Merchant Banking

Financial Markets and Services Kiran Bindu

Origin of Merchant Banking
13th Century merchant bankers were traders of
commodities and acted as bankers to the kings of European states. They Financed the continental wars and coastal trades. They lent their names to lesser known traders by accepting bills through which they guaranteed that the holder of the bill would receive full payment.
Financial Markets and Services Kiran Bindu

Appointment of bankers. registrars. Holding brokers-Underwriters. brokers. Pricing Assessing and appraisal of project report.Managers to the issue or Merchant Bankers Advise on the capital structure. underwriters. instrument of issue. printers and advertisement agents. Financial Markets and Services Kiran Bindu .

Press and investor conferences. Obtain daily report of the applications and amounts collected at branches. Deciding on the dates of opening and closing of the subscription list. Deciding the pattern of advertisement. Deciding the collection branches where application can be received or collected. Financial Markets and Services Kiran Bindu .

expertise.Obtaining subscription to the issue. Financial Markets and Services Kiran Bindu . competence. Looking at the above roles of the MB a company should choose one after a lot of research into his integrity. Obtain consent of the Stock Exchange and get basis of allotment approved.

Past performance.Ethics and integrity. Infrastructure. Trained & committed manpower. Reputation. Relationship & Contacts. Concern & interest of clients. Liaison and networking. Financial Markets and Services Kiran Bindu Factors to select a MB .

Financial Markets and Services Kiran Bindu . Financial strength of the promoters and the company. Track record of the promoters.Factors to select a client. Track record of the company. Economic viability of the project. Professional management.

Financial Markets and Services Kiran Bindu . project appraisal and arrangement of Working capital. Deciding the capital structure.Prime Objectives of MB Providing long term funds to the projects or companies. Portfolio Management Underwriting Corporate advisory & issue mgmt.loan syndication. Project counseling.

Market Making OTC NSE Forex Financial engineering. Private placements with NRI’s and FII’s.M&A’s.Emerging Areas. capital restructuring. Financial Markets and Services Kiran Bindu . Brought out deals.

Financial Markets and Services Kiran Bindu . Render high standard of service. exercise independent judgment & disclose conflict of interest while providing unbiased service. 1992 Observe high standards of integrity and fairness in all his dealings. proper care. exercise due diligence.Code of Conduct for MB SEBI (MB) Regulations.

likely to harm the interest of other MB or is likely to place such other MB in a disadvantageous position in relation to the MB. while competing for or executing any assignment..Code of conduct continued……. (Harmful statement while solicitation & execution) Financial Markets and Services Kiran Bindu . Not make any statement or become privy to any act. practice or unfair competition.

Financial Markets and Services Kiran Bindu . efficient and cost effective manner. Render best possible advice to the client having regard to the clients needs and the environment and his own professional skill. written or oral.Not make exaggerated statements. Ensure that all professional dealings are effected in a prompt. to the client either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients.

press or any other party any confidential information about his client. Provide investors with true and adequate information without making any misguiding or Financial Markets and Services Kiran Bindu .A MB shall not divulge to other clients. Deal in securities of the client company without making disclosure to the board as required under the regulation and also to the Board of Directors of the client company. which has come to his knowledge.

memorandum and related literature are made available to investors.  Ensure copies of prospectus. Fair allotment of securities and refund of application money without delay. Financial Markets and Services Kiran Bindu . Investor complaints are adequately dealt with. exaggerated claims and are aware of attendant risks before any investment decisions are made.

rules and regulations which may be applicable and relevant to the activities carried on by the merchant banker. A MB shall abide by the provisions of the Act. Financial Markets and Services Kiran Bindu .• The MB shall not generally and particularly in respect of issue of any securities be party to Creation of false market Price rigging or manipulation Passing of price sensitive information or take any other action which is unethical or unfair to the investors.

Minor Defaults. Serious Defaults. Financial Markets and Services Kiran Bindu . Major Defaults. Type 1 Type 2 Type 3 Type 4 General Defaults.Non-Compliance and Defaults.

Chapter I –Preliminary Chapter II – Registration of MB Chapter III – General Obligations and SEBI (MB) Regulations 1992 Responsibilities. Chapter IV – Procedure for Inspection. Chapter V – Procedure for Action in case of Default. Financial Markets and Services Kiran Bindu .

Financial Markets and Services Kiran Bindu . Form B – Certificate of Registration. Form C – Due diligence certificate.Schedule – 1 Forms Form A – Application for Grant of Certificate/Renewal of Certificate.

Financial Markets and Services Kiran Bindu .• Schedule 2 – Fees • Schedule 3 – Code for Merchant Bankers.

information and knowledge Financial Markets and Services Kiran Bindu .Qualities of a good MB Leadership Aggressive action Co-operative and friendliness Contacts Attitude towards problem solving Inquisitiveness for new skills.

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