2. SECURITIES MARKET
Securities market is a component of the wider financial
market where securities can be bought and sold on the basis
of demand and supply.
Securities markets encompasses equity markets, bond
markets and derivatives where prices can be determined and
participants both professional and non professionals can meet.
Different types of securities are traded in the securities
market such as ownership securities, debt securities, short-
term securities, long-term securities, government securities,
non-government or corporate securities.
On the basis of the maturity period of securities traded in the
market, the securities market is segmented into money market
and capital market.
3. CAPITAL MARKET
Capital market is the market segment where securities
with maturities of more than one year are bought and
sold.
Equity shares, preference shares, debentures and bonds
are the long-term securities traded in the capital market.
The capital market is the source of long-term funds for
business and industry.
The capital market is divided into two different markets.
These are the primary market and secondary market.
4. SECONDARY MARKET
A market which deals in securities that have been already
issued by companies, is called as secondary market.
It is the base upon which the primary market is
depending.
The secondary market where continuous trading in
securities takes place is the stock exchange.
The chief purpose of the secondary market is to create
liquidity in securities.
It is also known as the Stock market.
5. STOCK EXCHANGE
Stock exchange is a centralized market for buying and
selling stocks where the price is determined through
supply-demand mechanisms.
The stock exchange were once physical market places
where the agents of buyers and sellers operated through
the auction process.
These are being replaced with electronic exchanges
where buyers and sellers are connected only by
computers over a telecommunications network.
At present there are 24 Stock Exchanges in India
recognized by the government.
6. (CONT.)
Out of these 20 exchanges are regional ones while 4
others National Stock Exchange of India
Limited(NSEIL), Over The Counter Exchange of India
Limited(OTCEI), Inter-connected Stock Exchange of
India Limited(ISE), & the Bombay Stock
Exchange(BSE) operate at he national level as they have
to mandate nationwide trading network.
They have adopted Screen Based Trading
System(SBTS) to provide automated computerized mode
of trading.
7. BSE
The Stock Exchange, Mumbai (BSE) is the leading and
also the oldest stock exchange in India with a history of
more than 125 years.
It was established in 1875 with formation of the Native
Share and Stock Brokers Association.
It is a very active stock exchange with highest number of
listed securities.
Nearly 70% of all transactions in the country are done on
BSE.
BSE has the largest no. of listed companies of more than
5000 on its trading list.
8. NSE
NSE was formed in 1994 and it was an important
development in the Indian capital market.
The new exchange which boasts of Screen Based
Trading System has been promoted as a competitor to
the BSE.
The NSE has two segments: the Capital Market segment
and the Wholesale Debt Market segment.
The capital market segment covers equities, convertible
debentures, and retail trade in non-convertible
debentures.
The Wholesale debt market segment is a market for a
high value transactions in government securities, PSU
bonds, commercial papers, and other debt instruments.
9. TRADING
The act of buying and selling of securities on a stock
exchange is known as Stock Exchange Trading. There
are 2 types of trading:-
1. Floor Trading:-
Under this system, an investor desirous of buying a
security gets in touch with a broker and places a buy
order along with the money to buy the security.
Similarly the investor sells his shares.
The broker in turn gets commission from his clients
which is fixed by the stock exchange.
10. ( CONT.)
2. Screen based trading:-
In the new electronic stock exchanges, which have a
fully automated computerized mode of trading, floor
trading is replaced with a new system of trading known
as screen-based trading.
In this system the distant participants can trade with each
other through the computer network.
11. SETTLEMENT
It means actual transfer of securities. This is the last
stage in the trading of securities done by the broker on
behalf of their clients. There can be 2 types of
settlement:-
On the spot settlement:- It means settlement is done
immediately and on the spot settlement follows T+2
rolling settlement. This means any trade taking place on
Monday gets settled by Wednesday.
Forward settlement:- It means settlement will take
place on some future date. It can be T+5 or T+7 etc. All
trading in stock exchanges takes place between 9.55am
and 3.30pm Monday to Friday.
12. DEBT MARKET
Debt market refers to the financial market where
investors buy and sell debt securities, mostly in the form
of bonds.
India debt market is one of the largest in Asia.
The debt market, in turn, may be divided into three
parts, viz., the government securities market, the
corporate debt market, and the money market.
The biggest advantage of investing in Indian debt
market is its assured returns. The returns that the market
offer is almost risk free.
13. SEBI
The GOI set up the Securities and Exchange Board of
India on 12th April,1988.
It deals with the matters relating to development and
regulation of securities market and investor protection.
The primary focus of risk management by SEBI has been
to address the market risks, operational risks and
systemic risks.
SEBI has been continuously reviewing its policies and
drafting risk management policies to mitigate these risks,
thereby enhancing the level of investor protection and
catalyzing market development.
