capital market slides final

8/8/2019 Capital Market Slides Final

1/20


2/20

Capital Market

Functions

Market Segments

Trading and Settlement

Fundamental Valuation Concepts


3/20

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


4/20

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


5/20

Primary Market

Secondary Market


6/20

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


7/20

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


8/20

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


9/20

Corporate Securities Market

SEBI Act, 1992

DIP Guidelines

Screen Based Trading Trading Cycle

Derivatives Trading

Demutualization

Depositories Act Risk Management

Investor Protection

Globalization


10/20

Government Securities Market

Market Infrastructure


11/20

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


12/20

Trading Network and NEAT System

Brokers premises to satellite to Exchange mainframe

Exchange mainframe to satellite to Brokers premises

Software Used: ODIN

IRIS

PROWESS


13/20

Market Types:

Normal Market

Odd Lot Market

Red Debt Market Auction Market

Corporate Hierarchy:

Corporate Manager

Branch Manager

Dealer


14/20

Order Management:

Entering Orders

Active Orders

Passive Orders Circuit Breakers

Order Conditions

Time Conditions

Quantity Conditions

Price Conditions

Other Conditions

Order Matching Priority


15/20

Transaction Cycle

Decision to trade

Placing order

Trade execution Clearing and settlement of trades

Funds /securities


16/20

Settlement Agencies:

National Securities Clearing Corporation Ltd.

(NSCCL)

Clearing Member Custodians

Clearing Banks

Depositories


17/20

Risk in Settlement:

Counter Party Risk

System Risk


18/20

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


19/20

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


20/20

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)

capital market slides final

Documents