Group B- 204 B

A. Money market: A segment of the financial market in which financial instruments with
high liquidity and very short maturities are traded. The money market is used by
participants as a means for borrowing and lending in the short term, from several days to
just under a year. Money market securities consist of negotiable certificates of deposit
(CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes,
federal funds and repurchase agreements (repos).
The money market is used by a wide array of participants, from a company raising money
by selling commercial paper into the market to an investor purchasing CDs as a safe
place to park money in the short term. The money market is typically seen as a safe place
to put money due the highly liquid nature of the securities and short maturities, but there
are risks in the market that any investor needs to be aware of including the risk of default
on securities such as commercial paper.
The instruments traded in the money market have a short-term maturity period ranging
from 30 days to a year. Hence this market is the best source to invest in liquid assets.
The only demerit accompanying the money market is the disorganization. Unlike
organized markets, e.g. capital markets, the money market is unregulated and informal. In
addition, this market gives lesser returns to the investor. However, the money market is
regarded as safe.
Definitions of Money Market
Following definitions will help us to understand the concept of money market.
According to Crowther, "The money market is a name given to the various firms and
institutions that deal in the various grades of near money."
According to the RBI, "The money market is the centre for dealing mainly of short
character, in monetary assets; it meets the short term requirements of borrowers and
provides liquidity or cash to the lenders. It is a place where short term surplus investible
funds at the disposal of financial and other institutions and individuals are bid by
borrowers, again comprising institutions and individuals and also by the government."
According to Nadler and Shipman, "A money market is a mechanical device through
which short term funds are loaned and borrowed through which a large part of the
financial transactions of a particular country or world are degraded. A money market is
distinct from but supplementary to the commercial banking system."
These definitions help us to identify the basic characteristics of a money market. A
money market comprises of a well organized banking system. Various financial
instruments are used for transactions in a money market. There is perfect mobility of
funds in a money market. The transactions in a money market are of short term nature.

Functions of Money Market
Money market is an important part of the economy. It plays very significant functions. As
mentioned above it is basically a market for short term monetary transactions. Thus it has
to provide facility for adjusting liquidity to the banks, business corporations, non-banking
financial institutions (NBFs) and other financial institutions along with investors.
The major functions of money market are given below:-
1. To maintain monetary equilibrium. It means to keep a balance between the
demand for and supply of money for short term monetary transactions.
2. To promote economic growth. Money market can do this by making funds
available to various units in the economy such as agriculture, small scale
industries, etc.
3. To provide help to Trade and Industry. Money market provides adequate finance
to trade and industry. Similarly it also provides facility of discounting bills of
exchange for trade and industry.
4. To help in implementing Monetary Policy. It provides a mechanism for an
effective implementation of the monetary policy.
5. To help in Capital Formation. Money market makes available investment avenues
for short term period. It helps in generating savings and investments in the
economy.
6. Money market provides non-inflationary sources of finance to government. It is
possible by issuing treasury bills in order to raise short loans. However this dose
not leads to increases in the prices.
Apart from those, money market is an arrangement which accommodates banks and
financial institutions dealing in short term monetary activities such as the demand for and
supply of money.

B. Stock Brokers: A stockbroker is an individual / organization who are specially given
license to participate in the securities market on behalf of clients. The stockbroker has the
role of an agent. When the Stockbroker acts as agent for the buyers and sellers of
securities, a commission is charged for this service.
As an agent the stock broker is merely performing a service for the investor. This means
that the broker will buy for the buyer and sell for the seller, each time making sure that
the best price is obtained for the client.
An investor should regard the stockbroker as one who provides valuable service and
information to assist in making the correct investment decision. They are adequately
qualified to provide answers to a number of questions that the investor might need
answers to and to assist in participating in the regional market.
Are they governed by any Rules and Regulations? Of course, yes. Stock brokers
are governed by SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956,
Securities and Exchange Board of India [SEBI (Stock brokers and Sub brokers)
Rules and Regulations, 1992], Rules, Regulations and Bye laws of stock exchange
of which he is a member as well as various directives of SEBI and stock exchange
issued from time to time. Every stock broker is required to be a member of a stock
exchange as well as registered with SEBI. Examine the SEBI registration number
and other relevant details can be found out from the registration certificate issued
by SEBI.
How do I know whether a broker is registered or not? Every broker
displays registration details on their website and on all the official documents.
You can confirm the registration details on SEBI website. The SEBI
website provides the details of all registered brokers. A brokers registration
number begins with the letters INB and that of a sub broker with the letters
INS.
What are the documents to be signed with stock broker? Before start of trading
with a stock broker, you are required to furnish your details such as name,
address, proof of address, etc. and execute a broker client agreement. You are also
entitled to a document called Risk Disclosure Document, which would give you
a fair idea about the risks associated with securities market. You need to go
through all these documents carefully.
SUB BROKERS:According to the BSE website Sub-broker means any person not
being a member of a Stock Exchange who acts on behalf of a member-broker as an agent
or otherwise for assisting the investors in buying, selling or dealing in securities through
such member-brokers.
All Sub-brokers are required to obtain a Certificate of Registration from SEBI without
which they are not permitted to deal in securities. SEBI has directed that no broker shall
deal with a person who is acting as a sub-broker unless he is registered with SEBI and it
shall be the responsibility of the member-broker to ensure that his clients are not acting in
the capacity of a sub-broker unless they are registered with SEBI as a sub-broker.
It is mandatory for member-brokers to enter into an agreement with all the sub-brokers.
The agreement lays down the rights and responsibilities of member-brokers as well as
sub-brokers.
STOCK BROKERS IN INDIA.There are a number of broking houses all over India. of
them have International presence too. Following are some of the leading Stock Broking
firms in India.
IndiaInfoline
ICICIdirect
Share khan
India bulls
Geojit Securities
HDFC
Reliance Money
Religare
Angel Broking
Investors have to check the brokers terms and conditions and decide about opening a
trading account. Only Govt. tax rates like, security transaction tax, stamp duty and
service tax are uniform other charges like brokerage for delivery trades, intraday trades,
minimum transaction charge, statement charges, DP charges, annual maintenance charges
etc., may vary from one broker to another.
C. Bankers to the I ssue: Bankers to the issue, as the name suggests, carries out all the
activities of ensuring that the funds are collected and transferred to the Escrow accounts.
The Lead Merchant Banker shall ensure that Bankers to the Issue are appointed in all the
mandatory collection centers as specified in DIP (Disclosure and Investment Protection)
Guidelines 2000. The LM also ensures follow-up with bankers to the issue to get quick
estimates of collection and advising the issuer about closure of the issue, based on the
correct figures.
The Bankers to an issue are engaged in activities such as acceptance of applications
along with application money from investors in respect if issues of capital and refund of
application money.
Registration:
To carry on the activities as a banker to an issue, a person must obtain a certificate of
registration from the SEBI. The SEBI grants registration on the basis of all the
activities relating to banker to an issue in particular with reference to the following
requirements: (1) the applicant has the necessary infrastructure, communication and
data processing facilities and manpower to effectively discharge his activities, (2) the
applicant/any of the directors of the applicant is not involved in any litigation
connected with the securities market/has not been convicted of any economic offence;
(3) is a scheduled bank and (4) grant of a certificate is in the interest of the investors.
A banker to an issue can apply for renewal of his registration three months before the
expiry of the certificate.
Every banker to an issue has to pay to the SEBI an annual fee of Rs 2.5 lakh for the
first two years from the date of initial registration, and Rs 1 lakh for the third year to
keep his registration in force. The renewal fee to be paid by him annually for the first
two years is Rs 1 lakh and Rs 20,000 for the third year. Non-payment of the
prescribed fee may lead to suspension of the registration certificate.
General Obligations and Responsibilities:
Furnish Information: When required a banker to an issue has to furnish to the SEBI
the following information: (1) the number of issues for which he was engaged as a
banker to an issue; (2) the number of applications/details of applications money
received; (3) the dates on which applications from investors were forwarded to the
issuing company/registrar to an issue; (4) the dates/ amount of refund to the investors.
Books of Account / Record / Documents: A banker to an issue is required to maintain
books of account/records/ documents for a minimum period of three years in respect
of, inter alia, the number of application received, the names of the investors, the times
within which the applications received were forwarded to the issuing company/
registrar to the issue, and dates and amounts of refund money to investors.
Agreement with Issuing Companies: Every banker to an issue enters into an
agreement with the issuing company. The agreement provides for the number of
collection centers at which applications/application money received is forwarded to
the registrar, for instance and submission of daily statement by the designated
controlling branch of the banker, stating the number of applications and the amount of
money received from the investors.
Disciplinary Action by the RBI: If the RBI takes any disciplinary action against a
banker to an issue in relation to issue payment, the latter should immediately inform
the SEBI. If the banker is prohibited from carrying on his activities as result of the
disciplinary action, the SEBI registration is deemed as suspended/ cancelled.
Code of Conduct: Every banker to an issue has to abide by the code of conduct
specified as follows:
In the conduct of his business, he should observe high standards of integrity and
fairness in all his dealings with clients/ investors / other members of the profession.
He should exercise due diligence and ensure proper care. He should not make any
statement/indulge in any act, practice/ unfair competition harmful to the interest of
other bankers or likely to place the latter in a disadvantageous position. Further, he
should not make exaggerated oral/written statements to his clients about his
qualification / capability to render services or his earlier achievements in this regard.
Moreover, a banker to an issue should always endeavor to render the best possible
advice to his clients and ensure that all professional dealings are affected in a prompt,
efficient and cost effective manner. Also, he should not divulge to other
clients/press/any other party any confidential information in his knowledge about his
client. He should also not allow blank applications forms bearing brokers stamp to be
kept at the bank premises / near the entrance of the premises and accept applications
after office hours / or after the date of closure of the issue/or o bank holidays. Finally,
he should not act at any time in collusion with other agents in a manner that is
detrimental to small investors. He has to abide by all acts, rules, regulations,
guidelines, resolutions, notification, directions, circulars and instructions issued by
the Government /RBI/ Indian Banks Association / SEBI relevant to his activities as a
banker to an issue.