NYSE Arca is a fully electronic exchange for growth-oriented enterprises. Listed companies can grow on NYSE Arca and transfer seamlessly to the NYSE once they meet the requirements. The all-electronic NYSE Arca is also a leading listing and trading platform for exchange-traded funds (ETFs), offering the largest public ETF liquidity pool in the U.S.
NYSE Arca was previously known as ArcaEx, an abbreviation of Archipelago Exchange, is a securities exchange on which both stocks and options are traded.
It is now a part of NYSE Euronext.
NYSE Arca Listing Standards
Initial Listing Standards
Distribution Minimums
Public Round-lot Holders 400
Publicly Held Shares 1,100,000
Closing Price per Share $5.00 for 90 consecutive trading days
Financial Minimums (based on US GAAP)
Market Capitalization $150 million
Market Value of Publicly Held Shares $45 million
Must meet at least two of the following four minimums:
Total Assets $75 million
Revenue (most recent year or 2 of last 3) $50 million
Shareholders’ Equity $50 million
Pre-tax earnings in last fiscal year Positive
Continued Listing Standards
Standard 1*
Public Round-lot Holders 400
Publicly Held Shares 1,100,000
Market Value of Publicly Held Shares $15 million
Shareholders’ Equity $15 million
Stock Price $1.00
Standard 2*
Public Round-lot Holders 400
Publicly Held Shares 1,100,000
Market Value of Publicly Held Shares $15 million
Market value of listed securities $50 million --or--
Total Assets and Total Revenue of $50 million each for the most recently completed fiscal year or two of the last three most recently completed years. $50 million each
Stock Price $1.00
*Must meet Standard One or Standard Two
http://www.nyse.com/regulation/listed/1155031724207.html
NYSE Listing Application Process
http://www.nyse.com/about/listed/1150366630075.html
Saturday, September 20, 2008
New York Stock Exchange Listing Requirements
NYSE Listing Standards
Domestic listing requirements call for minimum distribution of a company's shares within the United States. Distribution of shares can be attained through U.S. public offerings, acquisitions made in the U.S., or by other similar means. Note that there are alternatives to the round lot-holders and pre-tax earnings standards. For a more complete discussion of the minimum numerical standards applicable to U.S. companies, see Section 102.00 of the Listed Company Manual.
Minimum Quantitative Standards:
Distribution and Size Criteria
Round-lot Holders (A)
(number of holders of a unit
of trading - - generally 100 shares) 400 U.S.
or:
Total Shareholders (A) 2,200
...together with:
Average Monthly Trading Volume
(for the most recent six months) 100,000 shares
or:
Total Shareholders (A) 500
...together with:
Average Monthly Trading Volume
(for the most recent 12 months) 1,000,000 shares
Public Shares (B) 1,100,000 outstanding
Market Value of
Public Shares (B,C):
Public Companies
$100 million
IPOs, Spin-offs, Carve-outs and Affiliated
Companies
$60 million
A company must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing.
Minimum Quantitative Standards: Financial Criteria
Earnings
Aggregate pretax earnings (D) over the last three years $10 million
Minimum in each of the 2 most recent years $2 million
(must be positive amount in the third year)
or:
Valuation with Cash Flow
For Companies with not less than $500 million in Global market capitalization and $100 million in revenues during the most recent 12 months:
Aggregate Operating Cash Flow(E) over the last three years
(each year must report a positive amount)
$25 million
or:
Pure Valuation
Revenues for the Most Recent Fiscal Year $75 million
Global Market Capitalization (F)
$750 million
or:
Affiliated Company Original distribution requirements as noted; market capitalization of $500 million or greater; entity must have 12 months of operations (although it is not required to have been a separate entity for that long); parent or affiliated company is a listed company in good standing; and parent or affiliated company retains control of the entity or is under common control with the entity.
or:
REITs (less than 3 years operating history) (B)
Stockholders' equity $60 million
or:
Funds (less than 3 years operating history) (B)
Net assets $60 million
(A) The number of beneficial holders of stock held in "street name" will be considered in addition to the holders of record. The Exchange will make any necessary check of such holdings that are in the name of Exchange member organizations.
(B) In connection with initial public offerings, spin-offs and carve-outs the NYSE will accept an undertaking from the company's underwriter to ensure that the offering will meet or exceed the NYSE's standards.
(C) If a company either has a significant concentration of stock or changing market forces have adversely impacted the public market value of a company that otherwise would qualify for an Exchange listing, such that its public market value is no more than 10 percent below the minimum, the Exchange will consider stockholders' equity of $60 million or $100 million, as applicable, as an alternate measure of size.
(D) Pre-tax income is adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(E) Represents net cash provided by operating activities excluding the changes in working capital or in operating assets and liabilities, as adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(F) Average global market capitalization for already existing public companies is represented by the most recent six months of trading history. For IPOs, spin-offs and carve-outs, it is represented by the valuation of the company as represented by, in the case of a spin-off, the distribution ratio as priced, or, in the case of an IPO/carve-out, the as-priced offering in relation to the total company's capitalization.
Additional Considerations
In addition to meeting the minimum numerical standards listed above, there are other factors which must necessarily be considered. The company must be a going concern or be the successor to a going concern.
The Exchange has broad discretion regarding the listing of a company. The Exchange is committed to list only those companies that are suited for auction market trading and that have attained the status of being eligible for trading on the Exchange. Thus, the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination can be made even if the company meets the standards set forth above.
http://www.nyse.com/regulation/listed/1147474807344.html
FAQs on Section 303A (2004)
http://www.nyse.com/pdfs/section303Afaqs.pdf
Domestic listing requirements call for minimum distribution of a company's shares within the United States. Distribution of shares can be attained through U.S. public offerings, acquisitions made in the U.S., or by other similar means. Note that there are alternatives to the round lot-holders and pre-tax earnings standards. For a more complete discussion of the minimum numerical standards applicable to U.S. companies, see Section 102.00 of the Listed Company Manual.
Minimum Quantitative Standards:
Distribution and Size Criteria
Round-lot Holders (A)
(number of holders of a unit
of trading - - generally 100 shares) 400 U.S.
or:
Total Shareholders (A) 2,200
...together with:
Average Monthly Trading Volume
(for the most recent six months) 100,000 shares
or:
Total Shareholders (A) 500
...together with:
Average Monthly Trading Volume
(for the most recent 12 months) 1,000,000 shares
Public Shares (B) 1,100,000 outstanding
Market Value of
Public Shares (B,C):
Public Companies
$100 million
IPOs, Spin-offs, Carve-outs and Affiliated
Companies
$60 million
A company must have a closing price or, if listing in connection with an IPO, an IPO price per share of at least $4 at the time of initial listing.
Minimum Quantitative Standards: Financial Criteria
Earnings
Aggregate pretax earnings (D) over the last three years $10 million
Minimum in each of the 2 most recent years $2 million
(must be positive amount in the third year)
or:
Valuation with Cash Flow
For Companies with not less than $500 million in Global market capitalization and $100 million in revenues during the most recent 12 months:
Aggregate Operating Cash Flow(E) over the last three years
(each year must report a positive amount)
$25 million
or:
Pure Valuation
Revenues for the Most Recent Fiscal Year $75 million
Global Market Capitalization (F)
$750 million
or:
Affiliated Company Original distribution requirements as noted; market capitalization of $500 million or greater; entity must have 12 months of operations (although it is not required to have been a separate entity for that long); parent or affiliated company is a listed company in good standing; and parent or affiliated company retains control of the entity or is under common control with the entity.
or:
REITs (less than 3 years operating history) (B)
Stockholders' equity $60 million
or:
Funds (less than 3 years operating history) (B)
Net assets $60 million
(A) The number of beneficial holders of stock held in "street name" will be considered in addition to the holders of record. The Exchange will make any necessary check of such holdings that are in the name of Exchange member organizations.
(B) In connection with initial public offerings, spin-offs and carve-outs the NYSE will accept an undertaking from the company's underwriter to ensure that the offering will meet or exceed the NYSE's standards.
(C) If a company either has a significant concentration of stock or changing market forces have adversely impacted the public market value of a company that otherwise would qualify for an Exchange listing, such that its public market value is no more than 10 percent below the minimum, the Exchange will consider stockholders' equity of $60 million or $100 million, as applicable, as an alternate measure of size.
(D) Pre-tax income is adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(E) Represents net cash provided by operating activities excluding the changes in working capital or in operating assets and liabilities, as adjusted for various items as defined in Section 102.01C of the NYSE Listed Company Manual.
(F) Average global market capitalization for already existing public companies is represented by the most recent six months of trading history. For IPOs, spin-offs and carve-outs, it is represented by the valuation of the company as represented by, in the case of a spin-off, the distribution ratio as priced, or, in the case of an IPO/carve-out, the as-priced offering in relation to the total company's capitalization.
Additional Considerations
In addition to meeting the minimum numerical standards listed above, there are other factors which must necessarily be considered. The company must be a going concern or be the successor to a going concern.
The Exchange has broad discretion regarding the listing of a company. The Exchange is committed to list only those companies that are suited for auction market trading and that have attained the status of being eligible for trading on the Exchange. Thus, the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange. Such determination can be made even if the company meets the standards set forth above.
http://www.nyse.com/regulation/listed/1147474807344.html
FAQs on Section 303A (2004)
http://www.nyse.com/pdfs/section303Afaqs.pdf
U K Listing Authority
Publications
http://www.fsa.gov.uk/pubs/ukla/factsheet4.pdf
This factsheet replaces factsheet Issue No 4, published in October 2006. It contains new text about our new “template” passport request letter for firms and their advisers to use when they submit a passport request to us and other minor changes.
http://www.fsa.gov.uk/pubs/ukla/factsheet4.pdf
This factsheet replaces factsheet Issue No 4, published in October 2006. It contains new text about our new “template” passport request letter for firms and their advisers to use when they submit a passport request to us and other minor changes.
The Alternative Investment Market (AIM), the junior market of the London Stock Exchange
As of year-end 2005, about 1,400 companies were listed on AIM. Of these, 220 were non-UK companies from 25 countries -- the first Chinese listing took place in spring 2005. There are 29 US companies, of which 20 were added in 2005.
Through the first quarter of 2006, the pace of listing has accelerated and, barring malign macro-economic influences, 2006 promises to add more than the 500 companies admitted to the market in 2005. In particular, 2006 is likely to be a year in which a record number of US companies trek across the pond for a listing.
There are several excellent reasons for the high degree of interest in AIM today:
1. The institution itself and the companies who represent it have made serious efforts to spread the word in the US. Many recent industry conferences have featured a speaker talking about the merits of the market.
2. In a relatively constrained venture market, AIM offers an interesting alternative to a second or third round financing. This is particularly true if your market is not well served by proximity to venture capital. AIM is not geographically constrained by the “two hour rule” which governs the thinking of much of the venture world.
3. Entry is relatively straightforward which is reflected in its associated timing -- four months from beginning to end. A comparison might be the length of an average venture capital raise -- nine months.
4. Then there’s the light hand of post listing regulation and semi-annual interface with the City as opposed to the quarterly treadmill here in the US.
5. Finally, there’s the high likelihood that a small company’s voice will be heard on an ongoing basis, post-listing. You stand a better chance of not being relegated to the sidelines by much larger, better promoted companies. In fact, specialist financial PR firms are available at relatively modest cost to ensure that your voice is heard. This is probably the most compelling answer, regulation aside, to the ‘why not NASDAQ question’.
6. And, let’s not forget the buzz -- the stories that gather currency and fuel the fire. For example, did you hear about the company that listed on AIM with a 10 million pound raise at a valuation of over 45 million pounds with just a couple of patents and a good management team? (This last is true and unusual: a distant outlier from the norm where sales and profitability are evidenced.)
When AIM opened for business in 1995 it was the preserve of discretionary private client stockbrokers who afforded their clients the opportunity to roll the dice on young companies. Those investors are still there, but today AIM is predominantly an institutional investors market.
Most AIM companies have market capitalizations between $10 and $100 million. By contrast, the average size of a NASDAQ IPO last year was $290 million. Average proceeds from an AIM listing run around $10 million.
Getting Started: First Find a NOMAD
The first step is to contact a NOMAD.
A NOMAD is a nominated adviser whose role it is to introduce your company to the market, advising you on the admission itself and your ongoing obligations.
Since this is an ongoing relationship, it requires some care and comparison among alternatives before making a choice. You also will need a broker who will work with you to ensure an appropriate market for the company’s shares. Again, this relationship is ongoing. More often than not, the NOMAD and the broker will be from the same firm -- separated by the traditional Chinese wall.
AIM Listings Require a UK or International Presence
In thinking about suitability for a listing, it is important to think about the attractiveness of the company to a UK investor. Ideally, you will have a ‘UK story’ to tell -- a growing UK division ready to expand organically or acquisition plans to grow in the UK, perhaps to consolidate an industry. At least, you should have an international story -- “our biomass technology has been installed in Australia, three European countries, and we have plans to build in Asia.”
http://www.focusbankers.com/publications/newsletter_2006_may.asp
Through the first quarter of 2006, the pace of listing has accelerated and, barring malign macro-economic influences, 2006 promises to add more than the 500 companies admitted to the market in 2005. In particular, 2006 is likely to be a year in which a record number of US companies trek across the pond for a listing.
There are several excellent reasons for the high degree of interest in AIM today:
1. The institution itself and the companies who represent it have made serious efforts to spread the word in the US. Many recent industry conferences have featured a speaker talking about the merits of the market.
2. In a relatively constrained venture market, AIM offers an interesting alternative to a second or third round financing. This is particularly true if your market is not well served by proximity to venture capital. AIM is not geographically constrained by the “two hour rule” which governs the thinking of much of the venture world.
3. Entry is relatively straightforward which is reflected in its associated timing -- four months from beginning to end. A comparison might be the length of an average venture capital raise -- nine months.
4. Then there’s the light hand of post listing regulation and semi-annual interface with the City as opposed to the quarterly treadmill here in the US.
5. Finally, there’s the high likelihood that a small company’s voice will be heard on an ongoing basis, post-listing. You stand a better chance of not being relegated to the sidelines by much larger, better promoted companies. In fact, specialist financial PR firms are available at relatively modest cost to ensure that your voice is heard. This is probably the most compelling answer, regulation aside, to the ‘why not NASDAQ question’.
6. And, let’s not forget the buzz -- the stories that gather currency and fuel the fire. For example, did you hear about the company that listed on AIM with a 10 million pound raise at a valuation of over 45 million pounds with just a couple of patents and a good management team? (This last is true and unusual: a distant outlier from the norm where sales and profitability are evidenced.)
When AIM opened for business in 1995 it was the preserve of discretionary private client stockbrokers who afforded their clients the opportunity to roll the dice on young companies. Those investors are still there, but today AIM is predominantly an institutional investors market.
Most AIM companies have market capitalizations between $10 and $100 million. By contrast, the average size of a NASDAQ IPO last year was $290 million. Average proceeds from an AIM listing run around $10 million.
Getting Started: First Find a NOMAD
The first step is to contact a NOMAD.
A NOMAD is a nominated adviser whose role it is to introduce your company to the market, advising you on the admission itself and your ongoing obligations.
Since this is an ongoing relationship, it requires some care and comparison among alternatives before making a choice. You also will need a broker who will work with you to ensure an appropriate market for the company’s shares. Again, this relationship is ongoing. More often than not, the NOMAD and the broker will be from the same firm -- separated by the traditional Chinese wall.
AIM Listings Require a UK or International Presence
In thinking about suitability for a listing, it is important to think about the attractiveness of the company to a UK investor. Ideally, you will have a ‘UK story’ to tell -- a growing UK division ready to expand organically or acquisition plans to grow in the UK, perhaps to consolidate an industry. At least, you should have an international story -- “our biomass technology has been installed in Australia, three European countries, and we have plans to build in Asia.”
http://www.focusbankers.com/publications/newsletter_2006_may.asp
Friday, September 19, 2008
Assignments - 2008
Management of Investment Banks
1. Intermediaries - Business concept and revenue models
use some material collected
http://nrao-mgmt-smi-handbook.blogspot.com/search/label/Business%20concept
2. Strategy
Try to examine the strategy of Reliance Mutual Fund. It started late as a mutual fund and now it is number one mutual fund in the country. What is the strategy employed by it?
3. Marketing
Explore the how securities market intermediaries are implementing differentiation and positioning as explained by Kotler.
http://ibm-course.blogspot.com/2008/09/marketing-strategies-kotlers_15.html
4. Finance
Explore the issue of overleverage in investment banks
http://ibm-course.blogspot.com/2008/09/investment-banks-financing-problem.html
The Ultimate Hedge Fund CFO
http://www.cenpartners.com/images/HW_Ultimate_HF_CFO.pdf
http://hubpages.com/hub/An_Outline_for_Corporate_Financial_Managers
http://ibm-course.blogspot.com/2008/09/finance-division-planning-analysis.html
5. Management of Equity Research Department
Integrating ESG into Investment Research, a presentation by Goldman Sachs
http://ibm-course.blogspot.com/2008/09/integrating-esg-into-investment.html
6. Management of Fund Management Department
7. Management of Backoffice and IT systems
www.partad.ru/otchetn/cert/smi/falk.pps
http://www.ftfnews.com/files/File/2nd%20Annual%20Rec/Derrick.pdf
http://www.anshinsoft.com/files/Back%20Office%20Solutions%20-%20Case%20Study.pdf
http://www.digia.com/C2256FEF0043E9C1/vAttachments/Carnegie_en_080516/$file/Carnegie_en_080516.pdf
Clearing and Settlement of Derivatives By David Loader
http://books.google.com/books?id=86Pl3jYVN0MC&printsec=frontcover&dq=clearing+settlement&ei=SlLjSO6lB4f0sQP14Z2TBA&sig=ACfU3U2zgy63WODT4QU9-aIiw3sI1cpI7w
Clearing, Settlement, and Custody By David Loader
http://books.google.com/books?id=qpqnBki-aXoC&printsec=frontcover&dq=clearing+settlement&ei=n1PjSPGBLou8tAP-nNi0AQ&sig=ACfU3U3XgmF_ZunGcBZCCWeodPFtvHT-Dw
8. Risk Management and Compliance
Sources: Inspection and Compliance Manual of Bombay Stock Exchange Limited.
http://www.efinancialnews.com/content/2451892654
http://www.bankofny.com/htmlpages/data/whitepaper_hedgefundrisk.pdf
The New Generation of Risk Management for Hedge Funds and Private Equity Investments
By Lars Jaeger
Published by Euromoney Books, 2004
ISBN 1843741350, 9781843741350
462 pages
http://books.google.com/books?id=2w0bRIv7cygC
Investment Banking issues
Issues to be covered: Changes in regulation during the last two years, Volume of issues during the last two and half years. 2006-07, 07-08, April to August 2008(up to the date data is available), Significant issues that are to be highlighted.
1. IPO - equity
2. Right issues
3. FPOs
4. Private placement - debt
5. private placement - equity
6. International GDR or ADR - equity shares
7. FCCB issue
8. ECB - External commercial borrowings
8. Open offer due to takeover
1. Intermediaries - Business concept and revenue models
use some material collected
http://nrao-mgmt-smi-handbook.blogspot.com/search/label/Business%20concept
2. Strategy
Try to examine the strategy of Reliance Mutual Fund. It started late as a mutual fund and now it is number one mutual fund in the country. What is the strategy employed by it?
3. Marketing
Explore the how securities market intermediaries are implementing differentiation and positioning as explained by Kotler.
http://ibm-course.blogspot.com/2008/09/marketing-strategies-kotlers_15.html
4. Finance
Explore the issue of overleverage in investment banks
http://ibm-course.blogspot.com/2008/09/investment-banks-financing-problem.html
The Ultimate Hedge Fund CFO
http://www.cenpartners.com/images/HW_Ultimate_HF_CFO.pdf
http://hubpages.com/hub/An_Outline_for_Corporate_Financial_Managers
http://ibm-course.blogspot.com/2008/09/finance-division-planning-analysis.html
5. Management of Equity Research Department
Integrating ESG into Investment Research, a presentation by Goldman Sachs
http://ibm-course.blogspot.com/2008/09/integrating-esg-into-investment.html
6. Management of Fund Management Department
7. Management of Backoffice and IT systems
www.partad.ru/otchetn/cert/smi/falk.pps
http://www.ftfnews.com/files/File/2nd%20Annual%20Rec/Derrick.pdf
http://www.anshinsoft.com/files/Back%20Office%20Solutions%20-%20Case%20Study.pdf
http://www.digia.com/C2256FEF0043E9C1/vAttachments/Carnegie_en_080516/$file/Carnegie_en_080516.pdf
Clearing and Settlement of Derivatives By David Loader
http://books.google.com/books?id=86Pl3jYVN0MC&printsec=frontcover&dq=clearing+settlement&ei=SlLjSO6lB4f0sQP14Z2TBA&sig=ACfU3U2zgy63WODT4QU9-aIiw3sI1cpI7w
Clearing, Settlement, and Custody By David Loader
http://books.google.com/books?id=qpqnBki-aXoC&printsec=frontcover&dq=clearing+settlement&ei=n1PjSPGBLou8tAP-nNi0AQ&sig=ACfU3U3XgmF_ZunGcBZCCWeodPFtvHT-Dw
8. Risk Management and Compliance
Sources: Inspection and Compliance Manual of Bombay Stock Exchange Limited.
http://www.efinancialnews.com/content/2451892654
http://www.bankofny.com/htmlpages/data/whitepaper_hedgefundrisk.pdf
The New Generation of Risk Management for Hedge Funds and Private Equity Investments
By Lars Jaeger
Published by Euromoney Books, 2004
ISBN 1843741350, 9781843741350
462 pages
http://books.google.com/books?id=2w0bRIv7cygC
Investment Banking issues
Issues to be covered: Changes in regulation during the last two years, Volume of issues during the last two and half years. 2006-07, 07-08, April to August 2008(up to the date data is available), Significant issues that are to be highlighted.
1. IPO - equity
2. Right issues
3. FPOs
4. Private placement - debt
5. private placement - equity
6. International GDR or ADR - equity shares
7. FCCB issue
8. ECB - External commercial borrowings
8. Open offer due to takeover
Thursday, September 18, 2008
Primary Capital Market India
Primary market is the market place for fresh issuances of equity and long-term debt securities.
Each issue of securities in the primary market adds to the floating stock of such securities in the secondary market.
In India, equity issues are made by companies registered under the companies act 1956.
New issues of equity can be made through public offers or through private placements.
In India primary debt issues are made by companies incorporated under the companies act, pubic sector corporations, and local authorities incorporated under various statutes, and Central and state governments
Investment/Merchant bankers play an active role in the pubic offers made by companies and corporations.
In government bonds issues RBI conducts auctions.
Subscribers to government debt issues or auctions are banks and financial institutions, specialised debt and money market institutions like Discount and Finance House of India and Primary dealers.
Structure of the primary market
Public issues
Right issues
Private placements
Investors
Issuers
Instruments
Intermediaries
Institutional Investors in India
Public financial institutions
Companies Act, Section 4A has the provision for giving the status of ‘Public Financial Institution.’
IDBI, IFCI and ICICI were given this status.
Other institutions having this status
LIC
IDFC
ARCIL
GIC
TFCI
PFC
NHB
SIDBI
REC
IRFC
EXIM Bank
NABARD and
Several state financial corporations
Commercial banks
Commercial banks can make investments in corporate securities and are included in the definition of QIBs.
As per present law, the exposure limits of a bank to capital market is capped at 40% of its net worth as on march 31 of the previous financial year.
The overall ceiling applies to both funded and non-funded exposure.
Within this overall ceiling, the banks direct investment in shares, convertible bonds/debentures, units of equity oriented mutual funds and all exposures to venture capital funds should not exceed 20 per cent of its net worth.
Mutual funds
Domestic mutual in India are registered with SEBI under SEBI MF regulations 1996.
There are eligible QIBs.
FIIs
FIIs are non resident investors.
They invest in both primary and secondary markets.
FIIs include
Pension funds
Mutual funds
Investment trusts
Asset management companies
Nominee companies
Universities
Incorporate/institutional portfolio managers or their power of attorney holders
are also registered as FIIs.
The investments are regulated under SEBI FII regulations 1995.
A domestic asset management company or a portfolio manager which is registered with SEBI can also register itself as an FII to manage sub-accounts belonging to FIIs abroad.
The limit of FII holding in a company is 30%.
It can be increased to 40% if a company passes a special resolution to that effect.
FIIS require RBI approval also under FEMA.
Multilateral and Bilateral Development Financial Institutions
IFC an affiliate of IBRD (World Bank) invests in private sector companies.
ADB
KFW
Domestic V C Funds
SEBI VCF regulations
Foreign V C Funds
SEBI FVCF Regulations 2000.
Two types
Foreign venture capital investors investing in domestic VC funds.
FVCIs directly investing in companies
State Industrial Development Corporations
SIDC invest in equity securities of companies to promote companies in their states.
Insurance Companies
IRDA guidelines for investment
Provident Funds
Governed by PF Act 1952 and 1925
PF having minimum corpus size of Rs. 25 crore is a QIB.
Retail investors
One who puts in an application of less than Rs. 1,00,000 in a public issue.
High Networth Investors
Individual investor who is not a retail investors, investment companies, and other companies
Investment routes for Institutional Investors.
Subscribing to public issues
Taking up unsubscribed portions or undersubscriptions to public issues
Taking up unsubscribed portions in right issues
Subscribing to private placements
Investment in unlisted companies
Primary Market Intermediaries
Issue managers,
Underwriters,
Brokers
Registrars
Bankers
Support Services
Growth and Performance
Policy changes
Performance
Equity market
Debt market
GDRs/ADRs/Converible bonds
Each issue of securities in the primary market adds to the floating stock of such securities in the secondary market.
In India, equity issues are made by companies registered under the companies act 1956.
New issues of equity can be made through public offers or through private placements.
In India primary debt issues are made by companies incorporated under the companies act, pubic sector corporations, and local authorities incorporated under various statutes, and Central and state governments
Investment/Merchant bankers play an active role in the pubic offers made by companies and corporations.
In government bonds issues RBI conducts auctions.
Subscribers to government debt issues or auctions are banks and financial institutions, specialised debt and money market institutions like Discount and Finance House of India and Primary dealers.
Structure of the primary market
Public issues
Right issues
Private placements
Investors
Issuers
Instruments
Intermediaries
Institutional Investors in India
Public financial institutions
Companies Act, Section 4A has the provision for giving the status of ‘Public Financial Institution.’
IDBI, IFCI and ICICI were given this status.
Other institutions having this status
LIC
IDFC
ARCIL
GIC
TFCI
PFC
NHB
SIDBI
REC
IRFC
EXIM Bank
NABARD and
Several state financial corporations
Commercial banks
Commercial banks can make investments in corporate securities and are included in the definition of QIBs.
As per present law, the exposure limits of a bank to capital market is capped at 40% of its net worth as on march 31 of the previous financial year.
The overall ceiling applies to both funded and non-funded exposure.
Within this overall ceiling, the banks direct investment in shares, convertible bonds/debentures, units of equity oriented mutual funds and all exposures to venture capital funds should not exceed 20 per cent of its net worth.
Mutual funds
Domestic mutual in India are registered with SEBI under SEBI MF regulations 1996.
There are eligible QIBs.
FIIs
FIIs are non resident investors.
They invest in both primary and secondary markets.
FIIs include
Pension funds
Mutual funds
Investment trusts
Asset management companies
Nominee companies
Universities
Incorporate/institutional portfolio managers or their power of attorney holders
are also registered as FIIs.
The investments are regulated under SEBI FII regulations 1995.
A domestic asset management company or a portfolio manager which is registered with SEBI can also register itself as an FII to manage sub-accounts belonging to FIIs abroad.
The limit of FII holding in a company is 30%.
It can be increased to 40% if a company passes a special resolution to that effect.
FIIS require RBI approval also under FEMA.
Multilateral and Bilateral Development Financial Institutions
IFC an affiliate of IBRD (World Bank) invests in private sector companies.
ADB
KFW
Domestic V C Funds
SEBI VCF regulations
Foreign V C Funds
SEBI FVCF Regulations 2000.
Two types
Foreign venture capital investors investing in domestic VC funds.
FVCIs directly investing in companies
State Industrial Development Corporations
SIDC invest in equity securities of companies to promote companies in their states.
Insurance Companies
IRDA guidelines for investment
Provident Funds
Governed by PF Act 1952 and 1925
PF having minimum corpus size of Rs. 25 crore is a QIB.
Retail investors
One who puts in an application of less than Rs. 1,00,000 in a public issue.
High Networth Investors
Individual investor who is not a retail investors, investment companies, and other companies
Investment routes for Institutional Investors.
Subscribing to public issues
Taking up unsubscribed portions or undersubscriptions to public issues
Taking up unsubscribed portions in right issues
Subscribing to private placements
Investment in unlisted companies
Primary Market Intermediaries
Issue managers,
Underwriters,
Brokers
Registrars
Bankers
Support Services
Growth and Performance
Policy changes
Performance
Equity market
Debt market
GDRs/ADRs/Converible bonds
4A. Public financial institutions - Companies Act 1956 India
4A. Public financial institutions
1[4A. Public financial institutions.-
(1) Each of the financial institutions specified in this sub-section shall be regarded, for the purposes of this Act, as a public financial institution, namely:-
(i) the Industrial Credit and Investment Corporation of India Limited, a company formed and registered under the Indian Companies Act, 1913 (7 of 1913);
(ii) the Industrial Finance Corporation of India, established under section 3 of the Industrial Finance Corporation Act, 1948 (7 of 1948);
(iii) the Industrial Development Bank of India, established under section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964);
(iv) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);
(v) the Unit Trust of India, established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963);
2[(vi) the Infrastructure Development Finance Company Limited, a company formed and registered under this Act.]
3[(vii) the securitisation company or reconstruction company which has obtained a certificate of registration under sub-section (4) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.]
(2) Subject to the provisions of sub-section (1) the Central Government may, by notification in the Official Gazette, specify such other institution as it may think fit to be a public financial institution:
Provided that no institution shall be so specified unless-
(i) it has been established or constituted by or under any Central Act, or
(ii) not less than fifty-one per cent, of the paid-up share capital of such institution is held or controlled by the Central Government.]
1. Ins. by Act 41 of 1974, sec. 2 (w.e.f. 1-2-1975).
2. Ins. by Act 21 of 1999, sec. 2 (w.r.e.f. 31-10-1998).
3. Ins. by Act 54 of 2002, sec. 41 and Sch. (w.e.f. 21-6-2002).
1[4A. Public financial institutions.-
(1) Each of the financial institutions specified in this sub-section shall be regarded, for the purposes of this Act, as a public financial institution, namely:-
(i) the Industrial Credit and Investment Corporation of India Limited, a company formed and registered under the Indian Companies Act, 1913 (7 of 1913);
(ii) the Industrial Finance Corporation of India, established under section 3 of the Industrial Finance Corporation Act, 1948 (7 of 1948);
(iii) the Industrial Development Bank of India, established under section 3 of the Industrial Development Bank of India Act, 1964 (18 of 1964);
(iv) the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);
(v) the Unit Trust of India, established under section 3 of the Unit Trust of India Act, 1963 (52 of 1963);
2[(vi) the Infrastructure Development Finance Company Limited, a company formed and registered under this Act.]
3[(vii) the securitisation company or reconstruction company which has obtained a certificate of registration under sub-section (4) of section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.]
(2) Subject to the provisions of sub-section (1) the Central Government may, by notification in the Official Gazette, specify such other institution as it may think fit to be a public financial institution:
Provided that no institution shall be so specified unless-
(i) it has been established or constituted by or under any Central Act, or
(ii) not less than fifty-one per cent, of the paid-up share capital of such institution is held or controlled by the Central Government.]
1. Ins. by Act 41 of 1974, sec. 2 (w.e.f. 1-2-1975).
2. Ins. by Act 21 of 1999, sec. 2 (w.r.e.f. 31-10-1998).
3. Ins. by Act 54 of 2002, sec. 41 and Sch. (w.e.f. 21-6-2002).
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