Is OTCEI a recognised Stock Exchange?
The Government has conferred it the status of a ‘recognised stock exchange’ under Sec. 4 of the Securities Contracts Regulation Act. Consequently, companies listed with OTCEI will practically be at par with companies listed on any stock exchange in the country.
What does OTCEI mean?
The OTC Exchange Of India ( OTCEI ), also known as the Over-the-Counter Exchange of India, was based in Mumbai, Maharashtra. It is under the ownership of Ministry of Finance , Government of India. It is India's first exchange for small companies, as well as the first screen-based nationwide stock exchange in India.
What is market making in OTCEI?
Market making is a unique concept of OTCEI. The other player on OTCEI is the custodian or registrar a safe keeper of share certificates. The OTCEI provides a liquid cash market for retail investors with a T+3 rolling settlement systems and no problem of bad of short deliveries.
What is the difference between conventional stock exchange and OTCEI?
The primary objective of conventional stock exchange is being the improvement of Capital Market. But Primary objective of OTCEI is to help small companies to raise funds.
What is OTCEI in trading?
Definition of OTCEI. Over The Counter Exchange of India (OTCEI) can be defined as a stock exchange without a proper trading floor. All stock exchange have a specific place for trading their securities through counters. But the OTCEI is connected through a computer network and the transactions are taking place through computer operations.
What is OTCEI promotion?
Promotion of OTCEI: OTCEI has been incorporated under Section 25 of the Companies Act. As a result of which the word ‘Limited’ need not be used since it is promoted for a common cause of promoting the interest of small and medium companies. This privilege has been given to the company by the Central Government.
What are the special features of OTCEI?
Special features of OTCEI: 1. Use of Modern technology: Unlike other stock market , OTCEI does not have any special counters and it is an electronically operated stock exchange. 2. Restrictions for other stocks: Stocks and shares listed in other stock exchanges will not be listed in the OTCEI and similarly, stocks listed in OTCEI will not be listed ...
How long do companies have to run to get on the stock exchange in India?
The companies must have run for minimum three years and they must have earned profit and the minimum capital requirement for listing is also quite high.
What is OTCeI in India?
OTCEI is promoted by the Unit Trust of India, the Industrial Credit and Investment Corporation of India, the Industrial Development Bank of India, the Industrial Finance Corporation of India, and other institutions, and is a recognised stock exchange under the SCR Act.
What is OTC exchange?
It is India's first exchange for small companies, as well as the first screen-based nationwide stock exchange in India. OTCEI was set up to access high-technology enterprising promoters in raising finance for new product development in a cost-effective manner and to provide a transparent and efficient trading system to investors.
When was the OTC exchange established?
The OTC Exchange Of India was founded in 1990 under the Companies Act 1956 and was recognized by the Securities Contracts Regulation Act, 1956 as a stock exchange. The OTCEI is no longer a functional exchange as the same has been de-recognised by SEBI vide its order dated 31 Mar 2015.
What is OTCEI in finance?
1. Provides a method of raising funds through capital market instruments which are priced fairly. In OTCEI the company will be able to negotiate the issue price with the sponsors who will market the issue.
What is OTCEI trading?
1. First e-trading only exchange in India:- OTCEI is the first exchange to introduce nationwide computerized screen-based trading. The entire trading occurs through electronic networks and thus available across the country.
What is OTCei in stock market?
OTCEI is a computer based screen system exhibiting the quotations of the scrips of the companies of different industries of the nation.
What is OTCEI in finance?
1. Provides method of raising funds through capital market instruments which are priced fairly. In OTCEI the company will be able to negotiate the issue price with the sponsors who will market the issue.
How many centers does OTCeI have?
OTCEI has been linked to 42 centers all over India through computers. OTCEI operates with the use of INET the country’s first public switched data network and Telex – the first nationwide information dissemination network and RABMN – Remote Area Business Message Network.
How long does it take to settle a scrip on OTC?
On the OTC Exchange, the transaction is settled within a period of 7 days. Further, the investor actually gets the delivery of the scrip or the payment for the scrip sold within 7 days.
When did the OTCEI come into existence?
The existing stock exchanges were insufficient in infrastructure facilities to cope up with the new situation. In order to overcome the pitfalls and loop-holes of the existing system, a new institution called OTCEI came into existence in 1990 and started functioning in 1992.
Do investors have to submit deeds to OTCEI?
Investors will be required to submit transfer deeds to any of the OTCEI counters for transferring the shares in their names. Shares will be automatically transferred in the name of the investors, if the consolidated holding of the shares does not exceed 0.5% of the issued capital of the company.
What is OTCEI in India?
Over the counter exchange of India or OTCEI which is commonly known as an electronic stock exchange in India. Also, it consists of small and medium-sized companies that aim to get access to capital markets. So, this is similar to electronic exchanges in the USA in the form of Nasdaq. Also, there is no central place for exchange.
When was OTCei founded?
History of OTCEI. OTCEI is based out in Mumbai, Maharashtra and was founded in 1990. It was formed under the companies act of 1956 and recognized by securities regulation act of 1956. For small companies, it was the first exchange along with the first screen based nationwide stock exchange.
What is OTC trading?
Also, in the US, OTC refers to other financial instruments like derivatives which they trade via the dealer network.
Why do investors prefer BRICS?
Many investors prefer BRICS as a source for their foreign expansion policy because of low labor costs.
Why was the first exchange in India?
Additionally, it was the first exchange in India to bring market makers. These are the firms that hold shares in companies and thereby facilitate trading securities by buying and selling.
Is the Nasdaq an OTC exchange?
Also, Nasdaq is a dealer network, but they are not classified as OTC. So, Nasdaq is considered now as a stock exchange. Currently, there are very few differences among the OTC networks and traditional exchanges. Also, this is because of the technology that allows for improvements in electronic trading and quotation.
Is OTCeI a stock exchange?
OTCEI was promoted by the industrial development bank of India, unit trust of India, the industrial investment and credit corporation of India, and other Institutions that are recognized stock exchange under the SCR act. Currently, OTCEI is no longer functionally exchange as it has been derecognized by the SEBI on the order dated 31st March 2015.
What is OTCEI in securities?
OTCEI is intended to provide easy marketability and better liquidity of securities to an investor. Besides, it also offers facilities for transfer of shares listed here. The investor can submit the transfer documents at any of the OTCEI counters in the country.
When did the OTCEI change its guidelines?
To facilitate offers for sale of bought-out deals, OTCEI changed its guidelines in January 1996. The revised guideline did away with the requirement of making an offer for sale of the entire bought-out deal to the public, except the market making inventory.
How long does a sponsor have to be on the OTCEI?
OTCEI requires such sponsor members to act as ‘market makers’ in that scrip for at least 3 years and also to appoint an additional market maker for that scrip for a period of at least one year. SEBI relaxed norms for listing on the OTCEI during March 1995.
Why are securities markets multi-tiered?
Securities markets in developed countries are multi-tiered with an element of in-built competition among st various layers. This prevents monopolisation of securities exchange and makes the markets more efficient. In India, however, the situation has been altogether different because of the virtual monopoly enjoyed by stock exchanges till recently.
How much of the public offer should be held by OTCEI?
The new guidelines also state that the OTCEI- sponsor of these companies should hold at least 10 per cent of the public offer as market making inventory as against 5 per cent for other companies. However, till December 1996, no companies engaged in finance or leasing services was listed on the OTCEI.
When did India start multi tier securities exchange?
The multi-tier securities exchange model was adopted in our country in October 1990 with the establishment of the Over the Counter Exchange of India (OTCEI). The object of the OTCEI “is to provide an alternate market for the securities of smaller companies, public-sector companies, closely-held companies desirous of listing, etc.
1. Trading Activities
Trading is done on Floor in conventional stock exchange, whereas in OTCEI, the trading is done through network or computer system.
2. Minimum paid up capital
For listing of companies, minimum paid up capital is Rs. 5 crores. But the minimum paid up capital in case of OTCEI is 2 Crores only.
3. Membership restrictions
Membership is restricted to region or location in a regular stock exchange, whereas the membership in OTCEI is spread throughout the country.
4. Securities traded
In a conventional stock exchange securities belonging to that region and other permitted securities are traded. But in OTCEI, securities of all companies throughout India are traded.
5. Need for market maker
Need for a market maker depends upon the exchange in a regular stock exchange. But market maker is a must for securities of each company in OTCEI.
6. Settlement days
Settlement of Transactions are done on the basis of T+5 days in regular stock exchange. But in OTCEI, settlements are done as per its rules.
7. Primary Objective
The primary objective of conventional stock exchange is being the improvement of Capital Market. But Primary objective of OTCEI is to help small companies to raise funds.
