SNS College of Technology [An Autonomous Institution]

Coimbatore - 35

16BA708 - Investment Management

Unit-2 - Securities Markets

Topic: BSE, OTCEI, NSE & ISE

Prepared by : Ms.Akash.B, II MBA

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

1/18

Recall

• Regulations of Primary Market

• Pre and Post issue obligations

• IPO Guidelines

• Stock Exchanges in India: Objectives and Functions

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

2/18

Bombay Stock Exchange (BSE)

• One of the oldest stock exchanges in Asia.

• Established in the year 1875 and recognized on a permanent basis in the year 1957.

• BSE On-line Trading (BOLT).

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

3/18

BSE

• Established in 1875 as “The

Native Share and Stock

Brokers Association”.

• World’s No.1 exchange in

terms of listed members.

• First Exchange in India and

second in the world to

obtain an ISO 9001:2000

certification

• BSE SENSEX

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

4/18

National Stock Exchange (NSE)

• NSE was set up by IDBI and other financial institutions in the year 1992 and started functioning in1994.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

• The various objectives of NSE are:

• To establish a nationwide trading facility

• To provide a fair and efficient securities market.

• To enable shorter settlement cycle.

5/18

Membership of NSE

• The membership of NSE is based on a number of factors such as capital adequacy, track record, education and experience.

• Written test followed by an interview is mandatory to become a member.

• The segments in which the applicants are admitted:

• Wholesale debt market

• Capital market

• Derivative market

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

6/18

BSE vs NSE Bombay Stock Exchange National Stock Exchange

Established in 1875 Established in 1992

6000+ Listed Members 1600+ Listed Members

SENSEX NIFTY

Mumbai, India Mumbai, India

Oldest Stock Exchange in Asia Largest Stock Exchange in India in terms of daily turnover

Presence in 450+ cities Presence in 1,500 + cities

BOLT System NEAT System

BSE started as an Association of persons in 1875, which was accredited as a stock exchange in 1957

NSE was founded in 1992, as a tax paying company, but later on, in 1993 it was recognized as a Stock Exchange.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

7/18

Interconnected Stock Exchange (ISE)

• Started in1998.

• Diluted version of ‘National Stock Market System’(NSMS)

• To interlink 15 odd regional stock exchanges of country to ensure liquidity.

• Minimize the cost of regional exchanges as they were incurring huge costs by supporting very illiquid market.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

8/18

Participants of ISE

• Membership to ISE costs Rs.16,000/- along with capital adequacy deposit of Rs.4 lakhs

• ISE has floated ISE Securities & Services Limited (ISS)

• ISS has been registered by SEBI as a Trading-cum-Clearing Member and F&O segment of NSE and Capital Market segment of BSE.

• Trading Members of ISE can access NSE and BSE by registering themselves as Sub-brokers of ISS.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

9/18

Objectives

• Create a single integrated national-level solution

• Optimally utilising the existing infrastructure

• Provide a level playing field to small Trading Members

• Provide clearing and settlement facilities

• Spread demat trading across the country.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

10/18

OTCEI

• Started in 1990.

• Providing a market for the smaller companies that could not offered the listing fees of the large exchange and didnt fulfill the minimum capital requirement of listing.

• It is incorporated as company under section 25 of the Indian companies act 1956.Promoters are UTI, ICICI, IDBI, IFCI, LIC, SBI Capital Market

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

11/18

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

12/18

Players in the OTCEI market

• The players on the OTCEI exchange are the members and dealers. The activities of members and dealers are:

• Act as broker, buy and sell securities according to the instructions of investor.

• Market makers in securities, they quote the prices at which members are willing to buy and sell the specified no. of securities.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

13/18

Members

• Members can be public financial institutions, scheduled banks, mutual funds, SEBI approved merchant banker, banking subsidiaries, venture capital funds and other non-banking financial companies with minimum net worth of 2.5 crores.

• Members pay a one time non-refundable admission fee of rs 10 lakh and rs 5 lakh after one year.

• The annual subscription fee is rs 1 lakh.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

14/18

Dealers

• The dealers are individuals, partnership firm, and corporate entities with a minimum net worth of Rs 5 lakh.

• They should have adequate office space and telecommunication facilities.

• They have to pay one time non-refundable fee of rs 2 lakh and annual subscription fee of rs 5000.

• OTCEI may collect additional security deposit if it considers necessary, depending upon the business experience of applicant.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

15/18

Market Maker

• A market maker is a broker-dealer firm that assumes the risk of holding a certain number of shares of a particular security in order to facilitate the trading of that security.

• Each market maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares, and once an order is received from a buyer, the market maker immediately sells from its own inventory or seeks an offsetting order.

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

16/18

Summarize

• NSE

• BSE

• NSE vs BSE

• OTCEI

• ISE

• List of Stock Exchanges in India

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

17/18

Thanks…

10

/8/2

01

9

V.P

rab

akar

an, A

P/M

BA

- S

ecu

riti

es

Mar

ket

18/18