INDIAN

SECURITIES
MARKET
SEBI

2
 FLOW OF PRESENTATION

 Introduction to SEBI and Indian Securities Market (MIIs,

Companies and Investors)
 Introduction to Primary Market and Secondary Market
 Pre-requisite and Due Diligence for buying/ selling shares in
Securities Market
 Rights of a Shareholder
 Introduction to Mutual Funds
 Do’s and Dont’s’ of buying/ selling shares in securities market
 Investor Grievance Redressal – SCORES
 Information/ Help Desk of SEBI

3
 Securities and Exchange Board of India (SEBI)

• Three Key Mandates of SEBI

• Major Work done by SEBI

Protection of Improvement in
interests of Market design
investors and regulation

Promote Increase in
Regulation of
development Availability of market
securities
of Securities newer products efficiency and
market transparency
Market

4
 Indian Securities Market – Structure

SEBI - Regulator

Clearing
Stock Exchanges Depositories Companies
Corporations

Other Intermediaries
Depository
Brokers (Merchant Bankers,
Participants (DPs)
RTAs, etc.

5
 Primary v/s Secondary Market : Key Differentiation

Features Primary Market Secondary Market

Definition - Securities issued first time to - Trading of already issued and
the public listed securities
Also called as - New Issue Market - Post Issue Market

Price - By Issuer Company in - Supply and Demand Forces of

Determination consultation with Merchant Market
Bankers
Key - Merchant Bankers and RTAs - Stock Brokers and DPs
Intermediaries
Purpose - Raise capital for expansion, - Trading of securities
diversification, etc. - Providing liquidity to investors
- Raising further capital for
expansion

6
 Primary Market - Types of Public issues

Issues

Private
Public Issues Rights Issues Bonus Issues
Placements

Preferential Qualified
IPO FPO Issue Institutional
Placement

Fresh Issues Offer for sale Fresh Issues Offer for sale

7
 Pre-requisite for buying/ selling shares in
Securities Market – Trading and Demat Account

Basic Requirements
Proof of Identity Proof of Address
Passport/ Driving License/ Voter Identity
card/ Aadhar Card / MGNREGA Job Card
PAN Bank account
& Proof of Identity/ any other govt.
approved Proof of Address

Opening of Accounts
Demat Account Trading Account

*AADHAR Card is not a compulsory document.

8
 Investing - Due Diligence
Why Due Diligence?
 Investment without analysis is like driving on a highway blindfolded.
 Pro active approach enabling investors to know about prospective
investment.
 Better understanding about the past performance.
 Greater possibility of securing future growth of the investment.

What questions to ask before investing?

 Is the company’s revenue increasing?
 Is the company actually making a profit?
 Is the company able to repay its debts?
 Is the company in a position strong enough to compete with its peers?

9
 How to apply in Public Issue?

ONLINE MODE
- Application Supported by Blocked Amount.
ASBA - Facility provided by Self Certified Syndicate Banks (SCSCBs)
- Full Bid Amount blocked in the bank account of the bidder.

- For  a) Retail Individual Investors.

UPI in ASBA b) Bidding for retail investors reserved up to
Rs.2,00,000/-.
- Application via UPI facility of Sponsor Bank.
3-in-1 Account - Applying in IPO through 3-in-1 account (demat, trading and
bank account).

OFFLINE MODE
- To open a Demat Account first.
Filled Form - Investors may obtain Application Form from Stock Broker/
Sponsor Bank/ Exchange Website.
- Form submitted to Stock Broker/ Sponsor Bank.

10
 Rights of a Shareholder

• Part-owner of the company.

• Right to receive corporate benefits like dividend, whenever declared.

• Right to receive:
- Annual Reports
- Audited Financial Statements
- Notices of General Meetings and other notices
- Other information disseminated by company.

• Right to attend company meetings.

• Right to contribute in key corporate governance decisions through

postal ballot/ e-voting.

11
 Rights of a Shareholder
(subject to certain limitations/ restrictions)
• Right to:
- Ask questions to the board of directors.
- Place items on the agenda of general meetings.
- Propose resolutions, etc.

• Right to participate in matters needing shareholder approval like:

- To vote in company proceedings.
- To approve mergers & acquisitions, appointment of directors on
company board, changing auditors, etc.

• Right to Inspect company’s statutory books and records.

• Right to Transfer shares by applicable laws.

• To raise grievances, if any, against the company (using SCORES, etc.).

12
 SEBI’s recent Investor Protection measures

E-KYC Power of Attorney (PoA)

Pledge/ Re-pledge
framework
- Online KYC Process - Not a compulsory
- Aadhaar authentication document
- Acceptance of securities
- e-Sign signature - Only required for availing by way of pledge by client
framework internet trading facility

Basic Services Demat

Account (BSDA) Mutual Funds

- Demat account at - Product labelling on

reduced costs basis of risk associated
with the scheme.
- For Retail Investors

13
What is a Mutual Fund?

14
 Why Mutual Fund?

Diversification

Professional
Management Convenience

WHY?

Tax Return
Advantages Potential

Flexibility &
Liquidity

15
 Major Development and Investor Protection Measures of SEBI

• Mutual Funds

a) Classification of mutual funds into 5 schemes:

 Equity Schemes
 Debt Schemes
 Hybrid Schemes
 Solution Oriented Schemes
 Other Schemes.

b) Product labelling of Mutual Funds as under:

 Low - principal at low risk
 Low to Moderate - principal at moderately low risk
 Moderate - principal at moderate risk
 Moderately High - principal at moderately high risk
 High - principal at high risk
 Very High- Principal at very high risk.
16
 Do’s and Dont’s of buying/ selling shares in securities
market
 Make sure to receive funds/ securities in your account within one (1) day of pay-
out date.


 Please read and understand Power of Attorney (PoA) before executing it. Please
remember that PoA is not a mandatory document.

 Ensure to receive Contract Notes within 24 hours of your trades.

 Ensure to receive statement of account at least once a quarter from your stock
broker.

 Avoid keeping excess money in broking account.

17
 Do’s and Dont’s of buying/ selling shares in securities
market

 Ensure that Stock Broker doesn’t pledge your securities to raise funds.

 Don’t keep signed delivery instruction slip with DP/ stock broker.

 Regularly verify balances of securities in your demat account.

 To receive Email / SMS Alerts : Please ensure that your email id and
mobile number are updated periodically with the stock broker/ DP.

 Don’t trust any hot investment tips promising unrealistic returns on

investments.

18
 Do’s and Dont’s of buying/ selling shares in securities
market

 Don't blindly imitate investment decisions of others who may have profited
from their investment decisions.

 Get clear about all brokerage, commissions, fees, other charges levied by

broker.

 Make payments by banking channel/cheque only in favour of stock broker.

 Don’t share your internet trading account password with anyone.

 Don't blindly follow advertisements/ media reports about the financial

performance of companies, as they may be misleading.
19
 Advice to Investors

 Be aware of your Rights and Responsibilities

 Take informed decision and do proper due diligence while investing

 No impulsive buying or panic selling

 Deal only with SEBI registered Intermediaries

 Caution against unsolicited investment tips

 

20
 Investor Grievance Redressal - SCORES

▪ Complaints can be filed against entities like:

▪ Listed companies; Stock Brokers; Stock Exchanges; Depository / Depository
Participants; Registrars to an Issue / Share Transfer Agent; Mutual Funds / Portfolio
Managers; Bankers to an Issue; Collective Investment Schemes; Credit Rating
Agencies; Custodians of Securities; Debenture Trustees; Merchant Bankers /
Underwriters

▪ www.scores.gov.in : SEBI COmplaints Redressal System (SCORES)

▪ launched on 08.06.2011.

▪ Investor friendly, Centralized Web based complaints redress system.

▪ Online filing of complaints and status can be viewed online.

▪ SCORES Mobile App: available on both iOS and Android platforms.

21
 Information/ Help Desk of SEBI
• SEBI Investor Website: http://investor.sebi.gov.in

• SEBI Toll-Free Help Line No's: 1800 22 7575 & 1800 266 7575
(Monday to Friday - 9:30 a.m. to 5:30 p.m.).

• ASK SEBI: [email protected]

(email ID for Investor Assistance for general queries)

• Details of SEBI offices in various cities/ towns can be found on

the address: https://www.sebi.gov.in/.
22
How to Buy/ Sell Shares in
Securities Market?

23
 FLOW OF PRESENTATION

 Trading & Demat Account Opening Form

 Documents in Account Opening Form - Trading & Demat
Account
 Modes of Placing Orders to trade
 Contract Note
 How to settle buy and sell trade?
 Payment of Margins
 Early Pay-in
 Grievance Redressal

24
 Trading & Demat Account Opening Form

 Documents to open trading and Demat account:

Proof of Identity (Any one) Proof of Address (Any one)

Permanent account number (PAN) Voter ID card
card (Mandatory)
Voter ID card Driving License
Driving License Passport
Passport Ration Card
Aadhaar Card Aadhaar Card
Any other valid identity card issued Bank account statement or bank
by the Central or State government passbook

Utility bills e.g. electricity bill or gas bill

25
 Documents in Account Opening Forms
- Trading & Demat Account
 The Account Opening Form has two type of documents :

MANDATORY DOCUMENTS VOLUNTARY DOCUMENTS**

 Rights & Obligations of Stock Broker  Running Account Authorization

and Investor
 Power of Attorney (PoA)
 Uniform Risk Disclosure Documents
 Electronic Contract Note (ECN)
 Do’s and Don’ts for trading on Declaration
Exchanges
 Consent for electronic
 Policies and Procedures of Stock communication and receiving alerts
Broker (Email/ SMS)

 Tariff Sheet

**(to be submitted only if investor is availing of additional services)

26
 Modes of Placing Orders to trade

Visit to
Broker’s
Office

By using
Stock Trade via
Broker’s Modes Phone
Mobile
App
of Call

placing
orders to
Trade
By using Through
Stock an email
Broker’s to Stock
website Broker

 While placing order to trade you receive SMS/ Email alerts on your registered mobile
number and email account.
27
 Contract Note
What is a Contract note?
• Record of any transaction.
• Confirmation of trade done
• In case of discrepancy, contact your broker immediately.

What does a Contract Note contain?

• Details of transaction
• Date, Time, Price, Quantity, Trade ID, various charges/ levies, etc.

How to receive a Contract Note?

• Within 24 hours from the date of trade execution
• Electronic Contract Note sent to registered email ID
• Can opt for Physical Contract Note
• Quarterly statement of funds and securities

28
 How to settle buy and sell trade?
 Pay-in of funds and /securities:
• Pay-in of funds/ securities: Transfer of funds/ securities from broker’s account to exchange’s
account.
• Funds / Securities:
 Cash Segment - On or before T+2
 Derivatives Segment - On or Before T+1

• Only Cheque/ NEFT/ RTGS to the Stock broker only.

 Pay out of Funds and securities:

• Pay-Out of funds/ securities: Transfer of funds/ securities from broker’s account to client’s
account once trade of securities has been executed.
• Funds / Shares to be received in Investor’s Demat Account within 24 hours of pay-out day.

 Counter Party Guarantee:

• Given by Stock Exchange for settlement of every buy/ sell trade, through Settlement Guarantee
Fund (SGF).

 CASH DEALING IS STRICTLY PROHIBITED

29
 Payment of Margins
 Margin to be placed with broker before placing orders

 Cash payment
 Pledge of Securities

 Check Margin requirement on the website of Stock Exchange

 Margin through securities form by pledge

 instead of transfer of shares in broker’s demat account.

 Margin payments – Authenticated by One Time Password (OTP)

30
 Margin Pledge

 Effective from September 01, 2020.

 Investors can now provide margin in form of “Securities”:

- By pledging securities in favour of specially designated demat account of

Stock Broker.

 What’s New?:

o Stock Brokers can accept securities (viz. shares) as collateral only in form of
margin pledge created on the securities held in client’s demat account.

31
 Margin Pledge

 What does the Investor need to do?:

o Give instruction to create margin pledge on securities.

o Instruction may be given in:

- Physical form
- Electronically through “SPEED-e” (for NSDL) and “Easiest” (for CDSL).

 Pledged to whom?

o Created in favor of a “specially designated” demat account of the stock broker/

clearing member.

o Name of the account :

TM – Client Securities Margin Pledge Account or TM / CM – Client Securities

Margin Pledge Account).

32
 Early Pay-in
 Payment of funds/ delivery of shares (in case of buy/sell) to the
Exchange by pay-in time on settlement date.

 Early Pay-in: When Investor pays funds / delivers shares before

this designated time.

 Exemption:

 Upon early pay-in of Funds: No margin needs to be paid (subject to

bank confirmation)

 Upon early pay-in of securities: No margin needs to be paid. Stock

Brokers to provide early pay-in details to the Stock Exchange in a
specified format.

33
 Grievance Redressal

 If investor has dispute with his Stock Broker:

i. Immediately question the Stock Broker about any transaction that you
do not understand or you did not authorize your trading member.

ii. Investor should raise such complaint in writing to the trading member
and retain copies of all related correspondence done with the trading
member.

iii. In case your complaint has not been addressed/ redressed by the
trading member file complaint with Stock Exchange.

iv. In case you don’t receive any satisfactory response/ redressal of your
grievance from Stock Exchange as well, you may file your complaint on
SEBI SCORES.

34
 Grievance Redressal
 Complaints at Exchange can be filed by Investor via :

i. Online portal of the Exchange

ii. Email

iii. Physical letter at any Investor Service Centre

iv. Complaint can be filed by investor at the nearest Investor Service Centre (ISC)

 In case aggrieved by the resolution given by Stock Exchange  Approach Investor

Grievance Resolution Panel (IGRP)

 In case aggrieved by the resolution given by IGRP  Take up the matter via Arbitration,
a quasi judicial mechanism.

35
DEPOSITORY SERVICES

36
 FLOW OF PRESENTATION

 Demat Account
 Basic Services Demat Account (BSDA)
 Services offered by Depositories
 Transmission of Securities
 What is a Pledge ?
 Margin Pledge
 Consolidated Account Statement
 Investor Grievance Redressal

37
 Demat Account
 Depository Participant – Agent of Depository.
- Opens Demat Accounts for clients on behalf of
Depository.

Demat Account Number

CDSL NSDL
- Numeric Character - Numeric Code starting
with “IN”
- eg: 0123456789098765 - eg: “IN01234567890987”

**Demat Account Numbers are combinations of DP ID and Customer ID and are

unique for every customer.

38
 Basic Services Demat Account (BSDA)

 Facility for retail investors

EQUITY SHARES DEBT SECURITIES

Holding AMC Charges Holding AMC Charges

<Rs.50,000 NIL <Rs.1,00,000 NIL

Between Rs.50,000 Rs.100/- per year Between Rs.100/- per year

– Rs.2,00,000 Rs.1,00,000 –
Rs.2,00,000

>Rs.2,00,000 Charges as >Rs.2,00,000 Charges as

applicable to applicable to
regular (non-BSDA) regular (non-BSDA)
accounts accounts

Eg: Debt securities = Rs.90,000/- & Equity Shares = Rs.40,000/-  NO AMC Charge.

Eg: Equity shares = Rs.1 lakh & Value of those shares increases to Rs 2.5 lakhs 
Investor is not eligible for BSDA.

39
 Services offered by Depositories

 Dematerialization (Demat): converting physical

certificates to electronic form.

 Rematerialisation (Remat): Reverse of Demat, i.e.

converting electronic securities into physical
certificates.

 Transfer of securities

 Change of beneficial ownership

40
 Services offered by Depositories

 Settlement of trades done on exchange connected to the

Depository.

 Service can be availed through Depository Participant (DP)

 Many Stock Brokers and Banks function as DPs and investors

can open a new demat account with them.

Demat securities in depositories - Safe and Secure.

41
 Transmission of Securities

 Transfer of securities balances in a demat account due to:

• Death, bankruptcy, lunacy, etc. of the account holder,

• To legal heir/ another holder.

 Not a voluntary act of the account holder.

 Transfer brought about by operation of law i.e. a person cannot

ask for transmission of shares from his/her own Demat account.

 Transmission process – Simple and Fast.

42
 Transmission of Securities - Process

 Steps for Transmission:

• The surviving joint holder/s, nominee or legal heirs of the

deceased account holder need to approach the Depository
Participant (DP).

• For shares held in Physical Form: Approach each Company

and their respective RTAs.

43
 What is a Pledge ?

 Pledge: Deposit of some personal property as collateral for a debt.

Investor wants to Borrow Funds to pay margin

He may pledge his owned securities (shares, bonds, etc.) to borrow funds.

Pledged securities act as collateral for the loan. Pledgee/ Creditor only has possession of
pledged securities and not ownership/ title to the pledged securities.

If borrower of funds(pledger) defaults on repayment  lender of funds (pledgee) can sell

the securities and recover his money

Securities are provisionally moved from pledger’s/ debtor’s securities account to

pledgee’s/ creditor’s securities account.
44
 Consolidated Account Statement
 Summary of Investments

 Holding Statement: EQUITY

Holding Statement DEBT

MUTUAL
FUNDS
 Statement of Transactions:
 Debit of securities
 Credit of securities
 Pledge of securities
 Margin Pledge / Re-pledge for trading

 Issued by Depository to account of Beneficial Owner (BO)

45
 Investor Grievance Redressal

Online system :
CDSL : https://www.cdslindia.com/Footer/grievances.aspx
NSDL: https://nsdl.co.in/nsdlnews/investors.php

Via email :
CDSL : [email protected]
NSDL: [email protected]

Toll Free Numbers:

CDSL : 1800-22-5533
NSDL: 1800-22-2990
46
Thank You

47