RECENT DEVELOPMENTS IN SECONDARY MARKET

By Davinder Kaur

 A depositary is a nominee who keep

the scrips on behalf of the investor. It leads the capital market towards a scrip less system through immobilization and dematerialization of share certificates. The depository system has been approved by the parliament on July 23,1996.It helps to avoid forgery, theft, delay in settlement and to speed up the transfer of securities.

Reducing the time Avoiding the risk of settlement Inhance liquidity and efficiency Reduce cost of trasection Central handling system is promote Promote the competitiveness of the country by complying with global standard

Accepting deposit of security for custody. Making computerized book entry deliveries of security which are immobilized in its custody. Creating computerized book entry, pledges of securities in its custody Providing for withdrawal of securities Undertaking corporate actions like distribution of dividend and interest Redemption of security on maturity.

CENTRAL DEPOISITARY:- He is a nominee who holds the security on behalf of the investor and maintain records relating to that electronic mode . SHARE REGISTRAR AND TRANSFER AGENT:- He is an institution that controls the issuance of security, he is one who retains the names and addresses of registered securities owners and re-registered securities in the name of owner.

CLEARING AND SETTELMENT CORPORATION:- it is a center to do trade matching and settle the funds and exchange securities.

De-materialization Process

DEPOSITORY

DEPOSITORY PARTICIPANTS

REGISTRAR

INVESTOR

Re Materialization Process

DEPOSITORY

DEPOSITORY PARTICIPANTS

REGISTRAR

INVESTOR

To control heavy fluctuations in the prices of shares and to adjusting the demand and supply of shares in the market, companies have been permitted to buy their own shares .the companies ordinance ,1999 has been promulgated :1. Restricting buy back of shares to 25% of the paid up capital. 2. Imposing a limit on the usages of once for the purpose of buy back to 25% of the paid up capital and free reserve , and 3. Restricting the further issue of the same securities with in 24 months after the buy back.

The buy back is authorized by its articles A special resolution has been passed in general metting of the company authorizing buy back The buy back does not exceed 25%of the total paid up capital and free reserves of the company Debt- equity ratio does not exceed to 2:1 after the proposed buy back . All shares and or other specified securities are fully paid up The buy back is in accordance with SEBI regulations framed for this purpose

In India, public sector undertaking is a term used for a government-owned corporation The term is used to refer to companies in which the government owned a majority that is 51 percent or more of the company equity. Eg.1. Air India transport service Ltd. 2.Airports authority of India Ltd. To speed up the process of disinvestment the ministry of finance has proposed to set up a special purpose vehicle. Government has plans to raise Rs 40,000 cr through disinvestment during 2010-2011.

Self regulatory organization is Non-government organization which has statutory responsibility to regulate its own members through the adoption and enforcement of rules of conduct for fair, ethical and efficient practices. Examples include NASD (National Association of Securities Dealers) and the national securities and commodities exchanges.

SROs would reduce the work of regulatory authorities like SEBI . For this purpose , SEBI is encouraging various market intermediaries like merchant bankers, stock brokers mutual funds etc. to start the organizing themselves in to SROs and to get recoginsation from the SEBI. Various SROs are ; 1. Association of merchant bankers of India 2. Association of mutual funds of India. 3. Registrars of association of India.

It simply works as a mathematical model which keeps a constant watch on the market movements. It would bring to light automatically scrips which are under alert . This alert list divides the scrips in to three categories such as least bothersome , bothersome and most bothersome indicating blue yellow and red singles respectively this process would facilitate and immediate audit of the scrips put under alert so that undesirable trading and the players who do it can be traced out .