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In detail ideas of the basics o the capital market
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Introduction to capital markets
- For ISB&M
Emergence of capital markets
Funding
Income/Consumption
Savings
Institutional intermediation
Financial markets
Securities market Capital market Money market
Derivatives market FX market
Activities in financial markets
Capital markets
Debt LT & ST Private & Government
Equity Private & Public PSU & Private
Money markets
Not organized Highly institutionalized T-bills, CP/CD’s, call money, Repo’s
etc
Constituents of capital markets
Capital market segments
Capital markets service providers
Stock brokers & sub-brokers Depositories & Participants Custodial Services Share Transfer Agents Debenture Trustees Credit Rating Agencies Portfolio Managers
Depository system
Depository keeps electronic ledgers of all securities
DP maintains individual transaction ledger of each investor
Issuer/registrar gets into agreement with depository
Clearing member
Custodial Services
Maintaining accounts of securities Collecting the benefits of clients Keeping client informed of actions
involved in a security Maintaining and reconciling records
Primary markets
Primary equity market Public offer Private placement
Primary debt market Primary dealers Banks & FI’s
Structure of the primary market
Primary market issuers Companies incorporated under
Companies Act or under special statue of the Centre or State
It restricts private companies Restricts transfer of shares Limits members to 50 Prohibits any invitation to subscribe
shares/debentures Prohibits acceptance of deposit
Primary market investors
Institutional investors HNI Retail investors (discount may be
applicable)
Institutional Investors PFI’s – defined by RBI as non-banking SCB MF’s FII’s MBDFI – ADB, World Bank VC’s SIDC Insurance Companies PF’s & PF’s
Example
Primary market intermediaries
Issue managers, underwriters & brokers
Registrars to issues Bankers to issues Support service providers
ASBA
Policy changes Free pricing of equity Disclosure requirements for issuers Statutory recognition of merchant
bankers SEBI regulation on all activities DEMAT 21 days to listing Risk disclosure document