PRESENTATION ON

NEW ISSUE MARKET

ACKNOWLEDGEMENT: We are thankful to our faculty NEHA

MEHTA MAM for giving us such a great topic of NEW ISSUE MARKET as our project and helping us to gain knowledge about it which is helpful in our near future.

INTRODUCTION:

• The financial market is classified into 2 groups- 1-Primary market 2-Secondary market• The primary market deals in the new financial

claims or new securities and therefore they are also known as the NEW ISSUE MARKET.

• Secondary market deals in the old securities, i.e., those which has been already issued in the primary market, ex- Stock exchange.

MEANING OF NEW ISSUE MARKET:

• The part of the capital market dealing with new securities is known as Primary Market. It is also known as New Issue Market.

• Both private and or public sector organizations can get funds by selling new shares or bonds.

• Usually, small or medium scale companies enter into the market of new securities in order to widen the scope of their business.

• The selling process of new securities to investors is called underwriting. The security dealers earn a commission that is added in the cost of the securities.

• A lot of formalities are required to be fulfilled before a security can be sold.

• “The market in which new, as opposed to existing, securities are sold. Investors who purchase shares in a new security issue are purchasing them in the primary market.”

FUNCTIONS OF NEW ISSUE MARKET:

• The basic function of new issue market is to facilitate transfer resources from savers to the users.

• It plays an important role in mobilizing the funds from the savers and transferring them to the borrowers.

• The main function of new issue market can be divided into three service functions:

1. ORIGINATION:

• It refers to the work of investigation, analysis and processing of new project proposals. Origination starts before an issue is actually floated in the market

2.UNDERWRITING:

• It is an agreement whereby the underwriter promises to subscribe to a specified number of shares or debentures in the event of public not subscribing to the issue

3.DISTRIBUTION

• It is the function of sale of securities to ultimate investors. Brokers and agents who maintain regular and direct contact with the ultimate investors, perform this service.

FEATURES:

1. New Long Capital

2. In a primary issue, the securities are issued by the company directly to investors.

3. The company receives the money and issue new security certificates to the investors.

4. Setting New Business

5. Capital Formation

6. Going Public

METHODS OF FLOATING NEW ISSUES:

The various methods which are used in the floating of securities in the new issue market are:

1.Public issues or Initial public offering: • The issuing company directly offers to the general

public/institutions a fixed number of securities at a stated price or price band through a document called prospectus.

2.Offer of sale:• It consists in outright sale of securities through the

intermediary of issue houses or share brokers

3.Private Placement:• It involves sale of securities to a limited number of

sophisticated investors such as financial institutions, mutual funds, venture capital funds, banks, and so on.

4.Right Issue:• When a listed company proposes to issue securities to its

existing shareholders, whose names appear in the register of members on record date, in the proportion to their existing holding, through an offer document, such issues are called ‘Right Issue’.

Participants In The Securities Market:

• Regulators: The key agencies that have a significant regulatory influence , direct or indirect, over the securities market such as SEBI, RBI, CLB, DEA and MCA etc.

• Stock Exchanges: A stock exchange is an institution where securities that have already been issued are bought and sold. Presently there are 23 stock exchanges in India, the most important ones being BSE and NSE.

• Registrars: Also known as a transfer agent, a registrar is employed by a company or a mutual fund to handle all investor-related services.

• Underwriters: An underwriter agrees to subscribe to a given number of shares (or any other security) in the event the public subscription is inadequate.

• Foreign Institutional Investors: Institutional investors from abroad who are registered with SEBI to operate in the Indian Capital market are called foreign institutional investors (FIIs).

• Merchant Bankers: Firms that specialize in managing the issue of securities are called merchant bankers. They have to be registered with SEBI.

• Brokers: Brokers are registered members of the stock exchanges though whom investors transact.

• Primary Dealers: Appointed by the RBI, primary dealers serve as underwriters in the primary market and as market makers in the secondary market for governmental securities.

• Credit Rating Agencies: A credit rating agency assigns ratings primarily to debt securities. In India there are two main credit rating agencies; Credit Rating Investment Services of India Limited (CRISIL) and Investment Information and Credit Rating Agency (ICRA).

CONCLUSION:

• New Issue Market is also known as primary market is the most important part all across the globe.

• New Issue market deals in all types of new security, bond, shares, etc. Without Primary Market, Secondary Market is handicapped. Thus, Primary Market plays a vital role in Stock Market.

REPRESENTATIVES:

• NAIM DAUA 07• CHAITALI DOSHI 11• KARAN JAIN 19• VIDHI KANAKIA 28• RUPAL KELKAR 30• ABHISHEK LANGAR 32