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Difference between primary market and secondary market

Difference between primary market and secondary market

Difference between primary market and secondary market

Difference between primary market and secondary market. The most popular another term of “Primary market” is “Market in art valuation”. The primary market is the significance part of capital market. It usually deals with issuing of new securities. Primary markets make long term instruments through which corporate entities raise funds from the capital market. Secondary market also can be called as “aftermarket”. Basically, The secondary market is a place where investors buy and sell securities that they already own. Example of the secondary market such as the New York Stock Exchange – NYSE and the NASDAQ. read more

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Trading Systems in Stock Exchanges or Trading Arrangement

Trading Systems in Stock Exchanges or Trading Arrangement

Trading Systems in Stock Exchanges or Trading Arrangement

Trading Systems in Stock Exchanges or Trading Arrangement. Investors give orders to the broker or dealer to execute their transactions in the securities markets with a view to managing their portfolios. When an investor places an order with a broker/dealer, there are a number of arrangements from which he can choose. These arrangements include the type of orders placed, the cost of executing the trade, and the method of paying for the transaction. It is important to understand the different types of orders placed and executed in the securities markets.Trading Systems in Stock Exchanges or Trading Arrangement. read more

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Types of Brokers

Types of Brokers

Types of Brokers and Dealers

Types of Brokers. The trading activities done by the investors are executed by a security firm acting either a broker or a dealer. A firm acting in a brokerage capacity serves as an agent for investors by finding anther investor to take the other side of the transaction. For doing this job, the broker is compensated by a commission. A broker in the securities markets is an intermediary representing buyers and sellers in securities transactions. Types of Brokers discussed in below. read more

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Participants in the Securities Markets

Participants in the Securities Markets

Participants in the Securities Markets

Participants in the Securities Markets. People of different categories do engage in share trading on DSE. Share ownership in DSE has increased significantly during the last couple of years. The motivation of all the participants is presumed to be the same: to earn a return at least commensurate with the level of risk assumed.Participants in the Securities Markets. read more

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Basic functions of the secondary market

Basic Functions of the Secondary Market

Basic Functions of the Secondary Market

Basic functions of the secondary market. When securities are traded between investors, issuers no longer receive any cash proceeds. Investors usually initiate securities purchases in the secondary markets by calling a security brokerage house. After an account has been opened, a broker relays the client’s order to a dealer making a market in the securities the investors want. Since the secondary market involves the trading of securities initially sold in the primary market, it provides liquidity to the individuals who acquired these securities. read more

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Areas of Legal Coverage of SEC

Areas of Legal Coverage of SEC

Areas of Legal Coverage of SEC

Areas of Legal Coverage of SEC. The Securities and Exchange Commission was established under the Securities and Exchange Commission Act, 1993 to protect the interest of the investors in securities markets. Under the Act, Rules and Regulation there under, the Commission is supposed to perform the following functions:
i) to ensure the issuance of securities properly.
ii) to promote and regulate the Bangladesh capital markets.
iii) to regulate the activities of the stock exchanges.
iv) to register and regulate the activities of intermediaries like stock brokers/dealers, underwriters who are associated with the securities markets.
v) to monitor the activities of any collective scheme like mutual funds.
vi) to monitor the functions of all authorized self-regulatory organizations in the securities markets.
vii) to prohibit fraudulent and unfair activities in the securities markets.
viii) to prohibit insider trading in securities.
ix) to introduce and promote investor education and training regarding to the securities markets.
x) to conduct research and publication focusing different aspects of securities markets.
xi) to regulate substantial acquisition of shares or stocks and take-over the companies.
Beside the above functions, the Commission is assigned to call for information, undertake investigation and inspection, conduct inquiries and audit of any issuer or dealer of securities, the exchange and intermediaries and self-regulatory organizations in the securities markets. Thus, the work and strategies of the Commission are to protect investors, facilitate capital formation and inhibit fraud in the public offerings of securities. There are different Departments of SEC to perform the above functions. Being one of the Departments, Corporate Finance performs specific functions as:
a) raising of capital through initial public offerings (IPOs) and other form of equity debts.
b) supervising the functions of the stock exchanges.
c) regulating the listed companies and corporate disclosure.
d) regulating and disclosing the interest of directors, officers and major shareholders.
e) monitoring and supervising the utilization of fund procured through public issues and right issues.
f) making policies for share-repurchase and stock-splits.
Legal Services Department of the Commission performs the following functions:
a) to interpret laws, rules, orders and regulations.
b) to prosecute against the violators of the provisions Acts, Rules and Regulations.
c) to file cases against the accused persons and firms listed with the exchanges.

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Trends of Securities Markets in Bangladesh

Trends of Securities Markets in Bangladesh

Trends of Securities Markets in Bangladesh

Trends of Securities Markets in Bangladesh. Securities markets in Bangladesh were established about 48 years back in 1954. But formal trading began in 1956. Their activities are controlled and regulated by their Article of Association along with other government regulation subject to amendment from time to time. The Capital Issue Act, 1954, however, is one of the pieces of legislation governing the stock exchange in the country. The then only securities market in Bangladesh, the Dhaka Stock Exchange Ltd. suspended its trading and other administrative activities in 1971 after the independence of the country. Later on in 1976 it resumed its activities with the changes of government policies. Trends of Securities Markets in Bangladesh. read more

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Regulations of Stock Exchanges I Securities and Exchange Commission

Regulations of Stock Exchanges I Securities and Exchange Commission

Regulations of Stock Exchanges I Securities and Exchange Commission

Regulations of Stock Exchanges I Securities and Exchange Commission. In mixed economies like Bangladesh, the major part of domestic savings takes place in the private sector. The domestic saving rate is positively related to the level of income and its growth rate. To raise the saving rate one must understand the savings preferences and motives of the non- corporate sector of the country. Economic history of some developing countries suggests that, in the evolution of the financial structure, the non-corporate sector prefers to hold more than fifty per cent of its financial saving in the form of saving and fixed deposits.Regulations of Stock Exchanges I Securities and Exchange Commission. read more

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Primary Market and Secondary Market

Primary Market and Secondary Market

Primary Market and Secondary Market

Primary Market

Primary Market and Secondary Market. Primary market is a security market where new securities are being sold for the first time. It is a market where new issues of common stock, preferred stock or bonds are sold by government or firms to acquire new capital. A primary market is one in which a borrower issues new securities in exchange for cash from an investor. When securities are initially offered to the public, they are said to be to be sold in the primary market. Primary markets are those in which the sellers of the securities are also the issuers of the securities i.e. the issuing firms are the sellers of the securities. If the existing corporations issue additional shares, these would be sold in what is called the primary market. A primary issue occurs when the issuer gets the proceeds from an initial public offering (IPO) of stocks or bonds. An intermediary that finds out the buyers for IPOs is termed as investment banker.Primary Market and Secondary Market.
New treasury bills, stocks, or bonds all take place in the primary markets. The issuers of these securities receive cash from the buyers of these new securities, who in turn receive financial claims that previously did not exist. read more

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Scenario of Securities Markets in Bangladesh

Scenario of Securities Markets in Bangladesh

Scenario of Securities Markets in Bangladesh

Scenario of Securities Markets in Bangladesh . The securities market of Bangladesh started functioning with the reactivation of Dhaka Stock Exchange and Investment Corporation of Bangladesh ICB, the largest investment banker and underwriter, in 1976. Subsequently, in 1980s, National Credit Limited and Bangladesh Commerce and Investment Ltd. also started functioning in securities market activities in Bangladesh. DSE is the largest organized exchange at present in Bangladesh. After her independence in 1971, the then existing securities market (The Dhaka Stock Exchange) was abolished by the decision of the government. All the listed companies were converted into sector corporations. The controls were vested with government. New industrial policy was formulated that deterred the growth of new companies. But subsequently, it was found that the publicly owned enterprises increasingly became losing concerns. Private enterprises became to grow in 1976 and they started functioning side by side with the public sector enterprises. As a result of the revamping of the private sector, Dhaka Stock Exchange resumed in 1976 with 9 listed companies. Under denationalization policy in 1982, the government returned some of the jute and cotton mills to their previous owners. The dimension of privatization spirit results in the development of stock exchange. In 1980s, two private investment companies viz., National Credit Ltd. and Bangladesh Commerce and Investment Ltd. were permitted to function in the securities market activities along with Dhaka Stock Exchange and Investment Corporation of Bangladesh. At present National Credit Ltd. and Bangladesh Commerce and Investment Ltd. do not function in the capital market. However, the securities markets in the country are developing its operation in all respect and the second securities market in Chittagong started operation in 1995. Other individual firms came forward to help investors to take part in the stock exchange activities. However, in the context of Dhaka Stock Exchange, and Chittagong Stock Exchange are involved in bringing together the buyers and sellers of securities as per provisions of the Securities and Exchange Commission (SEC for short), Bangladesh. These two secondary markets take the responsibilities to meet the demands of buyers and sellers of the market by setting transactions. They have no authority to fix the price of the securities; rather they confirm the transactions in the market. Both the exchanges are conducted by Computerized Automated Trading System and are self-regulated. read more

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Role of Securities Market in Economic Development

Role of Securities Market in Economic Development

Role of Securities Market in Economic Development

Role of Securities Market in Economic Development. For rapid economic development both direct and indirect financing should be considered complementary. Efficient and effective operation of securities market is required to meet at least two basic requirements. First one is to support industrialization through savings mobilization, investment fund allocation and maturity transformation. Second one is to be safety and efficiency in discharging the above role. In a developing country like Bangladesh such conditions do not prevail due to the prevalence of informal credit markets. The recent development towards privatization seeks the need of efficient capital markets. It performs various functions in the process of economic development. The securities markets provide both savers and users with a broad spectrum of investment choices that can increase the level of both savings and investment. Securities markets can attract the investors as it offers higher return to the investment portfolio. This investment portfolio easily can draw more savers in the investment process that in turn involves institutions like brokerage house, investment banking, money investing firms etc. read more

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Status of Legal Authority of SEC

Status of Legal Authority of SEC

Status of Legal Authority of SEC

Status of Legal Authority of SEC. Securities and Exchange Commission was set up on June 8, 1993 under the Securities and Exchange Commission Act, 1993 with a view to protecting the interest of the investors and regulating securities markets in Bangladesh. For the development of securities markets and for the matter concerned therewith or incidental thereto, Securities and Exchange Commission is an independent, quasi-judicial agency of the government, the mission of which is to administer laws in the securities field and to protect investors and the public in securities transactions. Being a corporate body Securities and Exchange Commission has a perpetual succession and a common seal. The Commission consists of five members including chairman, the Chief Executive as follows: i) Chairman, ii) two full time members, iii) one member nominated by the Ministry of Finance not below the rank of Joint Secretary and iv) one member (amongst the Deputy Governor, B-Bank) nominated by Bangladesh Bank. One full times member will be the Vice-Chairman of the Commission. The Chairman and full time members shall be appointed for three years from the date of appointment. They shall be appointed amongst the persons having capability of dealing with the problems relating to the company matters and securities markets or have special knowledge and experience of law, finance, economics, accountancy, administration, discipline etc. Its staff consists of Executive Director, Director and Deputy Director of different Divisions, lawyers, accountants, security analysts, librarian and others. read more

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Classification of Securities

Classification of Securities

Classification of Securities

Classification of Securities. Before analyzing securities, it is essential for financial analysts, economists, business policymakers, security investors, academicians to study and develop an understanding of different classes of securities. Depending upon a wide variety of considerations, securities can be categorized into four broad groups viz; read more

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Sources of Finance for a Business

Sources of Finance for a Business

Sources of Finance for a Business

Sources of Finance for a Business. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk. For any businesses be it start-ups or established one, there are internal and external sources. read more

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Nature of Securities Markets

Nature of Securities Markets

Nature of Securities Markets

Nature of Securities Markets. The prime objective of a firm is to achieve the highest value for the shareholders. The firm’s management should examine sufficiently the process by which a firm’s market value is determined, in particular, the important role of financial markets in the process. The determination of share price is a combination of firm’s actions and reactions in the capital markets under the securities markets. Hence the securities markets make the flow of funds through the financial system. The borrowers of funds seek to augment their current income in order to acquire assets, and their refinancing to do so. Lenders have excess funds on which they wish to earn a return. The role of the securities markets is to facilitate the transfer of funds in the quickest and efficient manner. Capital markets are often referred to as the markets for long term and medium term funds. Capital market thus can be broadly classified into securities markets and non-securities markets. Securities market have in turn two segments; the market for primary issue, where the initial transactions between the users of funds and the suppliers of funds take place and the markets wherein secondary trading of issued securities take place in the secondary market. No member of the stock exchange, in this respect, is supposed to violate the provisions of Securities and Exchange Commission by manipulation of the securities prices. read more

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