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

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Structure of Securities
Market
The securities market in India can
be divided into two segments
PrimaryMarket
Secondary Market

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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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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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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

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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.

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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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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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 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)

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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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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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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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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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 THANK YOU

15 Securities and Exchange Board of India