Investment Management

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Presentation transcript:

Investment Management UNIT-2 SECURITIES MARKETS

Functions of Primary Market 5/7/2018 V.Prabakaran, AP/MBA - Securities Market

Origination 5/7/2018 In primary market, origination means to investigate, evaluate and procedure new project proposals. It initiates before an issue is present in the market. It is done with the help of merchant bankers. The merchant bankers can be banks, financial institutions, private investment firms, etc. V.Prabakaran, AP/MBA - Securities Market

Cont… 5/7/2018 In primary market, the preliminary investigation involves a detailed study of economic, financial, legal, technical aspects to ensure the soundness of the project. The second function is performed by sponsoring institutions. They provide advisory service. Advisory service includes: Types of issue, Pricing, Methods of issue, etc. V.Prabakaran, AP/MBA - Securities Market

Underwriting 5/7/2018 In primary market, to ensure success of new issue, there is a need for underwriting firms. The company needs to appoint underwriters. They can be banks or financial institutions or specialized underwriting firms. In primary market, underwriting can be done by a single underwriter or by a group of underwriters. Minimum subscription is guaranteed by underwriters. If the issue is completely subscribed, no liability would be left for the underwriters. If by chance any part of the issue remains unsold, afterwards the underwriter has no option, rather than buying all the unsubscribed shares. V.Prabakaran, AP/MBA - Securities Market

Distribution 5/7/2018 In primary market, the success of any grand new issue is hinges on the issue is being subscribed by the people. The sale of the securities to the supreme or highest investors is termed as distribution. Distribution Job is given to brokers and dealers. The brokers or agents maintain direct contact with the supreme investors. V.Prabakaran, AP/MBA - Securities Market

Stock Brokers 5/7/2018 A stockbroker is an individual / organization who are specially given license to participate in the securities market on behalf of clients. The stockbroker has the role of an agent. When the Stockbroker acts as agent for the buyers and sellers of securities, a commission is charged for this service. As an agent the stock broker is merely performing a service for the investor. This means that the broker will buy for the buyer and sell for the seller, each time making sure that the best price is obtained for the client. V.Prabakaran, AP/MBA - Securities Market

Cont… 5/7/2018 An investor should regard the stockbroker as one who provides valuable service and information to assist in making the correct investment decision. They are adequately qualified to provide answers to a number of questions that the investor might need answers to and to assist in participating in the regional market. V.Prabakaran, AP/MBA - Securities Market

5/7/2018 Thanks… V.Prabakaran, AP/MBA - Securities Market