LISTING OF SECURITIES IN STOCK EXCHANGE.

About depository and paperless trading system, the regulation of stock broker.

1. LISTING OF SECURITIES AND SEBI Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

2. Listing of Securities Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

3. Listing means the admission of securities of a company to trading on a stock exchange. Listing is not compulsory under the Companies Act. It becomes necessary when a public limited company desires to issue shares or debentures to the public. When securities are listed in a stock exchange , the company has to comply with the requirements of the exchange . Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

4. Objectives of Listing To provide ready marketability and liquidity of a company’s securities. To provide free negotiability to stocks. To protect shareholders and investors interests. To provide a mechanism for effective control and supervision of trading. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

5. Different Types of Listing of Securities Initial Listing Public issue Right Issue Bonus Shares Listing for merger or amalgamation Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

6. Procedure for Listing Requirements Certified copy of Memorandum & Article of Association; Prospectus & agreement with underwriters; Details of Capital Structure; Copies of an advertisement offering securities during the last 5 years; Copies of financial statement & auditor’s report for the last 5 years; Copy of shares & debentures, letter of allotment and letter of regret; Details of the company since incorporation including changes in the capital structure, borrowings, etc.; Details of shares or debentures issued for consideration other than cash; A statement defining the distribution of shares and other details related to the commission, brokerage, discounts, or terms related to issue of shares; Agreement with a financial institution, if any; Details of shares forfeited; Details of securities about which permission to deal with are applied for; A copy of consent from SEBI. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

7. Advantages of Listing on Stock Exchange Information about the company is available in detail. Information provides awareness about the work of the organization. This increases trading activity of purchase and sale of shares of the company. Continuous dealing of the security raises its value in the securities market. It provides convenience of sale of security. This lends liquidity to the shares.   There is safety in dealing as it is registered with SEBI. It ensures creditworthiness. The act of listing of shares creates a favorable impression on the investor. Listing gives collateral value in making loans and advances from banks who prefers quoted securities. It widens the market of the security. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

8. ADVANTAGES TO THE COMPANY MANAGEMENT It gives the management and the company a higher status and facilitates expansion programmes . Such companies can raise finance very easily. Listed companies are eligible for certain fiscal advantages such as concessional rate of income tax, benefits of carry forward and set off of losses of the earlier years etc. Such companies are better placed while approaching the SEBI for its consent under any of the provisions of the SEBI Act. Listed companies are treated favorably by the financial institutions and commercial banks when they approach them for short-term and long-term accommodations. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

9. ADVANTAGES TO THE INVESTORS Listing makes the securities more prestigious and enhances their marketability. Hence, the holders of such securities can convert their holdings without any difficulty in times of need. The security prices are regularly published in the financial newspapers and periodicals. Hence, the investors can sell their holdings at the current market price. Such securities generally fetch higher prices. Holders of listed securities are eligible for certain concessions in matters relating to Income Tax, Wealth Tax etc. in their capacity as assessees. Listed securities enjoy more public confidence. Hence, they have high collateral value. The bankers will readily accept such securities for providing loans and other accommodations. Listed companies should make a fair disclosure of certain information and so the investors are given a reasonable opportunity of judging the merits of the concern. Listed securities ensure safety to the funds of the investors. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

10. DISADVANTAGES OF LISTING Listing makes people depend upon share brokers, jobbers etc. Many of them are weak speculators and frequently put their clients into difficulties. They create violent price fluctuations. Securities, which are unable to have a stable value, shall loose their prestige and fell down in the esteem of the investors and bankers. The management is also induced to show keen interest in the price movements for personal gains. They may take advantage of their inside knowledge and indulge in speculation. The free negotiability of securities enables a few interested persons to buy a substantial portion of the securities and thereby capture the management of the company. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

11. DEPOSITORY AND PAPERLESS TRADING Definition A depository is an institution that holds securities such as stocks, bonds, and other financial instruments in electronic form, rather than in physical paper certificates . Function Depositories facilitate the transfer of securities between buyers and sellers without the need for physical certificates. This process is more efficient and secure Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

12. DEPOSITORIES IN INDIA National Securities Depository Limited (NSDL ) Established : 1996. Function : NSDL was the first depository in India and is responsible for holding securities in electronic form, facilitating transactions, and providing a range of related services. Services : NSDL handles various types of securities including equities, debentures, government securities, and mutual funds. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

13. DEPOSITORIES IN INDIA Central Depository Services Limited (CDSL ) Established : 1999. Function : CDSL operates alongside NSDL and provides similar depository services. It was set up to enhance the efficiency of the securities settlement process. Services : Like NSDL, CDSL manages electronic records of a wide array of securities and offers services to investors and issuers. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

14. PAPERLESS TRADING IN INDIA Dematerialization Definition : Dematerialization is the process of converting physical securities into electronic form. Process : Investors submit their physical share certificates to a depository participant (DP), who then forwards them to the depository. The depository updates its records and credits the investor’s account with electronic securities. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

15. PAPERLESS TRADING IN INDIA Trading Platforms Stock Exchanges : Major stock exchanges in India, such as the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), support paperless trading through electronic trading systems. Online Trading : Investors can buy and sell securities through online trading platforms offered by brokerage firms. These platforms are integrated with depository systems, facilitating seamless electronic transactions. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

16. PAPERLESS TRADING IN INDIA Settlement Process Electronic Clearing : The settlement of trades occurs electronically. After a trade is executed, the electronic transfer of securities and funds is processed through the depository and clearing systems. T+2 Settlement : The standard settlement cycle in India is T+2, meaning transactions are settled two business days after the trade date. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

17. Broker System of Trading of Securities Types of Brokers Full-Service Brokers: Provide a wide range of services including investment advice, portfolio management, and financial planning. Discount Brokers: Offer lower-cost trading services with minimal additional advice or personal interaction. Online Brokers: Allow clients to trade through online platforms, often at a lower cost and with advanced trading tools. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

18. Broker System of Trading of Securities Account Setup Opening an Account: Investors must open a trading account with a broker. This involves providing personal information, financial details, and sometimes a risk assessment. Account Types: Depending on the broker, accounts can range from individual and joint accounts to retirement accounts and margin accounts. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

19. Broker System of Trading of Securities Order Execution Placing Orders: Investors place orders to buy or sell securities through their broker. Orders can be market orders (executed immediately at the current price) or limit orders (executed only when the price reaches a specified level). Order Types: Various order types include stop-loss orders, trailing stops, and others designed to manage risk and execute trades under specific conditions. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

20. Broker System of Trading of Securities Trade Processing Order Transmission: The broker transmits the order to the exchange or trading platform where the securities are listed. Trade Confirmation: Once executed, the broker confirms the trade with the investor and provides details such as the price and quantity of the securities traded. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

21. Broker System of Trading of Securities Settlement and Custody Settlement: After a trade is executed, the settlement process involves transferring the securities to the investor's account and the corresponding payment to the seller. This usually occurs within a specified period, such as T+2 (trade date plus two business days). Custody: The broker may hold the securities in custody for the investor, ensuring safekeeping and accurate record-keeping. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

22. Broker System of Trading of Securities Fees and Commissions Commission: Brokers typically charge a fee or commission for executing trades. This can be a flat fee per trade, a percentage of the trade value, or a combination of both. Additional Fees: There may be other fees associated with account maintenance, data access, or other services. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

23. Developments In Stock Exchange Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

24. T+1 settlement Indian stock markets shifted to a shorter settlement cycle, or T+1 regime, for the final list of large stocks on January 27, 2023. T+1 (trade plus one) means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place. Earlier, trades on the Indian stock exchanges were settled in two working days after the transaction was done (T+2). Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

25. IPO listing timeline reduced to T+3 T he Securities and Exchange Board of India (SEBI), reduced the listing timeline of IPOs from T+6 to T+3. The new rule was implemented in two phases: optional from September 1, 2023, and mandatory from December 1, 2023. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

26. Bank Nifty Monthly Expiry The National Stock Exchange (NSE) announced on July 12, 2023, a revision in the expiry days for futures and options (F&O) contracts of Bank Nifty and Nifty Midcap Select. From September 4, 2023, Bank Nifty's weekly F&O contract expiry was fixed on Wednesdays instead of Thursdays. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

27. Sensex and Bankex Contract Revival The Bombay Stock Exchange (BSE) relaunched Sensex and Bankex derivative contracts in May. The relaunch of derivative contracts was accompanied by a reduced number of futures and options. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

28. India saw the highest number of IPOs T he total number of IPOs grew in India by 56 per cent year-on-year ( YoY ), which was the highest in the world. The second-highest number of IPOs was seen in Italy. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

29. OPTIONS AND DERIVATIVES Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

30. OPTIONS Options are contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before or at the contract's expiration date. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

31. Types of Options Call Option : Gives the holder the right to buy the underlying asset at a specified price (strike price) within a certain time frame. Put Option : Gives the holder the right to sell the underlying asset at a specified price within a certain time frame. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

32. Strike Price : The price at which the underlying asset can be bought or sold. Expiration Date : The date by which the option must be exercised. Premium : The price paid for the option contract. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

33. Strategies Covered Call : Holding a long position in an asset and selling a call option on the same asset. Protective Put : Holding a long position in an asset and buying a put option to protect against a decline in the asset's price. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

34. Derivatives Derivatives are financial contracts whose value depends on the price of an underlying asset. They are used for hedging, speculation, or arbitrage. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

35. Types of Derivatives Futures : Agreements to buy or sell an asset at a future date for a price agreed upon today. They are standardized and traded on exchanges. Forward Contracts : Customized agreements between two parties to buy or sell an asset at a specific price on a future date. Unlike futures, forwards are not traded on exchanges and are tailored to the parties' needs. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

36. Types of Derivatives Swaps : Contracts in which two parties agree to exchange cash flows or other financial instruments. Common types include interest rate swaps and currency swaps. Options : Can also be considered a type of derivative because their value is derived from an underlying asset. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

37. SURVEILLANCE ON PRICE MANIPULATION IN STOCK MARKET Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

38. Market surveillance Market surveillance is the prevention and investigation of abusive, manipulative or illegal trading practices in the securities markets. Market surveillance helps to ensure orderly markets, where buyers and sellers are willing to participate because they feel confident in the fairness and accuracy of transactions. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

39. Types of Price Manipulation Pump and Dump : Inflating the price of a stock through false or misleading statements to attract investors, then selling off the stock at the inflated price. Short and Distort : Short selling a stock and then spreading negative rumors or false information to drive the price down. Wash Trading : Buying and selling the same security to create the illusion of trading activity and manipulate the stock price. Quote Stuffing : Placing a large number of orders and quickly canceling them to create confusion or manipulate market prices. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

40. Surveillance Mechanisms Market Surveillance Systems : Regulatory bodies use sophisticated software to monitor trading patterns, detect anomalies, and identify potential manipulative behaviors. These systems analyze large volumes of trading data to spot irregularities . Trade and Order Monitoring : Regulators track trading activity and order books to identify unusual patterns or volume spikes that might indicate manipulation. This includes monitoring the frequency and size of trades, as well as order cancellations. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

41. Surveillance Mechanisms Behavioral Analysis : Surveillance includes analyzing the behavior of traders and their trading strategies. For instance, regulators look for patterns consistent with manipulative practices, such as coordinated trades or suspicious timing . Algorithmic Trading Oversight : With the rise of algorithmic trading, regulators also focus on automated trading systems to ensure they’re not being used for manipulative practices. This includes ensuring that algorithms comply with market rules and don’t create unfair advantages. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

42. Surveillance Mechanisms Cross-Market Surveillance : Manipulative activities might involve multiple markets or exchanges. Regulators often coordinate with other exchanges and international bodies to detect and address cross-market manipulation . Whistleblower Programs : Many regulatory bodies have programs that incentivize individuals to report suspicious activities. These tips can be crucial in uncovering and investigating price manipulation. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

43. Buyback of Shares A buyback of shares refers to a company repurchasing its own shares from the market. This can be done through various methods and serves multiple purposes. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science

44. Stock Lending Stock lending involves borrowing and lending of securities, typically used by institutional investors to facilitate short selling or for other trading strategies. Ms Ann Mercy J, Assistant Professor, Sri Ramakrishna College of Arts & Science