SEBI INVESTOR AWARENESS PROGRAMME - SECONDARY MARKET

1. SEBI INVESTOR AWARENESS PROGRAMME- SECONDARY MARKET Securities and Exchange Board of India

2. Topics to be covered • Structure of Securities Market • Participants in the Secondary Market • Getting started • Where to trade • Trading – a general understanding • How to trade • Post trade • Charges by the stock broker • Settlement • Investor Protection Mechanism • Investors Grievance Redressal Securities and Exchange Board of India

3. Structure of Securities Market • The securities market in India can be divided into two segments – • Primary Market • Secondary Market Securities and Exchange Board of India

4. Participants in the Secondary Market • Stock Exchange • Clearing Corporation • Depositories/ DP • Trading Member (Stock Broker)/ Clearing Member • Registrar to an Issue and Share Transfer Agent Securities and Exchange Board of India

5. Getting started • To start trading the following are required – • Trading account • Member – Client Agreement • Risk Disclosure Document • Demat account • Bank account • Permanent Account Number (PAN) • Unique Client Code Securities and Exchange Board of India

6. Where to trade • The secondary market is divided into two segments – • Cash/ Equity segment • Derivative segment – • Equity Futures and Option (F & O) – Index / Single Stock • Currency Futures/ Option • Interest Rate Futures Securities and Exchange Board of India

7. How to trade • Trade through a SEBI registered Stock Broker, by - • Placing margins as required with the broker • placing order over the phone • email etc. • Internet Trading • Wireless / Mobile Trading. Securities and Exchange Board of India

8. Post Trade • The stock broker is required to provide contract notes confirming the trades done within 24 hrs of executing the trade • The contract notes can either be in physical or electronic form Securities and Exchange Board of India

9. Charges by the Stock Broker • Brokerage charged by member broker (maximum 2.5%) • Service tax as stipulated • Securities Transaction Tax • Penalties arising on specific default on behalf of client (investor) Securities and Exchange Board of India

10. Settlement • The settlement in the securities market is done on a T+2 Rolling Settlement Cycle (where T = Trading Day). FAILURE TO PAY-IN T + 2 TRADE SETTLEMENT Trading (T) Option of Early Pay-in (T1) Pay-in and Pay out (T2) Auction (T3) Close out (T4) Securities and Exchange Board of India

11. Settlement - Auction • Incase there is a shortage in Pay-in of shares at the time of settlement on T+2, the Stock Exchange purchases the requisite quantity in the Auction Market and gives them to the buying trading member. Securities and Exchange Board of India

12. Settlement - Close Out • If the shares could not be bought in the auction i.e. if shares are not offered for sale in the auction, the transactions are closed out as per SEBI guidelines Securities and Exchange Board of India

13. Investor Protection Mechanism • Investor Protection Fund or Consumer Protection Fund (IPF/ CPF) is set up by the Stock Exchanges to meet the legitimate investment claims of the clients of the defaulting members that are not of speculative nature Securities and Exchange Board of India

14. Investor Grievance Redressal • Complaints can be filed with OIAE department of SEBI against companies for delay or non-receipt of shares, refund orders,etc., and with Stock Exchanges against brokers on certain trade disputes or non receipt of payment/securities. • Arbitration • Court of Law Securities and Exchange Board of India

15. THANK YOU Securities and Exchange Board of India