CAPITAL, COMMODITY AND MONEY MARKET

1 ISTUDY MATERIALPROFESSIONAL PROGRAMMECAPITAL, COMMODITYAND MONEY MARKETMODULE 3 ELECTIVE PAPER House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444fax +91-11-2462 6727email THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to , Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, andPrinted at Tan PrintsiiiiiPROFESSIONAL PROGRAMMECAPITAL, COMMODITYAND MONEY MARKETE fficient financial systems are indispensable for speedy economic development.

2 The financial system of acountry is a conglomeration of sub MARKET , viz. capital , COMMODITY and MONEY MARKET . The flow of funds in thesemarkets is multi directional depending upon liquidity, risk profile, yield pattern, interest rate differential or arbitrageopportunities, regulatory restrictions etc. As the Indian economy gets integrated with the global economyempowered by increasingly sophisticated information and technology systems, there is an acute need for trainedprofessionals to entrust important roles in all the spheres of the financial MARKET activity.

3 This study material hasbeen designed to provide expert knowledge and understanding of various capital MARKET instruments, commoditymarket products, MONEY MARKET instruments, key features and participants in these markets, raising capital ininternational MARKET by companies study material has been published to aid the students in preparing for the capital , COMMODITY and MoneyMarket paper of the CS Professional Programme. It is part of the educational kit and takes the students step bystep through each phase of preparation stressing key concepts, pointers and Secretaryship being a professional course, the examination standards are set very high, with emphasison knowledge of concepts, applications, procedures, for which sole reliance on the contents of this study materialmay not be enough.

4 Besides, as per the Company Secretaries Regulations, 1982, students are expected to beconversant with the amendments to the laws made upto six months preceding the date of examination. Thematerial may, therefore, be regarded as the basic material and must be read alongwith the original Bare Acts,Rules, Regulations, Academic Guidance etc. This study has been updated upto June 30, subject of capital , COMMODITY and MONEY MARKET is inherently complicated and is subject to constantrefinement through, rules and regulations made thereunder.

5 It is, therefore becomes necessary for every studentto constantly update himself with the various legislative changes made from time to time by referring to theInstitute s journal Chartered Secretary as well as other professional journals. In the event of any doubt, studentsmay write to the Directorate of Academics and Perspective Planning of the Institute for clarification care has been taken in publishing this study material yet the possibility of errors, omissions and/ordiscrepancies cannot be ruled out.

6 This publication is released with an understanding that the Institute shall notbe responsible for any errors, omissions and/or discrepancies or any action taken in that there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged ifthe same is brought to its 2: capital , COMMODITY & MONEY MARKET (100 Marks)Level of Knowledge: Expert KnowledgeObjective:To acquire specialized knowledge of capital , COMMODITY and MONEY MarketDetailed Framework Basic structure of Flow of funds in the economy.

7 capital Markets its Role in capital formation, Functions of Liquidity, , Resource Allocation and Framework Ministry of Finance ( capital Markets Division,Department of Economic Affairs) Ministry of Corporate Affairs Companies Act, 1956 SEBI Act, 1992 Securities Contracts (Regulation) Act, 1956 (SCRA) Depositories Act, 1996 SEBI Regulations and Guidelines An Overview, SEBI (Prohibition of Insider Trdaing) Regulations,1992, SEBI (Substantial Acquisitions of Shares and Takeovers) Regulations, 2011 (SAST) Prevention of MONEY Laundering Act, 2002 Grievance Redressal Mechanism: Stock Exchange (Investor Protection Fund), SEBI, SecuritiesAppellate Tribunal (SAT), Supreme Court Enforcement.

8 Economic Offences Wing, Financial Intelligence Unit, Central Bureau of Investigation,Financial Action Task Force (FATF) Intermediaries Framework Framework of MARKET Infrastructure Institutions (MII), Stock Exchanges Clearing Corporations,Custodians, Depositories, Depository Participants, Registrars and Transfer Agents (RTA), Bankers to issue Merchant Bankers, Underwriters, , Investment Advisors, Portfolio Managers, Self Certified SyndicateBanks, Brokers, Sub-brokers, MARKET -makers Credit Rating Markets IPO, FPO, Offer for Sale, Private Placement, Preferential Allotment, Institutional Placement Procedures(IPP), Qualified Institutional Placement (QIP), Rights Issue, Bonus Issuev Prospectus, DRHP, Shelf Prospectus, Red Herring prospectus Private Investment in Public Equity (PIPE) SEBI (Issue of capital & Disclosure Requirements)

9 Regulations, 2009 Lead Manager (Pre & Post Issue Activities) Due Diligence Review Underwriting obligations Basis of Allotment Book-building Pre-issue and Post-issue activities, Green-shoe Option Pre-listing and Post-listing activities, Listing Markets Opening day (listing) Continuing compliance obligations and disclosures: Post-listing activities, Corporate Actions Requirements for Continuing Listing Corporate Governance Norms Disclosures as per Listing Agreement: Price Sensitive Information, Material Changes, Quarterly results Functioning of an Exchange: Margining, Trading, Clearing and Settlement, Trade Guarantee Fund,Trading Software, Arbitration Mechanism Stock MARKET Indices6.

10 capital MARKET Investment Institutions Domestic Financial Institutions (DFI) , Qualified Institutional Buyers (QIB), Foreign Institutional Investors(FII) , Private Equity (PE), Angel Funds, HNIs, Venture capital (VC), Qualified Foreign Investors (QFI),Mutual Funds, Alternative Investment Funds (AIF), Hedge Funds, Pension MARKET Instruments Equities Preference Shares, Shares with Differential Voting Rights (DVR) Corporate Debt :Non Convertible Debentures (NCD), Partly-and Fully-Convertible Debentures (PCD,FCD) NCDs with or without Call and Put Features Bonds, Foreign Currency Convertible Bonds (FCCB) Indian Depository Receipts (IDR) Derivatives.