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O VER TH E CO UN TER EXCH AN G E O F IN D IA

(O TCEI)

Promoted jointly-

ICICI, UTI, IDBI, SBI Capital


Market
Ltd., GIC, LIC, Canar Bank
Financial
Services Ltd.
Recognized

as
Exchange-1989,

Stock

O TC EI
OTCEI was incorporated in 1990
as a Section 25 company under the

Companies Act 1956 and


is recognized as a stock exchange

under Section 4 of the Securities


Contracts Regulation Act, 1956.

O TC EI
The Exchange was set up
1. to aid enterprising promoters in raising

finance for new projects in a cost


effective manner
2. and

to provide investors with


a)transparent
b) efficient mode of trading.

O TC EI
Modelled along the lines of the

NASDAQ market of USA,


OTCEI introduced many novel concepts

to the Indian capital markets


* screen-based nationwide trading,
* sponsorship of companies,
* market making and scripless trading.

O TC EI
As a measure of success of these

efforts, the Exchange today has 115


listings
OTCEI has assisted in providing

capital for enterprises that have


gone on to build successful brands
for themselves like VIP Advanta,
Sonora Tiles & Brilliant mineral

O TC EI
In raising finance

in most cost-effective manner


Providing Investors with a

Convenient,
Transparent,
Efficient
Venue for capital market
investment

O TC EI
Incorporated as per The

Companies Act, from Sept,1990.


Based on a model of National

Association of Securuties
Dealers Automated Quotations
of USA.
Commenced Operations from

1992

O TC EI
A Two-tier Market in

India
To provide access to

Small and Medium


companies to Capital
Market

O TC EI
First to Introduce:

Ringless,
Electronic National Exchange
Screen-based trading system
Listing entirely new set-up

Companies

O TC EI
Who would find OTCEI helpful:
high-technology enterprises
companies with high growth potential
companies focused on new product
development .
entrepreneurs seeking finance for specific
business projects
OTCEI, with its entry guidelines and eligibility requirements
tailored for such innovative and growth oriented companies, is
ideally positioned as the preferred route for raising funds
through Initial Public Offer (IPOs) or primary issues, in this
country

O TC EI
Companies allowed to

listing with as low as Rs


30 lakh paid-up capital
Investors interactions

with computer with their


Price quotations

O ur Products

Sonora tiles, VIP Advanta,


Brilliant Mineral Water &
the OTC Exchange?
Just what is the connection between these
products and the OTC Exchange, you may ask.
The answer is that these are popular products

made by companies listed on the OTC


Exchange of India (OTCEI).

O ur Products
OTCEI is the primary Stock Exchange

for these securities.


The Company issuing the security

enters into an agreement to comply


with all the regulations of the Stock
Exchange.
The securities can be bought or sold

through our brokers (Members/

Investors G rievances
OTCEI in 1993, became the first
Exchange in the country

Chennai, Delhi, Kolkata and Mumbai.

The IGCs handle complaints/ queries


from investors against
*Brokers and/or
*Companies listed on the OTCEI.

Investors G rievances
Common Grievances
Company-related
Non-receipt of securities sent for transfer
Non-receipt of corporate benefits,

e.g.dividends/interest/bonus/rights,etc.
Non-receipt of share certificates in exchange for
counter receipts
Broker- related
Non-rectification of documents returned as bad
delivery by the broker
Non-receipt of funds/ securities on sale/
purchase

P rocedure for G rievance


R edresal
OTCEI tries to resolve complaints

received from investors at the earliest.


Complaint given a unique reference

number, investor is sent an


acknowledgment
Complaint forwarded to

Company/Registrar/Broker, who are


asked to reply within 21 days

Investors G rievances
Investor Compensation Fund
OTCEI set up the I C Fund in 1995 to
compensate the claims of investors
and protect them in case of default
or loss of security.

Investor Claims
Claims can be lodged by any class of investors

for any pecuniary loss suffered on account of


default or non-performance by any constituent
of OTCEI.

Notification of Claims -within 30 days

Investors G rievances
Conversion of Counter Receipt

(CR) to Certificates
OTCEI ceased trading in CRs from 1st
March 1999. The Companies listed on
the Exchange are in the process of
converting the CR to share certificates.
All investors are advised to exchange
their CR into certificates.

Investors G rievances
Please write to following email address for

redressal of OSL grievances:


e-mail us at : investor.osl@otcei.net
Mumbai

92, Maker Towers "F"


Cuffe Parade
Mumbai 400 005
Phone : (022) 67480800/22188164/22188165
Fax : (022) - 67480832/22188503

O TCEIO F IN D IA
Adopts two-ways public offer

* Direct Offer -Offering directly


* Indirect Offer-through
Sponsors
Allows trading in some listed

companies on other stock exchanges

O TC EI Trading
-3 types
1. Listed
2. Permitted
3. Initiated
Companies

O TC EI Trading
Starting of trading

Debt instruments-1993
OTCEI has two major Players

* Members.
* Dealers(allowed to trade in
securities in their
own Account
or on behalf of their
Clients)

O TC EI Trading
They are allowed to perform

*. Broking
*. Trading on their own account.
*. Market Making
Other Players: Registrar/Custodian

O TC EI Trading
Members allowed to be engaged in

Sponsorship, Broker for Securities,


Make Market in Scripts

O TC EI Trading

Who are Members?


Fin Instutions,
Merchant Bankers,
Venture Capital Funds,
NBFCs with minimum of 2.5 crore
networth

Dealers are not allowed for

Sponsorship

O TCEIO F IN D IA
Sponsor is indispensible in OTCEI, as he

performs*
*
*
*
*

Appraising Management Capability,


Financial &Technological Viability of a Project,
Valuing, Offering the Scrip to the Public,
Listing the Scrip,
Doing compulsory Market Making, of the
Scripts

Sponsors arrangement of at least one or more

Market Maker(Merchant Bankers) for the period


of one year for offering Buy and Sell Quotes

M arket M akers
Market Making is Unique

for OTCEI
They are Merchant

Bankers
Willing to Make Market

M arket M akers
By Continuous offering of Buy and

Sell quotes
Act as Dealers-cum-Stockist
Dont charge any brokerage
Make Profit by Spread between

Bid and Offer Price

TRAD IN G & D O CU M EN TS
Counter Receipts
Sale Confirmation Slip
Application Acknowledgement

Slip
Transfer Deed

Brokers
The Exchange has three types of intermediaries called:-

Members,
Dealers and
Sponsors,
who contribute to the Exchange's activities by trading and

enabling listing of companies on the Exchange.

Members and Dealers may carry out the activities of


trading, underwriting, market making and participation in
bought out deals,

But Dealers cannot sponsor an issue for listing.

* Sponsors can perform the function of sponsorship of


issues, but are not permitted to participate in secondary market
activities.

Brokers

Key Information
Base Minimum Capital deposited

with the Exchange : is taken as security


for due performance and fulfillment by
the member of his operations and
obligations towards the Exchange.
The minimum base capital is Rs. 4 lakhs.
To comply with this requirement before
their activation.
Which may by way of Cash, FDRs, Bank
Guarantee or Securities.

Brokers
Cash to be deposited with the Exchange- minimum

25 % i.e. Rs. 1 lakh


Deposit of Fixed Deposit Receipts (FDRs)- (25
%) issued by approved banks
Deposit /lodgement of Securities- (maximum 50
%) with approved custodian (HDFC Bank Ltd.) with
20% margin. OR
Irrevocable Bank guarantees (in lieu of
securities - maximum 50 %) from approved banks
Members can also deposit additional base capital
with the Exchange. The cash component of the
additional base capital to be deposited should be a
minimum 30%.

Brokers
Intra-day Limits :
Turnover Limit : Members are subject to intra-

day trading limits. Gross Turnover (buy+sell) for


the day shall not exceed twenty five times (25)
the base capital deposited by the members.
Members desirous of increasing their limits will
have to submit additional deposits by way of
cash, bank guarantees, fixed deposit receipts
and securities.
Trading Members violating the intra-day gross
turnover limit at any time on any trading day
shall not be permitted to trade forthwith.

Brokers
Gross Exposure Limit
: Members are subject to gross exposure limits.
Gross exposure, being the aggregate of the cumulative

net outstanding positions (purchase or sales) in each


security shall not exceed eight and half times (8.5) the
base capital deposited by the members.
Gross Exposure at any point of time shall also include

net outstanding positions of the previous settlement till


the securities pay-in for the previous settlement.
Members desirous of increasing their limits will have to

submit additional deposits by way of cash, bank


guarantees, fixed deposit receipts and securities.

Brokers

Margins :

All margins imposed by the Exchange are payable on T+1 day.


The Exchange collects the following margins from brokers depending on their

positions/ exposures and market volatility, in line with SEBI requirements:

a) Daily Margin

Daily margin payable by the member consists of value at Risk Margin and Mark

to Mark Margin.

b) Mark to Market Margin

Mark to market margin is computed on the basis of mark to market loss of a

member. Mark to market loss is potential loss, in case the cumulative net
outstanding position of the member in all securities at the end of day is closed
out. Mark to Market margin is calculated by marking each transaction in a scrip
to the closing price of the scrip at the end of trading. MTM Profit/loss across
different securities within the same settlement is set off to determine the MTM
loss for a settlement. Such MTM losses for settlements are computed at client
level.

c) Value at Risk Margin

Value at Risk Margin is computed for all securities in the rolling settlement. All

securities are classified into three groups for purpose of var margin

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