Category Archives: CAPITAL MARKETS

FUNCTIONS OF NEW ISSUES/PRIMARY MARKET

FUNCTIONS OF NEW ISSUES/PRIMARY MARKET The main function of NIM is to facilitate the transfer of resources from savers to entrepreneurs seeking to establish new enterprise or to expand/diversify existing ones. Such facilities are of crucial importance in the context of the dichotomy of funds available for capital uses from those in whose hands they accumulate, and those by whom they are applied to productive use

Continuous Price Formation

Continuous Price Formation The third major function, closely related to the second, discharged by the stock exchanges is the process of continuous price formation, The collective judgement of many people operating simultaneously in the market, resulting in the emergence of a large number of buyers and sellers at any point of time, has the effect of bringing about changes in the levels of security prices in small

Market Place

Market Place The second important function discharged by stock markets/exchanges is that they provide a market place for the purchase and sale of securities, thereby enabling their free transfer ability through several successive stages from the original subscriber to the never ending stream of buyer who may be buying them today to sell them at a later date for a variety of considerations like meeting their own

FUNCTIONS OF STOCK/SECONDARY MARKETS EXCHANGES

FUNCTIONS OF STOCK/SECONDARY MARKETS EXCHANGES Stock exchanges discharge three vital functions in the orderly growth of capital formation (i) Nexus between savings and investments, (ii) Market place and (iii) Continuous price formation. Nexus between Savings and Investment First and foremost, they are the nexus between the savings and the investments of the community. The savings of the community are channeled by

Economic Interdependence

Economic Interdependence The markets for new and old securities are, economically, an integral part of a single markets the industrial securities market. Their mutual interdependence from the economic point of view has two dimensions. One, the behavior of the stock exchanges has a significant bearing on the level of activity in the NIM and, therefore, its responses to capital issues: Activity In the new Issues

Control

Control The stock exchanges exercise considerable control over the organisation of new issues. In terms of regulatory framework related to dealings in securities the new issues of securities which seek stock quotation/listing have to complete with statutory rules as well as regulations by the stock exchanges with the object of ensuring fair dealings in them. If the new issues do not conform to the prescribed st

Stock Exchange Listing

Stock Exchange Listing One aspect of this inseparable connection between them is that the securities issued in the NIM are invariably listed on a recognized stock exchange for dealings in them. In India, for instance, one of the conditions to which a prospectus is to conform is that it should contain a stipulation that the application has been made, or will he made in due course for admitting the securities to

Organisational Differences

Organisational Differences The two parts of the market have organisational differences also. The exchanges have, organizationally speaking physical existence and are located in a particular area. The NIM is not rooted in any particular spot and has no geographical existence has neither any tangible form any administrative organisational set up like that of stock nor is it subjected to control and administration

Nature of Financing

Nature of Financing Another aspect related to the separate functions of these two parts of the market is the nature of their contribution to industrial financing. Since the primary market with new securities, it provides additional funds to the issuing companies either for a new enterprise or for the expansion of diversification of the existing one and, therefore, contribution to company financing is direct. In

New vs Old Securities

New vs Old Securities The NIM deals with new securities that is, securities which were not previously available and are, therefore, offered to the investing public for the first time. The derives its name from the fact that it makes available a new block of securities public subscription. The stock market, on the other hand, is a market for old securities which be defined as securities which have been issued alr