Investment Management UNIT-2 SECURITIES MARKETS

Types of Financial Market 6/1/2018 Stock Markets: Stock Market is a type of Capital market which deals with the issuance and trading of shares and stocks at a certain price. Bond Markets: Bond Market is a form of capital market where buyers and sellers are involved in the trading of bonds. Commodity Market: A market which facilitates the sale and purchase of raw goods is called a commodity market. Commodity market like any other market includes a buyer and a seller. In such a market buyer purchases raw products like rice, wheat, grain, cattle and so on from the seller at a mutually agreed rate. V.Prabakaran, AP/MBA - Securities Market

Cont… 6/1/2018 Money Market: As the name suggests, money market involves individuals who deal with the lending and borrowing of money for a short time frame. Derivatives Market: The market which deals with the trading of contracts which are derived from any other asset is called as derivative market. Future Market: Future market is a type of financial market which deals with the trading of financial instruments at a specific rate where in the delivery takes place in future. V.Prabakaran, AP/MBA - Securities Market

Cont… 6/1/2018 Insurance Market: Insurance market deals with the trading of insurance products. Insurance companies pay a certain amount to the immediate family members of owner of the policy in case of his untimely death. Foreign Exchange Market: Foreign exchange market is a globally operating market dealing in the sale and purchase of foreign currencies. Private Market: Private market is a form of market where transaction of financial products takes place between two parties directly. Mortgage Market: A type of market where various financial organizations are involved in providing loans to individuals on various residential and commercial properties for a specific duration is called a mortgage market. The payment is made to the individual concerned on submitting certain necessary documents and fulfilling certain basic criteria. V.Prabakaran, AP/MBA - Securities Market

Participants in financial Market RETAIL INVESTOR: Individual investors who buy and sell securities for their personal account, and not for another company or organization. Also known as an "individual investor" or "small investor". COMPANIES: The surplus funds generated from business operations are majorly invested in money market instruments, commercial bills and stocks of other companies. GOVERNMENT: Authorized dealers basically look after the demand-supply operations in financial market. Also works to fill in the gap between the demand and supply of funds. MUTUAL FUNDS: Acquire funds mainly from the general public and invest them in money market, commercial bills and shares. Mutual fund is also principle participant in financial market. 6/1/2018 V.Prabakaran, AP/MBA - Securities Market

Participants in financial Market BANKS: Largest provider of funds to business houses and corporates through accepting deposits. INSURANCE COMPANIES: Issue contracts to individuals or firms with a promise to refund them in future in case of any event and thereby invest these funds in debt, equities, properties, etc. FINANCE COMPANIES: Engages in short to medium term financing for businesses by collecting funds by issuing debentures and borrowing from general public. MERCHANT BANKS: Funded by short term borrowings; lend mainly to corporations for foreign currency and commercial bills financing. 6/1/2018 V.Prabakaran, AP/MBA - Securities Market

Cont… Stock Brokers Sub Brokers Share Transfer Agents 6/1/2018 Stock Brokers Sub Brokers Share Transfer Agents Bankers to an Issue Trustees of a Trust Deed Registrars to an Issue Merchant Bankers Underwriters Portfolio Managers Investment Advisers V.Prabakaran, AP/MBA - Securities Market

Cont… Clearing Houses Depository Custodians Credit Rating Agencies 6/1/2018 Clearing Houses Depository Custodians Credit Rating Agencies Foreign Institutional Investors V.Prabakaran, AP/MBA - Securities Market

Clearing Houses 6/1/2018 As clearing house give guarantee for all the transactions and acts as counterparty for all the transactions it will never have open positions in the market. It ensures that all parties adhere to the system and procedures so that various parties in the market can do trading smoothly which in turn leads to more confidence of the players on the markets and hence it increases liquidity in the market. It ensures a proper risk management system in place by stipulating that margin is maintained which is of two types – initial and maintenance margin and hence accounting is done for all the gains and losses on daily basis and hence chances of default are reduced considerably. It ensures that delivery of the underlying asset is consistent in terms of quality, quantity, size etc… so that there is no confusion among parties, in other words all contracts are standardized. V.Prabakaran, AP/MBA - Securities Market

6/1/2018 Thanks… V.Prabakaran, AP/MBA - Securities Market