Presentation On Secondary market

Group Members (1)Parmar Bindiya Manubhai (2)Parmar Rekha Vashrambhai (3)Chavda Bhavna Kanjibhai

Definition SECONDARY MARKET: ‘’The secondary market is the market in which existing securities are resold or traded.’’ It is also known as Stock market In India the secondary market consist of stock exchanges operating under rules, by-laws, and regulations duly approved by the govt. Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

The following are the financial products/instruments which the secondary market deals with : Equity Shares Rights Issue Rights Shares Bonus Shares Treasury Bills Coupons Commercial Paper Debentures Convertible Bond

Zero Coupon Bond Bond Participating Preference Share Cumulative Convertible Preference Shares Cumulative Preference Shares Preferred Stock/ Preference shares

Function of Secondary Market To facilitates the liquidity and marketability of outstanding equity and debt instrument To contribute to economic growth through allocation of funds To provide instant valuation of securities by changes in internal environment. To ensure a measure of safety and fair dealing to protect investors’ interest

Difference between the primary market and the secondary market In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.

Participants in Secondary Market Broker-dealer: It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers. Although many broker-dealers are "independent" firms solely involved in broker-dealer services, many others are business units or subsidiaries of commercial banks, investment banks or investment companies. When executing trade orders on behalf of a customer, the institution is said to be acting as a broker. When executing trades for its own account, the institution is said to be acting as a dealer.

Floor broker: A floor broker is an independent member of an exchange who can act as a broker for other members who become overloaded with orders, as an agent on the floor of the exchange. The floor broker receives an order via Teletype machine from his firm's trading department and then proceeds to the appropriate trading post on the exchange floor. There he joins other brokers and the specialist in the security being bought or sold and executes the trade at the best competitive price available.

Floor trader: Market maker: A floor trader is a member of a stock or commodities exchange who trades on the floor of that exchange for his or her own account. The floor trader must abide by trading rules similar to those of the exchange specialists who trade on behalf of others. The term should not be confused with floor broker. Floor traders are occasionally referred to as registered competitive traders, individual liquidity providers or locals. Market maker:  A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn.

Quantitative analyst: Proprietary trader: Proprietary trading (also "prop trading" or PPT) occurs when a firm trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments, with the firm's own money as opposed to its customers' money, so as to make a profit for itself. Quantitative analyst:  A quantitative analyst is a person who works in finance using numerical or quantitative techniques. Similar work is done in most other modern industries, but the work is not always called quantitative analysis. In the investment industry, people who perform quantitative analysis are frequently called quants. 

Stock trader: A stock trader refers to a person or entity engaging in the trading of equity securities, in the capacity of agent, hedger, arbitrageur, speculator, or investor. The majority of stock traders are technically stock speculators, synonym stockjobbers . A stock investor is an individual or firm who puts money to use by the purchase of equity securities, offering potential profitable returns, as interest, income, or appreciation in value (capital gains).

Investor:  An investor is someone who allocates capital with the expectation of a financial return. The types of investments include, — gambling and speculation, equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc. This definition makes no distinction between those in the primary and secondary markets. That is, someone who provides a business with capital and someone who buys a stock are both investors. Since those in the secondary market are considered investors, speculators are also investors.

STOCK EXCHANGE Definition Meaning “An association , organization , or an individual which is established for the purpose of assisting ,regulating , and controlling business in buying ,selling and dealing in securities.” Meaning This comes under treasury sector ,which provides service to stock brokers & traders to trade stocks ,bonds and securities. Stock exchanges helps the companies to raise their fund. Therefore the companies needs to list themselves on the Stock Exchange There are 23 stock exchanges in India like BSE, NSE, Bangalore stock exchange, Cochin stock exchange, Delhi stock exchange, Kolkata stock exchange & many others.

Regulation of stock exchanges The stock market in India are regulated by the central government under the securities exchange board of india which provides : Recognition of stock exchange Supervision & control of stock exchange Regulation of contracts in securities Listing of securities Transfer of securities And many other related function

SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI) The SEBI was constituted on 12th April,1988 under a resolution of the Government of India. The SEBI is the regulatory authority . The Securities and exchange board of India Act, 1992 provides for the establishment of SEBI to protect investor’s interest in securities and promote and regulate the security market

Powers of SEBI Promoting education, and training of intermediaries of securities market Prohibiting fraudulent and unfair trade practices relating to securities market. Power to grant license to any person for the purpose of dealing in certain areas. issues and transfer of securities Power to inspect the books of accounts

BOMBAY STOCK EXCHANGE (BSE) BOMBAY STOCK EXCHANGE is the oldest and first stock exchange of India established in the year 1875. First it was started under banyan tree opposite to town hall of Bombay over 22 stock brokers. Category of shares at BSE A group ,B1 Group (medium Sized, Inconsistent profit, less liquidity), B2 Group (Small companies, very low trading, poor in profit generation), Z Group (non compliance, poor companies), F Group (debt Market)

Index of 30 stocks representing 12 major sectors Index of 30 stocks representing 12 major sectors. World's number 1 exchange in terms of the number of listed companies. World's 5th in transaction numbers. More than 4,700 listed companies. Classified into A, B1, B2, F and Z groups.

SENSEX BSE Sensex: BSE-SENSEX, short form of the BSE-Sensitive Index, is an index of 30 stocks representing a sample of large, well-established and financially sound companies. It is the oldest index in India and has acquired a unique place in the collective consciousness of investors. The index is widely used to measure the performance of the Indian stock markets. BSE-SENSEX is considered to be the pulse of the Indian stock markets as it represents the underlying universe of listed stocks at The Stock Exchange, Mumbai. BSE Indices : Sensex , BSE-100 , BSE-200 , BSE-500 ,BSE Midcap , BSE Small cap

NATIONAL STOCK EXCHANGE OF INDIA The NSE of India is the leading stock exchange of India, covering 370 cities and towns in the country. It was established in 1994 as a TAX company. It was established by 21 leading financial institutions and banks like the IDBI,ICICI,IFCI,LIC,SBI,etc. Professionalization in trading-It brings professionalism in its functions Transparency-The use of computer screen for trading makes the dealings insecurities transparent. Screen-based trading -Trading in this stock exchange is done electronically. Ring less - It has no ring or trading floor Nation wide coverage - Investors from all over country NIFTY is an indicator to checkout in NSE

Nifty S&P CNX Nifty is a well-diversified 50 stock index accounting for 23 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL.IISL is India's first specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard &Poors (S&P), who are world leaders in index services. • NSE Indices : S&P CNX Nifty , CNX Nifty Junior-100 second rang of growth stocks , CNX Mid Cap , CNX IT Sector Index , CNX PSE Index -20 PSE stocks , CNX MNC Index -15 listed companies

OVER-THE-COUNTER EXCHANGE OF INDIA(OTCEI) The OTCEI is a national, ring less and computerized stock exchange. It was established in october,1990. It started its operation in september,1992. Advantages of OTCEI. 1. It helps the investors to have easy and direct access to the stock exchange 2. It helps investors to get fair prices for their securities 3. It provide safety to the investors 4. To provide computerized trading system 5. To provide investors a convenient,effcient and transparent mode of investment

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