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over the counter exchange of India , the stock exchange which help the small investors to invest in stock market. it contains all information about OTCEI with establishment,role , trading mechanism, benefits,members,dealers etc. A complete presentation regarding OTCEI
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Committee
Functioning
Incorporated
Capital
G.S patel committee,
Abid Hussain committee .
October 1990
September 1992
8 crore.
ESTABLISHMENT
OTCEI was needed to solve the problems of small investors and company
SMALL INVESTORS
ACCESS LIQUIDITY
DELAY IN PAYMENT
& DELIVERY
UNCERTAINTY REGARDING
PRICES
Problems of company were:
PROBHITIVE ISSUE COST
ADMINISTERED PRICING OF ISSUE
RESTRICTED
ACCESS TO
MARKET
OTCEI COUNTER
UTI
ICICIIDBI
IFCI
GIC SBI
Capital M
arket
Canbank
Financial
services
LIC
Elimination of Trading
Ring
Executive Trading
Computerised Trading
Nationwide Reach
FEATURES OF OTCEI
Individuals ,partnership firms and
corporate entities Minimum net worth of Rs. 5 lakhs
Adequate office space and
telecommunication facilities
Have to pay one time non refundable admission fee of Rs.
2 lakhs
Annual subscription fee of Rs. 5,000 The individual
should be at least a graduate
WHO CAN BE DEALERS
Public Financial institutions , Scheduled banks, Mutual funds, venture capital funds. Minimum net worth Rs. 2.5 crores Must pay admission fee of Rs. 10 lakhs and Rs. 5 lakh after
one year Annual Subscription fee is Rs 1 lakh Act as brokers who buy and sell securities Quote prices and perform vital function of sponsorship
WHO CAN BE MEMBERS
Trading from distant
locations
Transparency in Dealing
Easy Access
Appraisal by sponsor
Quick Settlements
BENEFITS OF OTCEI
PROCEDURE OF LISTING
The sponsor determines the price of the company shares offered to the public , members and dealers of the OTCEI
The sponsor gets all statutory consent and compliance with all SEBI.
An OTCEI member is appointed as a sponsor of the company`s issue. He appraises the project / company on technical, managerial, commercial, economical and financial aspects .
The listing application has to be made to the OTCEI as per its rules and regulations
After getting approved, the allotment is made.
The sponsor registers the issue with OTCEI and places the equity
Listing fees - initial listing fee of Rs. 6000 and an annual fee of 0.05% of its subscribed capital
The company must have a minimum issued equity capital of ` 30 lakh
Companies with an issued equity capital >` 30 lakh < ` 300 Lakh, the minimum public offer should be 40% of the issued capital
GOVERNMENT GUIDELINES FOR LISTING
The companies with an issued equity capital > ` 300 lakh will follow the listing requirements and
guidelines.
The companies engaged in investing, leasing, finance, hire-purchase , amusement parks etc are
not eligible for listing
A company with capital > ` 10 crore will not be eligible for listing.
The company can go public on the OTC exchange by two methods
METHOD OF OFFER
PRIMARY ISSUE SECONDARY
ISSUE
TRADING MECHANISM
BANK
Registrar
Counter A Counter B
OTC Central Computer
Telecom Mobile
PTI Computer
At present the settlement procedure has five days trading cycle
Short sales and squaring up have to be done with in the trading cycle and certificate to the investors must be delivered within a fortnight from the date of purchase . It avoids the speculation
Forward trading is not allowed in OTCEI
This settlement procedures are different for the listed securities and the permitted securities
SETTLEMENT SYSTEM
AKHIL 8215.4(A)