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Unit 3: Primary Market and Secondary Market

3.3.5 Registrar to an Issue and Transfer Agent Notes

Registrar and transfer agent are the two categories of intermediaries who actively participate in
the new issue activity of a company. The Registrar performs the functions of collecting
applications from prospective investors, keeping a record of the applications and moneys received
from the investors, assisting the issuing company in the determination of the basis of allotment
of securities, processing and dispatching of allotment letters and refund orders, share and
debenture certificates and other documents related to the issue and acting as Depository
Participants (DPs).
Transfer Agent, on the other hand, carries out the activities, such as maintaining the records of
holders of securities of the company for and on behalf of the company, handling all matters
relating to transfer and redemption of securities of the company and acting as Depository
Participants (DPs).

3.3.6 Debenture Trustees

A company contemplating to issue debentures to raise long-term funds from the market has to
appoint a trustee to safeguard the interests of the debenture holders. The following may be
appointed as debenture trustee:
1. A scheduled bank, or
2. A public financial institution, as defined in Section 4-A of the Companies Act, 1956, or
3. An insurance company, or

4. A body corporate.

Self Assessment

Fill in the blanks:
5. ................................. and ................................. are the two categories of intermediaries who
actively participate in the new issue activity of a company.
6. A company contemplating to issue debentures to raise ................................. funds from the
market has to appoint a trustee to safeguard the interests of the debenture holders.

3.4 Secondary Market

Secondary market is a market where the sale of previously issued securities takes place. Thus,
secondary market provides a trading platform for the already issued securities of governments,
semi-governments and firms. It is a two-way market in which the investors and stockbrokers
are just as likely to be sellers as buyers.
The redeeming features of the secondary markets are:

1. A secondary market is a market for already existing long-term securities of governments,
semi-governments and corporate enterprise. This market exists only if someone creates it.
There are two types of market creators-dealers and brokers. Dealers stand ready to buy
and sell at quoted prices. They hold on to the securities until someone else comes along
wishing to buy them. In contrast, brokers do not themselves buy or sell the securities.
They, instead of buying the securities, would find someone willing to buy them.
2. The secondary market can be wholesale and retail. The wholesale market is the market in
which professionals, including institutional investors trade with one another. Transactions

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