Page 23 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations Mahesh Kumar Sarva, Lovely Professional University

Notes Unit 2: Securities Market: An Overview

CONTENTS
Objectives

Introduction
2.1 Products, Participants and Functions
2.2 Securities Market and Financial System
2.2.1 Primary Market
2.2.2 Secondary Market
2.2.3 Derivatives Market
2.3 Regulatory Framework
2.3.1 Legislations
2.3.2 Rules, Regulations and Regulators

2.3.3 Reforms Since 1990s
2.4 Summary
2.5 Keywords
2.6 Review Questions
2.7 Further Readings

Objectives

After studying this unit, you will be able to:

Explain products, participants and functions
Discuss securities market and financial system
Elaborate regulatory framework
Discuss screen based trading
Introduction

The securities markets in India have witnessed several policy initiatives, which have refined the
market micro-structure, modernised operations and broadened investment choices for the
investors. The irregularities in the securities transactions in the last quarter of 2000-01, hastened
the introduction and implementation of several reforms. While a Joint Parliamentary Committee
was constituted to go into the irregularities and manipulations in all their ramifications in all
transactions relating to securities, decisions were taken to complete the process of demutualisation
and corporatisation of stock exchanges to separate ownership, management and trading rights
on stock exchanges and to effect legislative changes for investor protection, and to enhance the
effectiveness of SEBI as the capital market regulator. Rolling settlement on T+5 basis was
introduced in respect of most active 251 securities from July 2, 2001 and in respect of balance
securities from 31st December 2001. Rolling settlement on T+3 basis commenced for all listed
securities from April 1, 2002 and subsequently on T+2 basis from April 1, 2003.
The derivatives trading on the NSE commenced with the S&P CNX Nifty Index Futures on
June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on

18 LOVELY PROFESSIONAL UNIVERSITY