Capital market A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments

can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere.

Capital Market Capital market is one of the most important segments of the Indian financial system. It is the market available to the companies for meeting their requirements of the long-term funds. It refers to all the facilities and the institutional arrangements for borrowing and lending funds. In other words, it is concerned with the raising of money capital for purposes of making long-term investments. The market consists of a number of individuals and institutions (including the Government) that canalise the supply and demand for long -term capital and claims on it. The demand for long term capital comes predominantly from private sector manufacturing industries, agriculture sector, trade and the Government agencies. While, the supply of funds for the capital market comes largely from individual and corporate savings, banks, insurance companies, specialised financing agencies and the surplus of Governments. The Indian capital market is broadly divided into the gilt-edged market and the industrial securities market.

The gilt-edged market refers to the market for Government and semi-government securities, backed by the Reserve Bank of India (RBI). Government securities are tradeable debt instruments issued by the Government for meeting its financial requirements. The term gilt-edged means 'of the best quality'. This is because the Government securities do not suffer from risk of default and are highly liquid (as they can be easily sold in the market at their current price). The open market operations of the RBI are also conducted in such securities.

The industrial securities market refers to the market which deals in equities and debentures of the corporates. It is further divided into primary market and secondary market.

Primary market (new issue market):- deals with 'new securities', that is, securities which were not previously available and are offered to the investing public for the first time. It is the market for raising fresh capital in the form of shares and debentures. It provides the issuing company with additional funds for starting a new enterprise or for either expansion or diversification of an existing one, and thus its contribution to company financing is direct. The new offerings by the companies are made either as an initial public offering (IPO) or rights issue.

Secondary market/ stock market (old issues market or stock exchange):- is the market for buying and selling securities of the existing companies. Under this, securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange. The stock exchanges are the exclusive centres for trading of securities. It is a sensitive barometer and reflects the trends in the economy through fluctuations in the prices of various securities. It been defined as, "a body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating and controlling the business of buying, selling and

dealing in securities". Listing on stock exchanges enables the shareholders to monitor the movement of the share prices in an effective manner. This assist them to take prudent decisions on whether to retain their holdings or sell off or even accumulate further. However, to list the securities on a stock exchange, the issuing company has to go through set norms and procedures. Regulatory Framework In India, the capital market is regulated by the Capital Markets Division of the Department of Economic Affairs, Ministry of Finance. The division is responsible for formulating the policies related to the orderly growth and development of the securities markets (i.e. share, debt and derivatives) as well as protecting the interest of the investors. In particular, it is responsible for (i) institutional reforms in the securities markets, (ii) building regulatory and market institutions, (iii) strengthening investor protection mechanism, and (iv) providing efficient legislative framework for securities markets, such as Securities and Exchange Board of India Act, 1992 (SEBI Act 1992); Securities Contracts (Regulation) Act, 1956; and the Depositories Act, 1996. The division administers these legislations and the rules framed thereunder. The Securities and Exchange Board of India (SEBI) is the regulatory authority established under the SEBI Act 1992, in order to protect the interests of the investors in securities as well as promote the development of the capital market. It involves regulating the business in stock exchanges; supervising the working of stock brokers, share transfer agents, merchant bankers, underwriters, etc; as well as prohibiting unfair trade practices in the securities market. The following departments of SEBI take care of the activities in the secondary market:

Market Intermediaries Registration and Supervision Department (MIRSD) - concerned with the registration, supervision, compliance monitoring and inspections of all market intermediaries in respect of all segments of the markets, such as equity, equity derivatives, debt and debt related derivatives.

Market Regulation Department (MRD) - concerned with formulation of new policies as well as supervising the functioning and operations (except relating to derivatives) of securities exchanges, their subsidiaries, and market institutions such as Clearing and settlement organizations and Depositories.

Derivatives and New Products Departments (DNPD) - concerned with supervising trading at derivatives segments of stock exchanges, introducing new products to be traded and consequent policy changes.

Policy Measures and Initiatives A number of initiatives have been undertaken by the Government, from time to time, so as to provide financial and regulatory reforms in the primary and secondary market segments of the capital market. These measures broadly aim to sustain the confidence of investors (both domestic and foreign) in the countrys capital market. The policy initiatives that have been undertaken in the primary market during 2006-07 include:

SEBI has notified the disclosures and other related requirements for companies desirous of issuing Indian depository receipts in India. It has been mandated that:- (i) the issuer must be listed in its home country; (ii) it must not have been barred by any regulatory body; and (iii) it should have a good track record of compliance of securities market regulations.

As a condition of continuous listing, listed companies have to maintain a minimum level of public shareholding at 25 per cent of the total shares issued. The exemptions include:(i) companies which are required to maintain more than 10 per cent, but less than 25 per cent in accordance with the Securities Contracts (Regulation) Rules, 1957; and (ii) companies that have two crore or more of listed shares and Rs. 1,000 crore or more of market capitalisation.

SEBI has specified that shareholding pattern will be indicated by listed companies under three categories, namely, 'shares held by promoter and promoter group'; 'shares held by public' and 'shares held by custodians and against which depository receipts have been issued'.

In accordance with the guidelines issued by SEBI, the issuers are required to state on the cover page of the offer document whether they have opted for an IPO (Initial Public Offering) grading from the rating agencies. In case the issuers opt for a grading, they are required to disclose the grades including the unaccepted grades in the prospectus.

SEBI has facilitated a quick and cost effective method of raising funds, termed as 'Qualified Institutional Placement (QIP)' from the Indian securities market by way of private placement of securities or convertible bonds with the Qualified Institutional Buyers.

SEBI has stipulated that the benefit of no lock-in on the pre-issue shares of an unlisted company making an IPO, currently available to the shares held by Venture Capital Funds (VCFs)/Foreign Venture Capital Investors (FVCIs), shall be limited to:- (i) the shares held by VCFs or FVCIs registered with SEBI for a period of at least one year as on the date of filing draft prospectus with SEBI; and (ii) the shares issued to SEBI registered VCFs/FVCIs upon conversion of convertible instruments during the period of one year prior to the date of filing draft prospectus with SEBI.

In order to regulate pre-issue publicity by companies which are planning to make an issue of securities, SEBI has amended the 'Disclosure and Investor Protection Guidelines' to introduce 'Restrictions on Pre-issue Publicity'. The restrictions, inter alia, require an issuer company to ensure that its publicity is consistent with its past practices, does not contain projections/ estimates/ any information extraneous to the offer document filed with SEBI.

Role of capital market in India:

Indias growth story has important implications for the capital market, which has grown sharply with respect to several parameters amounts raised number of stock exchanges and other intermediaries, listed stocks, market capitalization, trading volumes and turnover, market instruments, investor population, issuer and intermediary profiles. The capital market consists primarily of the debt and equity markets. Historically, it contributed significantly to mobilizing funds to meet public and private companies financing requirements. The introduction of exchange-traded derivative instruments such as options and futures has enabled investors to better hedge their positions and reduce risks. Indias debt and equity markets rose from 75 per cent in 1995 to 130 per cent of GDP in 2005. But the growth relative to the US, Malaysia and South Korea remains low and largely skewed, indicating immense latent potential. Indias debt markets comprise government bonds and the corporate bond market (comprising PSUs, corporates, financial institutions and banks).

India compares well with other emerging economies in terms of sophisticated market design of equity spot and derivatives market, widespread retail participation and resilient liquidity. SEBIs measures such as submission of quarterly compliance reports, and company valuation on the lines of the Sarbanes-Oxley Act have enhanced corporate governance. But enforcement continues to be a problem because of limited trained staff and companies not being subjected to substantial fines or legal sanctions.

Given the booming economy, large skilled labour force, reliable business community,

continued reforms and greater global integration vindicated by the investment-grade ratings of Moodys and Fitch, the net cumulative portfolio flows from 2003-06 (bonds and equities) amounted to $35 billion. The number of foreign institutional investors registered with SEBI rose from none in 1992-93 to 528 in 2000-01, to about 1,000 in 2006-07. Indias stock market rose five-fold since mid-2003 and outperformed world indices with returns far outstripping other emerging markets, such as Mexico (52 per cent), Brazil (43 per cent) or GCC economies such as Kuwait (26 per cent) in FY-06.

Vision of capital market We seek to emerge as the most credible financial services company serving the varied needs of every kind of investor by being thought leaders, innovative solution providers and ethical financial partners Memberships & Registrations : National Stock Exchange of India Ltd. - Cash, Derivatives & Currency Derivatives Bombay Stock Exchange Ltd. Cash,

Derivatives & Currency Derivatives MCX SX Currency Derivatives Central Depository Services (India) Ltd. National Securities Depository Ltd. Merchant Banking Portfolio Management Services AMFI Registration MCX, NCDEX (Through wholly owned subsidiary Company ICM Commodities Pvt. Ltd.) Wholly Owned Subsidiaries ICM Commodities Pvt. Ltd. (Formerly Niche Commodities Pvt. Ltd.)

ICM Finance Pvt. Ltd. (Formerly Ashmavir Finance Pvt. Ltd.) India Capital Financial Services Pvt. Ltd.

Month & Year Activity

October 1994 Acquired NSE Membership in individual name of our Promoter which was later transformed to a Corporate Membership in the name of Niche Brokerage Private Limited in the year 2000.

November 1999 Acquired BSE Membership in the name of Yogesh Securities Private Limited, which was merged with Niche Brokerage Private Limited in July 2006.

January 2001 Acquired license to operate Depository from NSDL September 2005 Acquired PMS License December 2006 Acquired AMFI certification January 2007 Acquired MCX License March 2007 Acquired NCDEX License April 2007 Started online trading service July 2007 Acquired Merchant Banking License July 2007 Name changed from Niche Brokerage Private Limted to India Capital Markets Private Limited.

October 2007 Acquired license to operate Depository from CDSL September 2008 Started Currency derivatives

Our present portfolio of services includes: Institutional Broking Retail Broking Merchant Banking Research Portfolio Management Services Mutual Fund & IPO Distribution

E-Broking Depository Services Currency Futures Commodities (Through wholly owned subsidiary Company ICM Commodities Pvt. Ltd.)