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SEBI οΏ½Financial Planning for Young InvestorsοΏ½

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Dr. Satish Vyavahare

Assistant Professor

Department of Economics

Lal Bahadur Shastri College of Arts, Science and Commerce, Satara

Email: satishraj.1415@gmail.com

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Topics to be covered

  • Structure of Securities Market
  • Participants in the Secondary Market
  • Getting started
  • Where to trade
  • Trading – a general understanding
  • How to trade
  • Post trade
  • Charges by the stock broker
  • Settlement
  • Investor Protection Mechanism
  • Investors Grievance Redressal

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Securities and Exchange Board of India

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  • The securities market in India can be divided into two segments –
    • Primary Market
    • Secondary Market

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Structure of Securities Market

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Participants in the Secondary Market

  • Stock Exchange
  • Clearing Corporation
  • Depositories/ DP
  • Trading Member (Stock Broker)/ Clearing Member
  • Registrar to an Issue and Share Transfer Agent

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Getting started

  • To start trading the following are required –
    • Trading account
      • Member – Client Agreement
      • Risk Disclosure Document
    • Demat account
    • Bank account
    • Permanent Account Number (PAN)
    • Unique Client Code

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Where to trade

  • The secondary market is divided into two segments –
    • Cash/ Equity segment
    • Derivative segment –
      • Equity Futures and Option (F & O) – Index / Single Stock
      • Currency Futures/ Option
      • Interest Rate Futures

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How to trade

  • Trade through a SEBI registered Stock Broker, by -
    • Placing margins as required with the broker
    • placing order over the phone
    • email etc.
  • Internet Trading
  • Wireless / Mobile Trading.

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Post Trade

  • The stock broker is required to provide contract notes confirming the trades done within 24 hrs of executing the trade

  • The contract notes can either be in physical or electronic form

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Charges by the Stock Broker

  • Brokerage charged by member broker (maximum 2.5%)
  • Service tax as stipulated
  • Securities Transaction Tax
  • Penalties arising on specific default on behalf of client (investor)

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Settlement

  • The settlement in the securities market is done on a T+2 Rolling Settlement Cycle (where T = Trading Day).

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Trading

(T)

Option of

Early Pay-in

(T1)

Auction

(T3)

Close out

(T4)

Pay-in and

Pay out

(T2)

TRADE

SETTLEMENT

T + 2

FAILURE

TO

PAY-IN

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Settlement - Auction

  • Incase there is a shortage in Pay-in of shares at the time of settlement on T+2, the Stock Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member.

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Settlement - Close Out

  • If the shares could not be bought in the auction i.e. if shares are not offered for sale in the auction, the transactions are closed out as per SEBI guidelines

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Investor Protection Mechanism

  • Investor Protection Fund or Consumer Protection Fund (IPF/ CPF) is set up by the Stock Exchanges to meet the legitimate investment claims of the clients of the defaulting members that are not of speculative nature

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Investor Grievance Redressal

  • Complaints can be filed with OIAE department of SEBI against companies for delay or non-receipt of shares, refund orders, etc., and with Stock Exchanges against brokers on certain trade disputes or non receipt of payment/securities.

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  • Arbitration

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  • Court of Law

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THANK YOU

Securities and Exchange Board of India

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