Secondary market final
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Transcript of Secondary market final
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SECONDARY MARKET
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The securities market in India can be divided into two segments –Primary MarketSecondary Market
Structure of Securities Market
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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.
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In primary markets, securities are bought by way of public issue directly from the company.
New issue are available in primary market.
The primary is a middlemen.
New issue of common stock;bonds and preferred stock are sold by companies.
In Secondary market share are traded between two investors.
Securities usually bought and sold through the secondary market.
The secondary market are broker and dealer.
The secondary market stock and bonds issues are sold to the public.
primary market secondary market
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Secondary Market has an important role to play behind the developments of an efficient capital market.
Secondary market connects investors' favoritism for liquidity with the capital users' wish of using their capital for a longer period.
Secondary market is that financial market in which investor can buy and sell shares and bonds after its issue by company. 5
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Government securities
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Securities and Exchange Board of India7
Participants in the Secondary Market Stock Exchange Clearing Corporation Depositories/ DP Trading Member (Stock Broker)/
Clearing Member Registrar to an Issue and Share
Transfer Agent
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Securities and Exchange Board of India8
Getting started To start trading the following are
required – Trading account
• Member – Client Agreement• Risk Disclosure Document
Demat account Bank account Permanent Account Number (PAN) Unique Client Code
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Securities and Exchange Board of India9
Where to trade
The secondary market is divided into two segments – Cash/ Equity segmentDerivative segment –
• Equity Futures and Option (F & O) – Index / Single Stock
• Currency Futures/ Option• Interest Rate Futures
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Securities and Exchange Board of India10
How to trade Trade through a SEBI registered
Stock Broker, by -Placing margins as required with
the brokerplacing order over the phoneemail etc.
Internet Trading Wireless / Mobile Trading.
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Securities and Exchange Board of India11
Post Trade The stock broker is required to provide
contract notes confirming the trades done within 24 hrs of executing the trade
The contract notes can either be in
physical or electronic form
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Step 1. Investor / trader decides to trade
Step 2. Places order with a broker to buy / sell the required quantity of respective securities
Step 3. Best priced order matches based on price-time priority
Step 4. Order execution is electronically communicated to the broker’s terminal 12
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Step 5. Trade confirmation slip issued to the investor / trader by the broker
Step 6. Within 24 hours of trade execution, contract note is issued to the investor / trader by the broker
Step 7. Pay-in of funds and securities before T+2 day
Step 8. Pay-out of funds and securities on T+2 day 13
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Securities and Exchange Board of India14
Settlement The settlement in the securities
market is done on a T+2 Rolling Settlement Cycle (where T = Trading Day).
Trading (T)
Option of Early Pay-in
(T1)
Auction (T3)
Close out (T4)
Pay-in and Pay out
(T2)
TRADE SETTLEMENTT + 2
FAILURE TO
PAY-IN
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Securities and Exchange Board of India15
Settlement - Auction
Incase there is a shortage in Pay-in of shares at the time of settlement on T+2, the Stock Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member.
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Securities and Exchange Board of India16
Settlement - Close Out If the shares could not be bought in the
auction i.e. if shares are not offered for sale in the auction, the transactions are closed out as per SEBI guidelines
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Securities and Exchange Board of India17
Charges by the Stock Broker Brokerage charged by member broker
(maximum 2.5%) Service tax as stipulated Securities Transaction Tax Penalties arising on specific default on
behalf of client (investor)
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Securities and Exchange Board of India18
Investor Protection Mechanism Investor Protection Fund or
Consumer Protection Fund (IPF/ CPF) is set up by the Stock Exchanges to meet the legitimate investment claims of the clients of the defaulting members that are not of speculative nature
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Securities and Exchange Board of India19
Investor Grievance Redressal Complaints can be filed with OIAE
department of SEBI against companies for delay or non-receipt of shares, refund orders, etc., and with Stock Exchanges against brokers on certain trade disputes or non receipt of payment/securities.
Arbitration
Court of Law
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Securities and Exchange Board of India20
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