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1. Industrial Securities :
 Marketable for industrial securities
 Ideal market for corporate securities
 Business organisation raise capital through three major
types of securities
(a) ordinary shares
(b) preference share
(c) debentures or bond
 finance is the life-blood of a business
 both long term and short term funds for working capital
 bills discounted from the banks
 it comprises the new issue market and stock exchange
(a) equity shares –
 share is a share capital of a company
 Registered as per companies Act ,1956
 Divided into equal parts
Three stages -
1. Registration
2. Raising capital
3. Commencement of business


 First public issue is called IPO
 Can be issued at par ,premium or discount.
 Shares are listed
 Paperless security – Demat facility
 Book building process
 Blue chip shares – carry goodwill

(b) Preference shares –
 Carry preferential rights over divided and repayment
of capital .
 Cumulative , non – cumulative
 Participative , non –participative
 Redeemable , non - redeemable
 Convertible , non - convertible

(c) Bonds or debenture -
 A document issued as an evidence
 Certificate under its seal
 Can raise loan
 Bonds issued by governments , and debenture issued by
private sector companies
 It is also listed and traded.


2. Organization and Structure of Primary:
 Market for raising fresh capital
 Generating wish to invest for a short period
 Market for raising fresh capital in the form of shares &
 Public Ltd. & govt. Co’s are the issuers & industrial,
institutions & mutual funds are the investors in the
 Primary market allows for the capital in the country &
the accelerated industrial & economic development.
 Business enterprises borrow money from the capital
market for very long period of time.
 The no. of new capital issues of to 4372 i.e., from 364 cr.
in 1990-91.
3. Trading & Settlement System.
1) Types of dealings: Spot Delivery Contract: Contract in
which payment & delivery of securities takes place on
the spot on the same day or on the next day.
2) Ready Delivery: takes place within a fined time period
not exceeding 7 days.
3) Forward Delivery Contract: takes place once at the
end of every fortnight through the clearly house only.


 Margin Trading: Used with reference to the deposit
required to be maintained by the member – brokers. A
carried out at many places.
 Trading Procedure:
a. Order placing
b. Order Execution
c. Contract Note
d. Delivery & Clearing
e. Settlement
 Rolling Statement:
 Started in 1998
 Trading in Demat shares on the basis of T+5 or T+3
 First started at BSE the by NSE
 New Settlement System:
 SEBI introduced new T+5 from July 2001 & then
cycle to T+3 from April 2002.
 After several rounds T+2 rolling settlement from
April 2003.
 Online Trading: ICICI web trade, HDFC securities,


4. Methods of marketing securities in the
primary market :
1. Public issue
2. Private placement
3. Offer for sale
4. Initial public offer
5. Right issue
6. Bonus issue
7. Book –building
(a) Appointment of books – runners
(b) Drafting of prospectus
(c) Circulating draft prospectus
(d) Bid analysis
(e) Mandatory underwriting
(f) Filing copy of prospectus with ROC
(g) Collection of application
(h) Allotment of shares
(i) Payment schedule and listing of shares
8. Stock option – ESOP
9. Bought out deals
10. Foreign capital issuance


 Permission to quote shares and debenture
officially on the trading floor
 It is a step to register
 Section 9 – securities contract (regulation ) act,
 Compulsory listing
 Simply inclusion of any security
 A) agreement
 B) purpose
 C) restriction
 D) investor protection
 Section 73 of companies act 1956 – to make
application to one or more recognised stock
 Section 11 B of SEBI act empowers the SEBI to
issue directors and intermediaries
 Aims at protecting the interest of investors



 Application and payment of wages
 Before the offer of securities to public and
registration of prospectus with ROC
 Met approval from stock exchange
 Continue listing by paying renewal fees
 Any allotment in absence of listing is to be void
 Section 21 of securities contracts(regulation)act
attracts penalty to the parties
 Authorities should intimate within 15 days with the
reason for refusal
 Make an appeal to central government

1. Widens market
2. Easy marketability
3. Easy publicity
4. Creates goodwill
5. Quick marketing
1. Safety
2. Useful as collateral


3. Ideal for investment
4. Protection to investment
5. Facilitates evaluations

1. Control on listed companies
2. Activates stock exchanges
3. Creates confidence among investors
4. Raises the rate of capital formation
5. Inflow of foreign funds


6. Intermediaries In Primary & Secondary
 Primary Market:
1. Merchant Bankers:
a. Merchant bankers carry out the work of underwriting & portfolio
mgmt, issue mgmt, etc.
b. Only body corporate with a net worth Rs 5 crores are allowed to
work as category of merchant bankers.
2. Underwriters:
a. The issuing co has to appoint underwriters in consultation with
the merchant bankers or lead manager.
3. Bankers To The Issue:
a. The banker play an important role in the working of the primary
market. They collect applications for shares & debentures along
with application money from investors in respect of issue of
b. The bankers have to pay annual registration fees of Rs 2.5 lakhs
for the 1
2 yrs & Rs 1 lakh for the 3
4. Registrars & Shares Transfer Agents:
a. Registrar is an intermediary which carries out many functions.
b. They have to obtain a certificate of registration from the SEBI.
c. They have to pay annual fee of Rs 15000 & Rs 10000 respectively.
5. Brokers To An Issue:
a. Brokers are the middleman who provide a vital connecting link
between the prospective investors & the issuing co.
6. Debentures Trustees:
a. Debentures trustees are the persons who are appointed to
safeguard the interest of debenture holders.


 Secondary Market:
1) Brokers:
a) The member of stock exchange carrying on business of dealing in
securities are known as brokers.
2) Jobber:
a) Jobber deals only with brokers & not with investors.
3) Taraniwala:
a) Jobber who makes an orderly & continuous auction in the stock
market is called Taraniwala.
4) Odd Lot Dealers:
a) These are specialists who handle the odd lots.
5) Arbitrageur:
a) An arbitrageur is a specialists in dealing with securities in
different stock exchange center at the same time.
6) Security Dealer:
a) The members who purchase & sale of government securities on
the stock exchange are known as security dealer.
7) Remisers:
a) The sub-broker employed by a member of stock exchange to
secure business are caller remisers.
8) Depository:
a) Depository provides an electronic transfer of securities.