Unit 2 Capital Market Operations

Functions of New Issue Market Contents of Offer Document Methods of Floating New Issue Procedure for Initial Public Offer (IPO) SEBI Guidelines Players in New Issue Market

6. Players in New Issue Market

There are many players in New Issue Market: 1. 2. 3. 4. 5. Merchant Bankers Registrars Collecting and coordinating Bankers Underwriters and Brokers Printers, Advertising Agencies and Mailing Agencies

1. Merchant Bankers
They are the : 1. Issue Managers 2. Lead Managers, 3. Co-Managers and are responsible to the Company and SEBI

2. Registrars to the Issue

Registrars are an Important Category of Intermediaries, who undertake all activities

connected with
New Issue Management

They are appointed by the company in consultation with the merchant bankers to the issue.

Qualification for Registrar:

I. Registration with SEBI is essential II. The criteria adopted by SEBI for registration are
Competency and expertise Quality of Manpower Their Track record Adequacy of infrastructure A Net worth of 6 Lakhs is essential for registrars They have to maintain proper books of accounts for a period of 3 years

Role of Registrar:
In Pre-issue During the Issue Pre-allotment And Post allotment

Role of Registrar In Pre-issue: 1. Help in identifying the collection centers 2. Assist in opening collection accounts with banks 3. Send instructions to collecting branches : For collection of application along with cheques 4. Receive the collection figures on regular basis until the subscription list is closed.

Role of Registrar during the Issue:

1. Receive the collection figures every day 2. Tabulate and classify the collection data 3. Keep the Merchant bankers and the company

informed of the progress of total subscriptions

4. Inform the stock exchange about the closure of

issue.

Home Work
Role of Registrar in: a) Pre-Allotment Work b) Allotment Work c) Post-Allotment Work

3. Collecting and Coordinating Bankers

Collecting Bankers collect the subscription in cash, cheques etc.

Coordinating bankers
collect information on subscriptions and coordinate the collection work they monitor the work and inform it to the registrars and the merchant bankers

Collecting Banker and Coordinating Banker may be the same bank or different banks

4. Underwriters and Brokers Brokers along with the net work of sub- brokers market the new issues. They send their own circulars and applications to the clients and take follow up, to market the securities. 5. Printers, advertising agencies and mailing agencies: They are the other organizations involved in the new issue market.

Book Building Process

Book Building is basically a process used in Initial Public Offer (IPO) for Efficient Price Discovery.

It is a mechanism where:
the period for which the IPO is open,

bids are collected from investors

at various prices,

which are above or equal to the floor price and

the offer price is determined after the bid closing date.

Book Building Process

Book building refers to the Process of Generating, Capturing, and Recording

Investors demand for shares

during an Initial Public Offering (IPO), Or for other securities during their Issuance Process, in order to support Efficient Price Discovery

Book Building is basically a process used in Initial Public Offer (IPO) for Efficient Price Discovery.

It is a mechanism where:
the period for which the IPO is open,

bids are collected from investors

at various prices,

which are above or equal to the floor price and

The offer price is determined after the bid closing date.

NSE operates a fully automated screen based

bidding system called NEAT IPO
(National Exchange for Automated Trading)

That enables trading members to enter bids directly from their offices through a sophisticated telecommunication network

Definition:
It the process of determining the price at which an Initial Public Offering will be offered. The book is filled with the prices that investors indicate they are willing to pay per share, and when the book is closed, the issue price is determined by an underwriter by analyzing these values.