient of Variation (CV)
Covariance (cov)
Correlation Co-efficient ()
BetaCapital Assets Pricing Model (CAPM)