What is a security market, stock market,derivative market
How is trading done in this?How many types of security are there
what is a securities market ?
security
have been defined in the Securities Contract Regulation Act 1956.In this, shares, bonds, scrips or any other similar securities issued by any company or corporate body or government and sold in the market are included. It includes derivative instruments of securities, units pooled in savings schemes, interest on investments in securities, rights securities as well as receipts declared by the Central Government to be securities or similar instruments.
what is a security market.
Today I will tell you that what is a security market. Security market is a place where buyer and seller one can transact buying and selling of securities, bonds and securities. Also the market plays an important role in providing the corporate, business industry sectors with a means to raise money for their company and business .Through this market, the people who have idle money available from those investors, that idle money can be transferred to the people who need these corporate attachments. Security market guides the investors as to how much of the savings money should be used for trading and how much should be used for trading.
Segments of Securities Market
There is two types segments of security market
1.Primary Market
2.Secondary Market|
1.Primary Market : The primary market is a place where new securities are sold through Initial Public Offerings (IPOs). In other words, the primary market is created by providing avenues for the sale of new systems, which are newly secured by state and central government companies and some private companies. Corporate companies sell cities by applying a premium on them i.e. more amount on the original price by giving a discount. They issue these securities in the form of shares or debt. These companies can issue securities in the local market tirelessly in the international market.
2.Secondary Market: Secondary market This is a place where the work of re-buying, selling, up-trading of securities sold through initial public offer in the primary market is done .The securities are largely traded in the secondary market only. equity market and derivatives market are included.
Derivative Market.
The derivatives market is different from the securities market .In this market securities are traded but their delivery or payment is done in future .The forward transactions currently practiced in the derivatives market are futures and put transactions. Stunted securities are traded in the Future market. These traders have to pay delivery or settlement transactions in the future. Futures transactions can be done on any individual security or on any index. Talking about options, securities are also traded including taking delivery in the future.
Stock market
Shares are largely traded in the stock market. Share market is such a platform, where buying and selling of shares is done by fixing the price. Earlier the stock market used to be one place. Transactions were done on the trading floor of the stock market. You must have ever seen the trading floor in pictures. On this trading floor, people must have been seen shouting loudly with their hands raised, as well as signaling to each other. This was an old way of dealing in the stock market. This practice is no longer in existence. Currently in Virtual Trading Floor. The basic purpose of the stock market is to provide necessary facilities for the transaction of securities between the buyer and the seller and to reduce the risk. There are two such markets in the stock market, primary and secondary. New securities are issued in the primary market and then after they have become an entity, those securities are traded in the secondary market. This transaction is completed through the stock market.
Stock Exchange in India.
There are a total of 24 stock exchanges in India. All these have been recognized by the Government of India. The largest and most important of them comprise the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). In the day-to-day trading in the stock market of India, large scale trading is done through NSE and BSE only.
A. National Stock Exchange - NSE:
The National Stock Exchange was launched in 1994. The motive behind starting this exchange is given further.
1. Dealing with equity debt and similar instruments at a national level.
2. To get a chance to interact with investors from across the country.
3. To facilitate the dealing of securities. Transactions should be efficient and hence there should be transparency in them.
4. To reduce the settlement cycle . duration of transactions.
5. To bring the objectives of securities market to international level. Therefore, this exchange remained in the form of a national level computerized stock market without a trading ring.
This exchange is divided into two parts. One capital market and the other wholesale debt market.
The capital market segment comprises equity shares, convertible debentures and non-convertible debentures. The wholesale debt market deals with high priced transactions of government debt, bonds of public sector companies, commercial papers and other debt instruments. Trading members dealing with the capital market are connected through an intermediary computer set up at Mumbai. For this very small aperture terminals ie V set (V-SAT) are used. Similarly, trading members belonging to the Wholesale Debt Market are also connected to each other through high-speed lines through an intermediary computer set up in Mumbai. The National Stock Exchange uses an order-based system. When an order is placed by a trading member in their system, an order confirmation slip a receipt indicating that the order has been placed is automatically generated. The number of securities given in it, the price at which the investors want to sell the securities and the code number of any party who has purchased them from the front are also entered in this slip. This is the type of system.
In NSE the script is identified by its symbol.
Eg. The symbol (mark) of Infosys Tech is INFOSYSTCH. The index of NSE is Nifty.
B. Bombay Stock Exchange - BSE :
The Bombay Stock Exchange is the oldest stock exchange in Asia. It is more popularly known as BSE. It was established in 1875 under the name of The Native Share and Stock Brokers Association. It is the first exchange in the country to be recognized by the Government of India. The Government of India gave it permanent status in 1956 under the Securities Contract Regulation Act, 1956. This exchange plays a major and important role in developing the Indian capital market. The index of BSE is Sensex and this index is watched all over the world.
The exchange creates an efficient and transparent market for trading in derivatives, equity and debt instruments.
In BSE the scripts are identified by their code numbers.
Eg. The BSE code of Infosys Tech is 500209.
