The document discusses the functions of the new issue market, which deals in new financial claims or securities in the primary market. The key functions of the new issue market are organization, underwriting, and distribution of new securities. Organization involves studying the viability of new projects. Underwriting involves subscribing to shares if the public does not fully subscribe. Distribution involves the sale of securities to ultimate investors through brokers and agents.
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The document discusses the functions of the new issue market, which deals in new financial claims or securities in the primary market. The key functions of the new issue market are organization, underwriting, and distribution of new securities. Organization involves studying the viability of new projects. Underwriting involves subscribing to shares if the public does not fully subscribe. Distribution involves the sale of securities to ultimate investors through brokers and agents.
The document discusses the functions of the new issue market, which deals in new financial claims or securities in the primary market. The key functions of the new issue market are organization, underwriting, and distribution of new securities. Organization involves studying the viability of new projects. Underwriting involves subscribing to shares if the public does not fully subscribe. Distribution involves the sale of securities to ultimate investors through brokers and agents.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
The document discusses the functions of the new issue market, which deals in new financial claims or securities in the primary market. The key functions of the new issue market are organization, underwriting, and distribution of new securities. Organization involves studying the viability of new projects. Underwriting involves subscribing to shares if the public does not fully subscribe. Distribution involves the sale of securities to ultimate investors through brokers and agents.
Copyright:
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FUNCTIONS OF NEW ISSUE
MARKET
MEANING y The financial market is classified into 2 groups- 1-Primary market 2-Secondary market y The primary market deals in the new
financial claims or new securities and therefore they are also known as the NEW ISSUE MARKET. y Secondary market deals in the old
securities, i.e., those
which has been already issued in the primary market, ex- Stock exchange.
Difference between New Issue Market & Stock Exchange yThe distinction between new issue market and stock exchange can be made on 3 grounds. y They are - 1-Functional difference 2-Organisational difference 3-Nature of contribution to Industrial finance. 15-4
analysis and processing of new project proposals. There are two aspects involved in this: 1. A carefully study of technical, economic and financial viability to ensure soundness of the project. 2. Advisory services: they are: a) Type of issues b) Magnitude of issue c) Pricing of an issue d) Time of f loating an issue e) Methods of issue f ) Technique of selling the securities
Underwriting y Underwriting is an agreement where the underwriter promises to subscribe to a no. of shares or debentures or a specified amount of stock in the event of public not subscribing to the issues. y Methods of underwriting
i) Standing behind the issue
ii) Outright purchase iii) Consortium method.
Advantages of Underwriting 15-8
•Relieved from the risk of finding
buyers •Company is assured of Getting minimum subscription •Provide expert advise •Public confidence on issue enhances. Underwriters in India 15-9
1. Institutional underwriters: LIC,
GIC, UTI, IDBI, ICICI, commercial banks etc. 2. Non Institutional underwriters: Brokers.
Distribution 15-10
•Distribution is the function of sale f
securities to ultimate investors. This service is maintained by brokers and agents who maintain regular and direct contact with the untimate investors.
Methods of floating new
issues y The various methods, which are used in the f loating of securities in the issue market are : a) Public issues b) Offer for sale c) Placement d) Rights issues.
INSTRUMENTSOF ISSUE 1)Secured premium notes with detachable warrants (SPN) 2)Equity shares with detachable warrants 3)Preference shares with warrants. 4)Nonconvertible debentures with detachable equity 5)Fully Convertible Cumulative Preference shares. 6)Zero interest Fully Convertible Debentures(FCDs) 7)FCDs with interest 8)Zero int. Partly Convertible Debentures (PCDs) with Detachable and SEPARATELY TRADABLE WARRANTS. 9)Zero Interest Bonds 10)Deep Discount Bonds 11)Option Bonds 12)Bonds with Warrants.
What is Warrant? A Warrant allows the holder to buy a number of equity share at a pre-specified price in future. The Pherwani Study Group has recommended the following new instruments 1. Participating Preference Shares 2. Participating Debenture 3. Covertible Debenture with option 4. Convertible Debentures Redeemable at Premium 5. Debt for Equity Swap
PLAYERS INTHE ISSUE MARKET
1) MERCHANT BANKERS 2. Registrars: undertake all activities connected with new issue management – Pre-allotment work, allotment work, post allotment work
3)COLLECTING AND CO-ORDINATING
BANKERS 4)UNDERWRITERS AND BROKERS 5)PRINTERS, ADVERTISING AGENCIES AND MAILING AGENCIES.
Vicarious Liability Is One of The Most Important Part of Torts Which Is Basically Concerned With Holding The Master Responsible For The Wrongful Acts of The Servant Done in The Course of Employment
Vicarious Liability Is One of The Most Important Part of Torts Which Is Basically Concerned With Holding The Master Responsible For The Wrongful Acts of The Servant Done in The Course of Employment
