Safety of Investment Ease of exit Attractiveness of Returns Lowest Transaction costs Well mitigated risks Assured regulatory structure to that systematic risks do not diminish the value of investment. in the whole transaction chain.

Marketable Assets B.Issuing AuthorityCash Asset.marketable Assets Marketable Assets Shares  Govt. .Issued by Business organisation for raising their fixed Capital. Stock Asset.F. Ministry of Finance and Commercial Banks through Credit Creation Debt Asset-By Variety of Organisations for raising their debt capital. Units  UTI Units  Bearer Debentures Non. Non. Securities  Bonds  M.marketable Assets  Bank Deposits  PF  LIC Schemes  Corporate Deposits  Post office Certificates  Pension Fund  National Savings Certificates Financial Asset.Issued by RBI.Financial Assets A.

Industrial securities Market.Classification of Financial Markets Organised Market and Unorganised Market Organised Market. Indigenous Bankers.Term loan Market. .Capital Market & Money Market A. Treasury Bill Market & Short term Market.Primary Market & Secondary Market Long term Loan Market. Securities Market & Long Term Loan Market.Industrial Securities Market. Govt. Chit fund Companies etc. Market for Mortgages & Market for Financial Guarantee B.Call Money Market. Pawn Brokers. Capital Market. Money Market. Commercial Bill Market. Unorganised Market.Money lenders.

Financial Markets Post reform period (1990) .Money Market Foreign Exchange transfer purchasing ower one country to another country & to promote foreign trade 3. Capital Market Money Market Call Money Market  T. 2.Bill Market.for short term funds & ad hocs.issued in favour of RBI only and RBR is authorised to issue currency against them  Commercial Bill market / Discount Market  Repos Market  Acceptance Markets/ Bills rediscounting Market Financial Services Market Merchant Banking services  Credit Rating Services  Factoring & Forfaiting Services  Custodial & Depository Services  Provision of Financial Guarantees  Venture Capita  Leasing  Others Capital Market  Govt .Ordinary or Regular For public & others and have secondary market . Financial services Market 4. Market  Industrial Securities Market 1.

Insurance Cos & Mutual funds -DoScheduled Commercial banks ( Excluding RRBs). Cooperative Banks. PDs & All India FIs Scheduled Commercial Notice Money Term Money 2-14 Days 15 Days to 1 year Certificate of Deposits(1989) Commercial Paper ( 1990) Forward rate Minimum 7 Days Minimum 7 Days Minimum 7 Days . All India FIs & PDs Scheduled Commercial Banks . PDs. All India FIs.Structure of Money Markets Instruments Call Money Tenor Over night Major Participants Scheduled Commercial banks ( Excluding RRBs). All FIs. Insurance Cos & Mutual funds Corporates.


Single & Large amount.25 lakhs Central Bank & Commercial Banks are major players Instruments Generally do not have secondary market Transactions mostly takes place over phone.Rs 10 Debenture.Money market Vs Capital Market MONEY MARKET Short term loanable funds not exceeding one year Supplies funds for WC & short term Govt. Debentures .e.B/Es. stock exchange . requirements Instruments include. TBs.Rs. Govt. Instruments include. hence no formal place CAPITAL MARKET Long term funds exceeding one year Supplies fixed capital & long term needs of Govt. 100 Development Banks & Insurance Cos. Play a dominant role Instruments have secondary market Transactions take place at a formal place i.Shares. CDs etc. TB-Minimum 1 lakh CD/ CP. CPs. Bonds etc Small amount Share.

‡ The form of intermediation may change but the place of intermediaries in the financial transaction chain will not change. price discovery and informational services. ‡ Service providers have professional attachment to investment opportunity and the investor and not to the nationality of the two. .Financial intermediaries/service Providers ‡ Identification of investment opportunities ‡ Assessment of investors requirement Function of matching the two are performed as an occupation by financial service providers. ‡ The services of intermediaries are crucial for bringing the investor and investment opportunities ( say issuers).

. efficiency and competitiveness of markets The regulatory objectives for different nations can not be much different. customer funds. in a different context . ‡ Ensuring the integrity .Financial Regulation-Goals ‡ Protecting financial consumers and investors ‡ Controlling and mitigating systematic risk ‡ Protecting against insolvency that costs the exchequer or .

. with less duplication with more focused expertise and at less cost than the divided structures ‡ It would foster competition as all products and services could compete as Financial Services . technological advancements and competitive pressures.Regulatory Structure.Assumptions All Financial transactions are routed through the following assumptions: ‡ Must have oversight on the whole market rather than a silo( which could combine some of the jurisdictions and agencies) could be effective over the long run and better able to adjust to innovations. more efficiently. ‡ It would satisfy the four goals of financial regulation better.

Policy makers in different jurisdictions will find it difficult to regulate any one facet on stand alone basis. to keep the work going on. irrespective of investment vehicle. The world demography.e. Flow of investments vary with the variations in perceptions about the competence of that market change. the investor and investor s objectives and risk appetite. Insurance. securities and Derivatives are all bound and driven by the same substratum.With this improvement the world could be smaller. VIZ. spread and efficiency of communication and information. ‡ ‡ ‡ . The financial transactions will increasingly happen on electronic market structures and the national borders created by sovereign states will be less relevant.Factors influencing Financial Market Transactions ‡ ‡ Improvement of the speed. Investments chase most attractive investment opportunities of location of the opportunity. This will create economies that have citizen s with Dual interests .It will create pockets of retired population requiring import of young Adults coming from the different parts of the world . provided the marker structure under which the investment is to be made is perceived to be competent enough to protect the investor s interest .interest in the economy where they earn and economy to which they originally belong. Facets of Financial markets i. Banking .

Physical existence and are located in particular geographical areas i. For expansion and diversification of existing firms SM.Deals with already existing securities b.e. Secondary markets Differences Primary & Secondary Marketsa. Primary Markets 2. Nature of contribution to industrial FinancePM. . Functional differenceP M-Deals with new securities SM.Facilitates liquidity for existing securities. Stock exchanges 3.Classification of Markets 1. Organisational difference PM.No tangible form or Administrative organisational set up SM.Provides funds for New firms.

2. Foreign Exchange market.Topics for Presentations Groups1. Repo Market 6 Commercial Bill market. Instruments.TBs. importance. Transactions. RBI guide lines etc. importance. CDs-issue. RBI guide lines. participants etc 5. participants.operations . guide lines & importance 3 CPs. participants etc. 4.DFHI( Discount and Finance House of India.Money market.issue. 7.Issue.composition. RBI guide lines.

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