Otcei free essay sample

Over The Counter Exchange of India(OTCEl) Over The Counter Exchange of India(OTCEl) was incorporated in October 1990 under Section 25 of the Companies Act, 1956 with the objective of setting up a national, ringless, screen-based, automated stock exchange. It is recognised as a stock exchange under Section 4 of the Securities Contracts (Regulations) Act, 1956. It was set up to provide investors with a convenient, efficient and transparent platform for dealing in shares and stocks; and to help enterprising promoters set up new projects or expand. their activities, by providing them an opportunity to raise capital from the apital market in a cost-effective manner. Trading in securities takes place through OTCEls network of members and dealers spanning the length and breadth of India. OTCEI was promoted by a consortium of financial institutions including : Â  Unit Trust of India. Â  Industrial Credit and Investment Corporation of India. We will write a custom essay sample on Otcei or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Industrial Development Bank of India. Industrial Finance Corporation of India. Life Insurance Corporation of India. Â  General Insurance Corporation and its subsidiaries.SBI Capital Markets Limited. Â  Canbank Financial Services Ltd. Salient Features of OTCEI: 1 . Ringless and Screen-based Trading: The OTCEI was the first stock exchange to introduce automated, screen-based trading in place of conventional trading ring found in other stock exchanges. The network of on-line computers provides all relevant information to the market participants on their computer screens. This allows them the luxury of executing their deals in the comfort of their own offices. 2. Sponsorship: All the companies seeking listing on OTCE have to approach one of the members of the OTCEI for acting as the sponsor to the issue. The sponsor makes a thorough appraisal of the project; as by entering into the sponsorship agreement, the sponsor is committed to making market in that scrip (giving a buy sell quote) for a minimum period of 18 months. sponsorship ensures quality of the companies and enhance liquidity for the scrips listed on OTCEI. 3. Transparency of Transactions: The investor can view the quotations on the computer screen at the dealers office before placing the order. The OTCEI system ensures that trades are done at the best prevailing quotation in the market. The confirmation slip/trading document enerated by the computers gives the exact price at which the deals has been done and the brokerage charged. 4. Liquidity through Market Making: The sponsor- member is required to give two-way quotes(buy and sell) for the scrip for 18 months from commencement of trading. Besides the compulsory market maker, there is an additional market maker giving two way quotes for the scrip. The idea is to create an environment of competition among market makers to produce efficient pricing and narrow spreads between buy and sell quotations. 5. Listing of Small and Medium- sized Companies: Many small and medium-sized companies were not able to enter