India’s National Stock Exchange

CHAPTER-2

INDUSTRY AND COMPANY PROFILE

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2.1 INDUSTRY PROFILE

Indian financial market consists of two markets i.e., money market and capital market. Money market is mainly to meet the short-term needs and capital market for long term needs.

2.1.1 CAPTAL MARKET AND ITS STRUCTURE

Capital market is a financial market, which provides and facilitates an orderly exchange of long term needs. The capital market in India is classified into

1. Primary market

2. Secondary market

The primary market deals with the issue of new long term securities. Where as the secondary market deals with buying and selling of old or existing securities, which are already listed in the official trading list of recognized stock exchange.

Players of ‘New Issue Market’ are, among them the most important players are:

  • Merchant bankers.
  • Registrars.
  • Collecting and coordinating bankers.
  • Underwriters and broker.

2.1.2 ABOUT NSE

The National Stock Exchange is India’s leading stock exchange. National Stock Exchange was set up by the leading institutions to provide a fully automated screen-based trading system. The Stock Exchange has brought transparency, efficiency, safety and market integrity. The set up facilitates as a model to serve securities industry in terms of systems, practices and procedures. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. Today the market uses information technology to provide transparent and efficient trading, clearing and settlement mechanism, and has several innovations in products & services such as screen based trading, compression of settlement cycles, dematerialization and electronic transfer of securities, securities lending and borrowing, professionalization of trading members, market of debt and derivative instruments. The NSE of India Limited has created a report on the Establishment of New Stock Exchanges, which recommended a promotion of National Stock Exchange (NSE) by financial institutions to provide access to investors all over the country. NSE was promoted by the leading Financial Institutions (FIs) at the directive of the GOI & was incorporated in the year 1992 as tax-paying company in the country. Its recognition as a stock exchange (SE) under the Securities Contracts (Regulation) Act, 1956 in the year 1993, NSE started its operations in Wholesale Debt Market segment in the year 1994. The Capital Market segment started operations in the year 1994 and Derivatives segment started operations in the year 2000.

2.1.3 MISSION OF NSE

NSE’s mission is setting the agenda for the change in the securities markets in India.

  1. OBJECTIVES OF NSE

The main objectives of NSE are:

  1. Establishment of a nation wide trading facilities for equities and debt instruments.
  2. To ensure and provide equal access to investors all across the country through communication network.
  3. To provide efficient and transparent securities market to investors by using e-trading systems.
  4. To enable book entry settlements systems, shorter settlement cycles, and
  5. NSE meeting the current international standards of securities market.

The standards that are set by the NSE in terms of market practices has now become industry benchmarks and is also being practiced by other market participants. It is that force which guides the industry towards new horizons and great opportunities.

2.1.4 PROMOTERS

NSE has been promoted by leading banks, financial institutions, insurance companies and other financial intermediaries:

  1. Industrial Finance Corporation of India Limited.
  2. Industrial Development Bank of India Limited.
  3. Life Insurance Corporation of India.
  4. State Bank of India.
  5. ICICI Bank Limited.
  6. Stock Holding Corporation of India Limited.
  7. IL & FS Trust Company Limited.
  8. SBI Capital Markets Limited.
  9. Bank of Baroda.
  10. Canara Bank.
  11. General Insurance Corporation of India.
  12. National Insurance Company Limited.
  13. The New India Assurance Company Limited.
  14. United India Insurance Company Limited.
  15. The Oriental Insurance Company Limited.
  16. Oriental Bank of Commerce.
  17. Punjab National Bank.
  18. Indian Bank.
  19. Corporation Bank.
  20. Union Bank of India.

2.1.5 CORPORATE STRUCTURE

NSE is one of the first de-metalized stock exchanges in the country, the ownership and management of the Exchange is completely divorced from the right to trade on it. Though the momentum for its establishment made by the policy makers in the country, it has been set up as a public limited company and owned by the leading institutional investors in the country. NSE has adopted a demutualised exchange in which the ownership, management and trading will be in the hands of three different sets of people. NSE is owned by a set of leading financial institutions, insurance companies, banks and other financial intermediaries and it is managed by professionals, who do not directly or indirectly trade on the Exchange. This method has completely eliminated conflict of interest and helped NSE in pursuing policies and practices within a public interest framework.

Its Board comprises of senior executives from promoter institutions, professionals in the fields of law, economics, accountancy, finance, taxation, etc, public representatives, nominees of SEBI and one full time executive of the Exchange. The Board deals with broad policy issues, decisions relating to market operations are delegated by the Board to various committees constituted by it. Such committees include representatives from trading members, professionals, the public and the management. The day-to-day management of the Exchange is delegated to the Managing Director who is supported by a team of professional staff.

2.1.6 COMMITTEES

The Exchange has constituted various committees to advise it on areas such as good market practices, risk containment systems, settlement procedures etc. These committees are manned by industry professionals, trading members, Exchange staff as also representatives from the market regulator.

  • Executive Committee.
  • Committee on Trade Related Issues (COTI).
  • Advisory Committee – Listing of Securities

Executive Committee:

Objective: To manage the day-to-day operations of the Exchange Composition.

Committee on Trade Related Issues (COTI):

Objective: To provide guidance on trade related issues which crop up during the day-to-day functioning of the Exchange Composition.

Advisory Committee – Listing of Securities:

Objective: To advise NSE on

  • The suitability of the Companies for listing on the Exchange within the parameters set

out by the listing agreement.

  • To ensure that the applicant company has complied with all the conditions set out in

the listing agreement as well as other formalities, SEBI regulations, etc.

  • Systems and procedures to be adopted for listing of securities

2.1.7 ABOUT BSE

Bombay Stock Exchange Limited is the oldest stock exchange in Asia.

Popularly known as “BSE”, it was established as “The Native Share & Stock Brokers

Association in 1875. It is the first stock exchange in the country to obtain permanent

recognition in the year 1956 from the Government of India under the Securities Contracts

(Regulation) Act, 1956.The Exchange’s has an important role in the development of

the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide.

Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatized entity incorporated in the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The day-to-day operations of the Exchange are managed by the Managing Director and a management team of professionals. The Exchange has a nation wide reach with their presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth.

The BSE’s On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

  1. LISTING OF SECURITIES

Listing means admission of the securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or State Government, quasigovernmental and other financial institutions/corporations, municipalities, etc.

The objectives of listing are mainly to:

  • Provide liquidity to securities.
  • Mobilize savings for economic development.
  • Protect interest of investors by ensuring full disclosures.

The Exchange has a separate Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of the Exchange. A company intending to have its securities listed on the Exchange has to comply with the listing requirements prescribed by the Exchange. Some of the requirements are as under: –

1. Minimum Listing Requirements for new companies.

2. Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange.

3. Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange.

4. Permission to use the name of the Exchange in an Issuer Company’s prospectus.

5. Submission of Letter of Application.

6. Allotment of Securities.

7. Trading Permission.

8. Requirement of 1% Security.

9. Payment of Listing Fees.

10. Compliance with Listing Agreement.

11. “Z” Group.

12. Cash Management Services (CMS) – Collection of Listing Fees.

The Cheque should be drawn in favour of Bombay Stock Exchange Limited , and should be payable, locally .Companies are requested to mention in the deposit slip, the financial year(s) for which listing fee is being paid. Payment made through any other slips would not be considered. The above slips will have to be filled in quadruplicate. One acknowledged copy would be provided to the depositor by the HDFC Bank.

  1. COMPANY PROFILE

AnandRathi is a leading full service securities firm providing the entire geometry of financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India presence as well as an international presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance, structured products all of which are supported by powerful research teams. The firm’s philosophy is entirely client centric, with a clear focus on providing long term value to clients, while maintaining the highest standards of excellence, ethics and professionalism.

The entire firm activities are divided across distinct client groups:

Individuals, Private clients, Corporate and Institutions and was recently ranked by Asia money 2006 poll amongst South Asia’s wealth managers for the ultra-rich.

Equity & Derivatives Brokerage

AnandRathi provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sectors trends and investment strategy has established us a competent and reliable research unit across the country.

AnandRathi Securities Pvt., Ltd., a full service securities firm, provides a range of financial services. It offers brokerage services in equities and commodities, distribution of mutual funds, IPO’s and insurance products, real estate, investment banking, merger and acquisitions, corporate finance, and corporate advisory. AnandRathi Securities Limited was formerly known as AnandRathi Securities Pvt., Ltd. and changed its name to AnandRathi Securities Limited in 2006. The company was founded in 1994 and is based in Mumbai, India.

AR Core Strengths

Breadth of Services

In line with its client centric philosophy, the firm offers to its clients the entire spectrum of financial services ranging from brokerage services in equities and commodities, distribution of mutual funds, IPO’s and insurance products, real estate, investment banking, merger and acquisitions, corporate finance and corporate advisory. Clients deal with a relationship manager who leverages and brings together the product specialists from across the firm to create an optimum solution to the client needs. AR brings together a highly professional core management team that comprises of individuals with extensive business as well as industry experience.

In-Depth Research

Our research expertise is at the core of the value proposition that we offer to our clients. Research teams across the firm continuously track various markets and products. The aim is however common to go far deeper than others, to deliver incisive insights and ideas and be accountable for results.

Management Team

Board of Directors

AnandRathi, Founder & Chairman

A gold medalist Chartered Accountant and former President Bombay Stock Exchange. Key Executives of the Birla Group. The driving force behind the setting up of the Birla Group’s Cement and Financial Services business among others. And in the setting up of the online trading system and the Central Depository Services Ltd in India. With over 40 years in the industry.

Pradeep Gupta,Co-founder & Vice chairman

Amit Rathi,Managing Director

P G Kakodkar,Director

Dr. S A DaveDirector

C D ArhaDirector

Ajit BhushanDirector

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