SEBI

INVESTOR AWARENESS
PROGRAMME

- SECONDARY MARKET

1 Securities and Exchange Board of India

Topics to be covered
 Structure of Securities Market
 Participants in the Secondary Market
 Getting started
 Where to trade
 Trading – a general understanding
 How to trade
 Post trade
 Charges by the stock broker
 Settlement
 Investor Protection Mechanism
 Investors Grievance Redressal
2 Securities and Exchange Board of India
Structure of Securities Market

 The securities market in India can be

divided into two segments –
 Primary Market
 Secondary Market

3 Securities and Exchange Board of India

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

4 Securities and Exchange Board of India

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

5 Securities and Exchange Board of India

Where to trade

 The secondary market is divided into

two segments –
 Cash/ Equity segment
 Derivative segment –
• Equity Futures and Option (F & O) –
Index / Single Stock
• Currency Futures/ Option
• Interest Rate Futures

6 Securities and Exchange Board of India

How to trade

 Trade through a SEBI registered Stock

Broker, by -
 Placing margins as required with the
broker
 placing order over the phone
 email etc.

 Internet Trading
 Wireless / Mobile Trading.

7 Securities and Exchange Board of India

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

8 Securities and Exchange Board of India

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)

9 Securities and Exchange Board of India

 Settlement
 The settlement in the securities
market is done on a T+2 Rolling
Settlement Cycle (where T = Trading
Day). FAILURE
T+2 TO
TRADE SETTLEMENT PAY-IN

Option of Pay-in and

Trading Auction Close out
Early Pay-in Pay out
(T) (T3) (T4)
(T1) (T2)

10 Securities and Exchange Board of India

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.

11 Securities and Exchange Board of India

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

12 Securities and Exchange Board of India

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

13 Securities and Exchange Board of India

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

14 Securities and Exchange Board of India

 THANK YOU

15 Securities and Exchange Board of India