cs executive: foreign institutional investors

Compiled by: CA Vidhi Dedhia L- 4 & 6 Security market intermediary & Debt market

Foreign Institutional investors:-

FII = Institution established / incorporated outside India Proposes to make investment in Indian securities.

It must have valid certificate granted by SEBI, without this certificate no person can buy/sell or otherwise deal in securities as FII.

SEBI considers following points before granting certifiable:-

Track record , competence, financial sounds, experience, etc FII is record regulated by a proper “ foreign Regulated Authority” Has granted permission from RBI.

FII can invest in securities in both:

Primary market Secondary market

Including: shares, debentures, warrants of co’s unlisted/ listed or to be listed on recognized Stock exchange

in India domestic mutual funds, dated gilt securities, derivatives, commercial papers, etc

Merchant BankerMerchant bank: it is a private equity activity of investment banks, it also a part of alternative investment division research Strategy

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Merchant Banker: All public issues

Are managed by atleast 1 merchant banker

It undertakes activities relating to :

Following are some other activities of merchant banker:Preparation of prospectus / Letter of offer, determining the financial structure, finding

financers, final allotment and refund of application money

Primary market Intermediaries

Provide useful service to the company

While making republic issue sec.




These intermediaries company reaches its prospective investors and work as a team to complete the issue.

Merchant banker / lead Merchant Banker Registrars and share transfer agents Under writers Bankers to issue Debenture trustee Depositary Participants (DP) Credit rating Agencies Portfolio managers

Registrar to an issue

Registrar to an Issue:- means a person authorized by bodycorporate to carry on following activities on its behalf

I. Collecting Application from investors in respect of an issue.II. Keeping a proper record of application and money received from

investor.III. Basis of allotment, processing and dispatching allotment letters &

refunds. Summary 1 2 3 Collecting application proper records allotment

Application money Basis Processing Dispatching


INTERMEDIARIES



Share Transfer Agent STA means any person who on behalf of any body corporate deals with all matters Transfer / redemption of Security

Share transfer agent shall exercise adequate care & due diligence before dematerilization of security

Underwriter Underwriting- means an agreement with / without conditions to subscribe to the security of body corporate when the existing shareholder of such body corporate / Public do not subscribe to the security offered to them.Underwriter—means a person – who engages in the business of underwriting of an issue of security of body corporate. E.g., Banks, Financial institutors, merchant Bankers stock bankers.

When X existing shareholder does not subscribe underwrites X Public to security of body corporate agrees to subscribe

Meaning of Custodian of SecuritiesIt means any person who carries on or proposes to carry on the business

of providing custodian service

Custodian services means safe keeping of securities or gold or gold related instrument.

The other functions of custodian service include –

Maintaining accounts of securities or gold or gold related instruments of a client;[ S/ G/GRI] Collection of benefits or rights accruing to the client in respect of securities or gold or gold

related instruments; Keeping the client informed of the actions taken or to be taken by the issuer of securities

[ Action taken by isser company inform the client]




Maintaining and reconciling records of the services referred in above clauses.




Debt Markets

Introduction market for issuance, trading, settlement

In fixed income security

DEBT Market In India comprises 2 segments

Government Corporate Debenture / Bonds Debentures / BondsE.g.: zero coupon bonds, floating E.g.: FI bonds, PSU Bonds, debentures rate bonds, T- bills, etc




Corporate debentures :- Different Categories Secured Unsecured Non Convertible debenture Partly convertible debenture Fully Convertible debenture Optionally convertible debenture

Debt Securities: Company issuing debt security

Such companies Offers to pay interest in lieu Of borrowed for a certain period

Long terms debt instrument issued by private sectors companies. They are transferrable There are various types of fixed income instrument which cater to the needs of both

Investors + issuers. Such instruments are classified on the basis of

Internet Time duration ,etc

Fixed income Products Instruments which provide for fixed income returns on investment

Bank fixed deposits (FD’s) {banks have 3 types of FD’s } Corporate FD’s Public Provident Fund Kishan Vikas patra

Investors in debt Market




Explain the regulatory frame would of debt Market in India ISSUE OF

Non convertible convertible either - FullyDebt security -partially

- Optionally Whether into listed or unlisted Equity Issued to public / private place

Even listing of such security shall be guided by “ Disclosure norms” applicable to equity Or other instruments

Shall be in accordance Provisions of SEBI SEBI

SEBI (Issue and listingOf debt sec) Regulations, 2008


T- BillsCommercial Papers Private debenturesDebt marketBanksInsurance CompaniesTrustsProvident Fund/ Mutual Funds


cs executive: foreign institutional investors

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