FUNCTIONS OF OTCEI PDF

General Insurance Corporation and its subsidiaries. Canbank Financial Services Ltd. It was set up to provide small and medium companies an access to capital market for raising finance in a cost effective manner and investors with a convenient, transparent and efficient avenue for capital market investment. The OTCEI was the first ring less, electronic and national exchange with a screen based trading system listing an entirely new set of companies of small size. It allowed companies with a paid up capital as low as 30 lacs to get listed, It brought screen based trading system in vogue for the first time; this was quite different from the open outcry system at BSE. Moreover, each strip listed on the exchange had at least two market makers who continuously gave two way quotes.

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General Insurance Corporation and its subsidiaries. Canbank Financial Services Ltd. It was set up to provide small and medium companies an access to capital market for raising finance in a cost effective manner and investors with a convenient, transparent and efficient avenue for capital market investment.

The OTCEI was the first ring less, electronic and national exchange with a screen based trading system listing an entirely new set of companies of small size. It allowed companies with a paid up capital as low as 30 lacs to get listed, It brought screen based trading system in vogue for the first time; this was quite different from the open outcry system at BSE. Moreover, each strip listed on the exchange had at least two market makers who continuously gave two way quotes.

Market makers are merchant bankers willing to make a market in securities by continuously offering buy and sell quotes.

They act as a dealer cum stockiest and do not charge any commission or brokerage. Their profit margin is the spread between the bid and offer prices. A voluntary market maker can be appointed for a period of six months. The network of on-line computers provides all relevant information to the market participants on their computer screens.

This allows them the luxury of executing their deals in the comfort of their own offices. Liquidity through Market Making: The sponsor-member is required to give two-way quotes buy and sell for the scrip for 18 months from commencement of trading.

Besides the compulsory market maker, there is an additional market maker giving two way quotes for the scrip. The idea is to create an environment of competition among market makers to produce efficient pricing and narrow spreads between buy and sell quotations.

Listing of Small and Medium-sized Companies: Many small and medium-sized companies were not able to enter capital market due to the listing requirement of Securities Contracts Regulation Act, regarding the minimum issued equity of Rs.

The OTCEI provides an opportunity to these companies to enter the capital market as companies with issued capital of Rs. Nation-wide Listing: Over The Counter Exchange of India network is spread all over India through members, dealers and representative office counters.

The company and its securities get nation-wide exposure and investors all over India can start trading in that scrip. Bought-out Deals: Through the concept of a bought-out deal, OTCEI allows companies to place its equity with the sponsor-member at a mutually agreed price. This ensures swifter availability of funds to companies for timely completion of projects and a listed status at a later date.

Companies can get the money before the issue in cases of Bought-out-deals. Small companies can get listing benefits. Nation-wide trading by listing at just one exchange. At the OTCEl, the transactions are fast and are completed quickly. Related Articles:.

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Over the Counter Exchange of India (OTCEI) – Explained

Established in and located in Mumbai, this exchange brought a paradigm shift to the Indian financial market right after it had suffered a setback due to an unprecedented scam that hit the Bombay Stock Exchange. This article, divided into 4 major sections highlighted below, will introduce you to the legacy of NSE. The immediate aim was to provide equal access to investors from all across the nation and make participating in stock market easier. Operations in the equity segment were started in November followed by Derivatives segment in June NSE was the first stock exchange in India where ownership, management and trading were handled by three independent set of people. While the ownership is with various financial institutions and banks, the management is handled by independent professionals who are forbidden from directly or indirectly trading on the exchange. This demutualization has eliminated the kind of conflict of interest that was at the root of security scam.

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OTC Exchange of India

This prevents monopolisation of securities exchange and makes the markets more efficient. In India, however, the situation has been altogether different because of the virtual monopoly enjoyed by stock exchanges till recently. Image Courtesy : ensyklopedia. Consequently, companies listed with OTCEI will practically be at par with companies listed on any stock exchange in the country.

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Over-the-Counter Exchange of India (OTCEI)

There is no central place of exchange, and all trading occurs through electronic networks. Over-the-counter markets around the world are stock markets that function outside of formal exchanges. In the United States, OTC is also a reference to debt securities and other financial instruments that trade over a dealer network. This was the first exchange in India to introduce market makers , which are firms that hold shares in companies and facilitate the trading of securities by buying and selling from other participants. Thanks to advances in technology that have yielded improvements in electronic trading platforms, the differences between traditional exchanges and OTC networks are not so substantial. The big advantage of formal exchanges is more transparency and the opportunity to see offers from every other counterparty. Markets In the U.

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Over The Counter Exchange of India (OTCEI)

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