INTERMEDIARIES IN FINANCIAL MARKETS

PRESENTED TO URVI MAM,

INDEX
NAME
VINITA POOJARI GAURI SAWANT DEEPA SHARMA MANISHA SHARMA NEEDHI SHINGALA POONAM TIWARI

ROLL NO.
56 60 67 68 73 84

ACKNOWLEDGMENT
We the students of BCAF-B from Group-5 thankful to our Prof. URVI & SELF FINANCE SECTION specially the BCAF Section to give us such a wonderful opportunity to work and collect information on our project INTERMEDIARIES IN FINANCIAL MARKETS. We learned a lot from this project

INTODUCTION
The Member of a stock exchange carrying on business of dealing in securities are known as brokers. Trading among the members of recognized stock exchange is done under the statutory regulations of the stock exchange. The brokers execute customers orders to buy & sell on listed securities. They get commission on these transactions. The following qualifications are prescribed are for those who want to become member of a stock exchange. 1. 2. 3. 4. 5. 6. 7. 8. Minimum age 21 years. Citizenship of India. Not been adjudged bankrupt or insolvent. Not compounded with his creditors. Not been convicted of an offence involving fraud or dishonesty. Not engaged as principal or employee in any business other than securities. Not been at any time expelled or declared a defaulter by any other stock exchange. Either Matriculate or has the 10 or 2 years qualification. Preference is given to professionally qualified persons.

The person who want to become a member should have minimum 2 years experience as a partner or authorized clerk or apprentice with a member or in other connected areas in capital market. Fee structure for a person becoming a member, in addition to the entrance fee is given below : (Rs. Lacks) Admission Fees Brokers Contingency Fund 2.50 2.50 Base Capital Adequacy Annual Subscription Processing Fee

New Members Conversion Transfer in: Less than 3 years More than 3 years

2.50 2.50

10.00 10.00

0.07 0.07

_ _

2.50 2.50

2.50 2.50

10.00 10.00

0.07 0.07

10.00 5.00

The minimum net worth-requirement for the members are as follows: a) Individual member Rs.30 lacks. b) Corporate member Rs.50 lacks. Corporate membership is available to the companies limited by shares, assets or guarantee. When a company formed & nominated by more than one member of the exchange is admitted as a corporate member in place of such member or a corporate member of the exchange acquires more than one membership right by the nomination or in any other manner, such additional membership right is known as component membership & the concerned member is called composite corporate member. The fees structure regarding the membership of a stock exchange is given below:

a) BSE Fees:
i. ii. iii. iv. v. vi. Entrance fees Rs.50 lacks. Admission fees Rs.2.5 lacks. Contribution to brokers contingency fund Rs. 2.5 lacks. Annual subscription Rs. 7000. Deposit of membership security Rs. 5 lacks. Base Capital Adequacy Rs. 5 lacks.

b) SEBI Fees:
i. Registration Rs. 5000.

c) Documents to be sent to SEBI:

i. ii. iii. iv. Form A. Demand Draft for Rs. 5000. All documents submitted to BSE. Letter of election & admission.

SUB BROKERS:
The sub-broker is an agent of the broker. He acts on behalf of the broker. He assists the investors in buying & selling of the securities in the stock market. He himself is not a member of the stock exchange, but he should get a registration certificate from the SEBI. The SEBI is

empowered to grant the certificate of registration to the sub-broker on the following conditions: i. ii. The authorization is given in writing by the broker. If he makes adequate steps for the redressal of the investors grievances.

The age of the sub-broker should not be less than 21 years. He should also satisfy other legal conditions applicable for the brokers. Every, Sub-broker should pay Rs. 1,000 as annual fee to SEBI for an initial period of 5 years. After the completion of 5 years, every sub-broker should pay Rs. 500 as long the Registration is in force. The broker & sub-broker should maintain all the book of account on par with the broker. He should maintain confidentiality of the information about the clients. He should not disclose any information or make improper use of the details for his personal investments. The services of the sub-broker should be fair, prompt & transparent to his clients. He should protect the investors interest regarding their right to dividends, bonus shares or any other related information. They should not be involved in excessive speculation activities. The inspection & punishment process is the same at par with the broker status.

REMISIER:
A Person who is engaged by a member primarily to solicit commission business in securities is known as a Remisier. The BSE has introduced the concept of Remisier with rules, Regulation, Bye-laws & it was approved by the Governing Board in its meeting held on 23 rd June, 1997. The Governing Board of the Stock Exchange for application for appointment of remisier by members. One time Non-Refundable Registration fees of Rs. 5000 at the time of every fresh registration can be changed from the Remisier. A Remisier shall be at least matriculate & an either an individual or partnership firm. He can of confirm memo for shares & securities in his own name. He can not act as remisier for I personal business.

JOBBER:
a jobber is a specialist & an independent dealer In securities. A jobber has to given two quotation for buying & higher quotation for selling the securities. The margin is narrow when there is keen competition. Each jobber specializes in a certain group of securities. He ensures that the transactions are carried out smoothly & promptly. The double quotation of a jobber assures fair-trading to investors.

TARANIWALA:
A jobber who makes an orderly & continuous auction in the stock market is called Taraniwala. He is localized dealer who handle transaction on a commission basis for other brokers who act on behalf of there customers he trades in the stock market even for small differences in prices & helps to maintain liquidity in the stock market.

ODD LOT DEALER:

These are specialists who handle the odd lots. The standard trading unit for listed stock is called lot. But all the listed stocks are not compulsorily in the demat form. The price of odd lots is determined by the round lot transactions. The odd lot dealer earns his profit on the difference between the purchase and sales prices.

AEBITRAGEUR:
An arbitrageur is a specialist in dealing with securities in different stock exchange centers at the same time. He makes the profit by the difference in the prices prevailing different centers of market activity. He carries out these transactions with a good communication system and telephonic & teleprinter facility. He should have ability to get the prices from different centers before other members trading in the stock market.

SECURITY DEALER:
The members who purchase and sales government securities on the stock exchange are known as Security Dealers. Each transaction has to be separately negotiated. The dealer should have information about the several kinds of government securities they take risk in ready purchase and sale of security for current requirements. Their role is restricted by the participation of LIC and Commercial Banks.

DEPOSITORY:
Depository provides an electronic transfer of securities it provides for scripless transfer of ownership by improving the efficiency of the market & thereby eliminating the problems encountered in dealing with physical securities. Trade settlement takes place with the advice of the clearing house, which provides details of obligation or communication take place through a computer network & movement at physical securities is eliminated. All the depository transactions are monitored, directed & guided by the SEBI. Any investor can avail the services connected with the recording of allotment or transfer of securities. On receipt of the certificate from the Depository Participant, the issuer company should cancel the certificate & substitute in its records the name of the depository as a registered owner. The public issue is made by the company &, therefore, it should transmit the information to the depository regarding the full information about the allotment process & the names of the beneficial owners of the securities. The depository has no voting rights in respect securities held. The companies act, 1956 (amended) indicates that every depository should maintain a register & an index of beneficial owners. The transactions which are recorded by the depository are treated as evidence on par with sec.2 of the bankers book evidence act,1891. The depository can recover any loss caused due to the behaviour of beneficial owner from the Depository Participant only. The SEBI has the full powers to make the regulations regarding the maintenance of records. It can issue a license to the depository for the commencement of business. It can also make regulations in the following:

(a) (b) (c) (d) (e) (f) (g) (h) (i)

For proper maintenance of records. Prescribe the process for surrendering a security certificate. Rights of depository. Obligations of the depository. The process of creating pledge. The manner of hypothecation by the beneficial owner. Fee payable for the issue of certificate for securities. Rights and obligations of the issuer company and participants. The entry norms for the admission of scrips to the demat.

The traditional methods of trading, clearing, settlement, transfer, registration and state of art. The latest technology has been helping the smooth functioning of the stock market. The rapid changes in the investor habits has lead to more exposure of the markets. The investors perception has reflected in the sensex movement. Now-a-days the trading can be made with a click of mouse. Trading has become a highly sophisticated execution of transactions without the physical presence in the exchange.