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BST Chapter Financial Management 10/7/19 (Secondary Market (Functions of…
BST Chapter Financial Management 10/7/19
Secondary Market
Features
Creates liquidity
Fixed Location
Comes after Market
Encourages new Investment
Features of Stock Exchange
It is a market for previously issued securities
Dealing only by authorized members
Permits transactions in listed securities only
Has a specific geographic location
Regulated by SEBI & SCRA
Functions of Stock Exchange
Gives liquidity and marketability to existing securities
Pricing of securities (dd and ss)
safety of transactions (membership = regulated + dealing well defined)
Contributes to economic growth (ensures that savings are channelized to most productive investment avenues)
Spreading of equity cult (ensures wider share ownership)
Provides scope for speculation (in a restricted and controlled environment)
Trading Procedure in Stock Exchanges
Selection of a Broker
The first step is to select a broker who will buy/sell securities on behalf of the speculator/investor
The investor has to sign a broker-client agreement and a client registration form before placing an order to buy or sell securities
He has also to provide certain other details in information such as PAN number (mandatory), Bank account details, Depository account details. etc
The broker then opens a trading account in the name of the investor