Sunday, February 26, 2012

NEW BANKING UPDATES OD JAIIB/CAIIB

Expand UTR
The moment the RTGS message reaches the PI Server,  the system generates a  UTR  (Unique Transaction Reference No.)  akin to the IBR Tr. Sl. No. UTR is a 16 digit  Alpha-Numeric code, the first 4 digits contains the Bank Code in alphabets, 5th one meant  for the message code, 6th & 7th mentions the year, 8-10th mentions Julian Date (No. of  days in the calendar year are reckoned as the basis to arrive at the date of remittance) and  the last 6 digits mentions day’s serial no. of the message.  
Repo rate in India
When banks have any shortage of funds, they can borrow it from Reserve Bank of India or from other banks. The rate at which the RBI lends money to commercial banks is called repo rate, a short term for repurchase agreement. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.[1]. the repo rate in India is currently 8 % as of July 2011

SEBI

The Securities and Exchange Board of India (SEBI), the regulatory authority for Indian securities market, was established in 1992 to protect investors and improve the microstructure of capital markets. In the same year, Controller of Capital Issues (CCI) was abolished, removing its administrative controls over the pricing of new equity issues. In less than a decade later, the Indian financial markets acknowledged the use of technology (National Stock Exchange started online trading in 2000), increasing the trading volumes by many folds and leading to the emergence of new financial instruments. With this, market activity experienced a sharp surge and rapid progress was made in further strengthening and streamlining risk management, market regulation, and supervision.

The securities market is divided into two interdependent segments:
  • The primary market provides the channel for creation of funds through issuance of new securities by companies, governments, or public institutions. In the case of new stock issue, the sale is known as Initial Public Offering (IPO).
  • The secondary market is the financial market where previously issued securities and financial instruments such as stocks, bonds, options, and futures are traded.
Domestic Exchanges
Indian equities are traded on two major exchanges: Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

Bombay Stock Exchange (BSE) 

BSE is the oldest stock exchange in Asia. The extensiveness of the indigenous equity broking industry in India led to the formation of the Native Share Brokers Association in 1875, which later became Bombay Stock Exchange Limited (BSE).
BSE is widely recognized due to its pivotal and pre-eminent role in the development of the Indian capital market.
  • In 1995, the trading system transformed from open outcry system to an online screen-based order-driven trading system.
  • The exchange opened up for foreign ownership (foreign institutional investment).
  • Allowed Indian companies to raise capital from abroad through ADRs and GDRs.
  • Expanded the product range (equities/derivatives/debt).
  • Introduced the book building process and brought in transparency in IPO issuance.
  • T+2 settlement cycle (payments and settlements).
  • Depositories for share custody (dematerialization of shares).
  • Internet trading (e-broking).
  • Governance of the stock exchanges (demutualization and corporatization of stock exchanges) and internet trading (e-broking).
BSE has a nation-wide reach with a presence in more than 450 cities and towns of India. BSE has always been at par with the international standards. It is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE Online Trading System (BOLT).
Benchmark Indices futures: BSE 30 SENSEX, BSE 100, BSE TECK, BSE Oil and Gas, BSE Metal, BSE FMCG

National Stock Exchange (NSE)

NSE was recognised as a stock exchange in April 1993 under the Securities Contracts (Regulation) Act. It commenced its operations in Wholesale Debt Market in June 1994. The capital market segment commenced its operations in November 1994, whereas the derivative segment started in 2000. NSE introduced a fully automated trading system called NEAT (National Exchange for Automated Trading) that operated on a strict price/time priority. This system enabled efficient trade and the ease with which trade was done. NEAT had lent considerable depth in the market by enabling large number of members all over the country to trade simultaneously, narrowing the spreads significantly.
The derivatives trading on NSE commenced with S&P CNX Nifty Index futures on June 12, 2000. The futures contract on NSE is based on S&P CNX Nifty Index. The Futures and Options trading system of NSE, called NEAT-F&O trading system, provides a fully automated screen based trading for S&P CNX Nifty futures on a nationwide basis and an online monitoring and surveillance mechanism. It supports an order-driven market and provides complete transparency of trading operations.

Benchmark Indices futures: Nifty Midcap 50 futures, S&P CNX Nifty futures, CNX Nifty Junior, CNX IT futures, CNX 100 futures, Bank Nifty futures
What are the names of stock exchanges operating in Foreign Countries.
1)     NASDAQ (National Association of Securities Dealers Automated Quotations
2)     LSE (London Stock Exchange)
3)     Frankfurt Stock Exchange

REGULATORY AUTHORITY  -

In India, the responsibility of regulating the securities market is shared by DCA (the Department of Company Affairs), DEA (the Department of Economic Affairs), RBI (the Reserve bank of India), and SEBI (the Securities and Exchange Board of India).

Legislations Governing Securities Market

There are four main legislations governing the securities market:
a.     The SEBI Act, 1992 establishes SEBI to protect investors and develop and regulate the securities market.
b.     The Companies Act, 1956 sets out the code of conduct for the corporate sector in relation to issue, allotment, and transfer of securities, and disclosures to be made in public issues.
c.     The Securities Contracts (Regulation) Act, 1956 provides for regulation of transactions in securities through control over stock exchanges.
d.     The Depositories Act, 1996 provides for electronic maintenance and transfer of ownership of demat securities.