E. Gordon

1 E. , Professor and Head,Dept. of Commerce, College, K. , , Principal, College, Director, Management Studies,Sri Kaliswari College, MARKETSANDSERVICESMUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR KOLKATA AuthorsNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or byany means, electronic, mechanical, photocopying, recording and/or otherwise without the prior writtenpermission of the Edition:1999 Reprint:2001 Second Revised Edition.

2 2003 Third Revised Edition:2006 Fourth Revised Edition:2007 Fifth Revised Edition:2008 Sixth Revised Edition:2010 Seventh Revised Edition:2011 Eighth Revised Edition:2012 Reprint:2013 Ninth Revised Edition:2014 Tenth Revised Edition:2016 Published by:Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd., Ramdoot , Dr. Bhalerao Marg, Girgaon, Mumbai - 400 : 022-23860170/23863863, Fax: 022-23877178E-mail: Website: Offices:New Delhi: Pooja Apartments , 4-B, Murari Lal Street, Ansari Road, Darya Ganj,New Delhi - 110 002.

3 Phone: 011-23270392, 23278631;Fax: 011-23256286 Nagpur:Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 : 0712-2738731, 3296733; Telefax: 0712-2721215 Bengaluru:Plot No. 91-33, 2nd Main Road Seshadripuram, Behind Nataraja Theatre,Bengaluru-560020. Phone: 08041138821, 9379847017, 9379847005 Hyderabad:No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham,Kachiguda, Hyderabad - 500 027. Phone: 040-27560041, 27550139;Mobile: 09390905282 Chennai:New-20, Old-59, Thirumalai Pillai Road, T. Nagar, Chennai - 600 : 9380460419 Pune:First Floor, "Laksha" Apartment, No.

4 527, Mehunpura, Shaniwarpeth,(Near Prabhat Theatre), Pune - 411 030. Phone: 020-24496323/24496333;Mobile: 09370579333 Lucknow:House No 731, Shekhupura Colony, Near Convent School, Aliganj,Lucknow - 226 022. Mobile: 09307501549 Ahmedabad:114, SHAIL , 1st Floor, Opp. Madhu Sudan House, Road, NavrangPura,Ahmedabad - 380 009. Phone: 079-26560126;Mobile: 09377088847 Ernakulam:39/176 (New No: 60/251) 1st Floor, Karikkamuri Road, Ernakulam,Kochi- 682011, Phone: 0484-2378012, 2378016; Mobile: 09344199799 Bhubaneswar:5 Station Square, Bhubaneswar - 751 001 (Odisha).

5 Phone: 0674-2532129,Mobile: 09338746007 Kolkata:108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,Kolkata - 700 010, Phone: 033-32449649,Mobile: 09883055590, 07439040301 DTP by:Sudhakar Shetty (HPH Pvt. Ltd., Bhandup)Printed at:Geetanjali Press Pvt. Ltd., Nagpur, on behalf of TO THE TENTH REVISED EDITIONWe have great pleasure in presenting this tenth revised edition in the handsof our esteemed measures have been taken in recent times by regulatory bodies sothat the financial markets may function efficiently and in a transparent mannerso as to protect the interest of all categories of investors.

6 Again, a variety ofinnovative financial products and services have been introduced with thebacking of appropriate legistative measures to make the financial markets activeand vibrant. All these aspects have been duly covered in this edition. Specialattention has been given to provide the latest data in all chapters. Recentdevelopments like reforms introduced in both primary and secondary marketsto give a wider retail base and greater liquidity, recent reforms in the derivativemarkets etc., establishment of Financial Markets Regulation Departmentrebranding etc.

7 NSE indices, etc. have been added to this edition to make it up-to-date. It is hoped that the present edition will fully meet the requirements ofstudents and are indebted to all the members of the Himalaya Publishing HousePvt. Ltd. for bringing out this edition in for improving the content of this book are most GordonMay, 2016K. NatarajanPREFACE TO THE FIRST EDITIONC onsequent upon the restructuring of commerce and managementcurricula by many Universities and autonomous colleges, many new subjectson thrust areas have recently been introduced.

8 One such broad area is theFINANCIAL SECTOR which comprises of financial markets, financialinstitutions and financial markets have been increasingly influenced in recent times byfinancial innovations in terms of products and instruments, adoption of moderntechnologies, opening up of the market to the global economy, streamlining ofthe regulatory framework and so on. Similarly, many innovative financialproducts are introduced to cater to the varied requirements of both corporateand individual customers. In the aftermath of this changing financial scenario,students of commerce and management are badly in need of a suitable textbookcovering all these aspects incorporating the latest developments in the the imperative need to bring out a suitable book on FinancialMarkets and Services tailored to meet the specific requirements of studentsof many universities, a modest attempt has been made to present this editionin the hands of the academic community.

9 The speciality of this volume is thatall matters are presented in a lucid manner and in simple language,notwithstanding the technical nature of the subject. All latest developmentshave been covered and above all it is most student-friendly. We are confidentthat this book will serve as a beacon light to the student community who pursuehigher education in the discipline of commerce and the convenience of students, the present work is divided into twosections Section A dealing with financial markets and Section B dealing withfinancial services.

10 This book owes its consummation to various distinguishedpersonalities who have expressed their views on this subject in different books,journals, magazines and are greatly indebted to all our well-wishers for their constantencouragement and valuable suggestions. Our publishers deserve special thanksfor their wholehearted support and cooperation in bringing out this editionelegantly and in comments and constructive suggestions for the improvement ofthis book are most welcome and will be greatly wish to express thanks to Mr. K. Sivadasan, Area Representative andmembers of Himalaya Publishing House Pvt.