Security means ownership or debt, it represents an investment to make profit. SEC [ security and exchange commission] defines the term security in detail.
Types of securities are equity, debt, derivatives.
It represents the ownership. Stocks fall within this category. Advantage of equity is, it get higher returns than the other securities. Disadvantages in these are, firstly, shares drops, the investor can lose the money and secondly, incase of bankruptcy. The company were closed, then investor or share holders lost the money, they can’t receive any thing from the company.
Debt security that represents loan. This has terms and conditions regarding the loan amount, in this loan amount, it has interest and a maturity date will be there to clear the debt. Certificate of deposits, government or corporate bonds e.t.c. debt securities are either secured or un secured debt, according to the type of debt taken by a person. If higher interest rates indicates higher returns for investors, but it is under more risk.
This security that consists of an agreement to buy or sell an asset at particular price and in specific date. This asset may in commodity, property, or other security. It include future agreements or contracts. Thus is the third and find security.
Security markets can divided into 2 levels issued primary markets issued a new securities and secondary markets has existing securities that can buy and sold. Secondary markets further divided in three parts they are organized exchanges, over the counter and stock exchanges, in these, individual parties come together to buy or sell securities directly.
In secondary market sold securities, and convert it into cash, it increases Willness of people to take stocks and bonds and increases the ability of firm to issue securities.
There are some Professional participants in securities market they are brokerages, broker-dealers, market makers, investment, managers, speculators and these provides infrastructure, such as, cleaning houses and securities depositories. This security market is used for the increase in new capital, transfer of real assets in financial assets. In some condition, securities market has interconnection between all participants they provides some conditions they are
- Through issuing a new security to attract new capital, To transfer real asset into a financial asset, Regulation function, Information function, Price determination, To invest money to get profits in the period of short or long term, Transfer of owner ship, Insurance, Commercial function.
Important financial instruments are some of them here under follows promissory note, certificate of deposit, bond, stocks, preferred share.
Regulation of market
The regulation of market is very important because, it ensures smooth working of capital market. The persons involved here are associated with economic growth of the country. These are some regulations that develops the capital market and economic growth they are depositories act , companies act  replaced act 1956, SEBI [securities exchange board of India]. SEBI develops the market and growth of economy and it is safer for investors.
Major policy capabilities taken by SEBI since it’s inception
it is taken by a risk in the market to get more capital and development in economic growth. By default of brokers, guarantee settlement were set up by the trade and settlement guarantee funds.
Green shoe option
SEBI introduced green shoe option in intial public offering [IPO]’
Derivatives is to assist the participants of market to merge the risk through speculation, arbitration and hedging.
Securities lending and borrowing
Clearing corporation after the registration with SEBI. Securities lending and borrowing is the intermediary of the SEBI scheme.
Establishment of regulator
Under SEBI, it gives assuarance and safe transactions in securities.
Screen based trading
It is a major capability in nation-wide online auto maded screen based trading system, it gives computer qualities of securities and do transactions. It can find the sale [or] buy from the counter party.
Control over issue of capital
It is liberalisation of the regulation of market. SEBI gives supply of disclosure and investor protection guidelines. Through this guidelines market more from merit to disclosure based regulation.
In earlier settlements, there was risk in the market. This is due to time taken for settlement and physical movement of paper. Further, it is in favour of purchaser by the company. To control there problems. Depositories act were established.
Securities market awareness
SEBI launched the nation-wide securities market awareness campaign that educate investors about the risk of market and the rights and obligation of investors.
It has number of measures were taken by risks in the market, so, the investors [or] participants can be protected through this risk management.
Profile of securities market
Public and rights issues
In the period of 2015 – 2016 till January 2016, 71 companies obtain the capital market and raised RS 51,612 crore compared to the corresponding period of 2014-2015, 61 companies obtain capital market and raised RS 11,562 crore there were 62 public issues which raised RS 42,981 crore and 9 rights issues which raised RS 8,631 crore during April to December 295. Among the public issues, there was 50 IPOs [Intial public offering] and 12 public debt issues. [QIPs] qualified institutional placements listed at BSE [Bombay stock exchanges] and national stock exchange [NSE]
QIP is the other mode of resource, it raises the funds from domestic market. QIP, listed issuer issues a equity shares or non-convertible debt instruments along with warrants and convertible securities than warrants to QI buyers only.
Resource mobilisation by mutual funds
In the period of April to December 2015, total amount raised by all mutual funds was RS 1,61,696 crore, in this, the share of private sector was 73 percent and share of public sector in mutual funds was 27 percent. In this, the amount mobilised in 2015- 2016 all January 2016, debts funds accounted for 43.6 percent, growth funds 43.3 percent and balanced schemes 11.0 percent. Further, the schemes of FOF [fun of funds] and GETFs [Global environment and technology foundation] has registered and net outflows in the period of April to December 2015.
Investment by mutual funds
Mutual funds by the total net investment in secondary market was RS 43,707 crore in December 2015. Invested in debt segment, in mutual funds RS 39,163 crore and in equity invested RS 4,544 crore in December 2015. In the period [April- December] 2015- 2016. Total net investment by mutual funds was RS 3,23,165 crore of which RS 2,60,097 crore was debt and RS 63,069 crore in equity. On December 31, 2015 there was total 2,208 schemes in mutual fund of which income oriented schemes were 1,619 [73.3 percent], equity oriented schemes were 474 [21.5 percent], exchange traded funds were 57 schemes [2.7 percent], balanced schemes were 27 [1.2 percent] and FOF investing schemes were 31 [1.4 percent].
Preferential allotments listed at BSE and NSE
Preferential allotments is other mechanism of resource mobilisation it is listed issuer issues shares to select a group of persons. 24 preferential allotments listed at BSE and NSE [RS 579 crore] during December 2015. Amount mobilised preferential allotments during 2015-2016, January 2016, RS 42,739 crore through 264 issues.
Investment by foreign port folio investors
In December 2015, foreign port folio investors [FPI] recorded total income amounting to RS 8,304 crore. Total income in equity segment of RS 2817 crore, total income of RS 5,488 Crore in debt segment. In the period of 2015-2016 [April- December 2015], the total income by FPI in the stock market of India was RS 15,313 crore, in this stock market, comprising of total income of RS 18,666 crore in equity segment and in debt segment, the total income of RS 3,354 crore.
Total number of investor accounts was 104.2 lakh at CDSL and 143.0 lakh at NSDL at the end of December 2015. In December 2015, the number of investor accounts at NSDL and CDSL were increased 0.6 percent to 1.2 percent respectively, over the previous month.
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