Chapter 2 | Intro to Securities Market | NISM Series XV | Research Analyst Workbook | Audiobook

📘 *Summary of Chapter 2: Introduction to Securities Market*

This chapter lays the foundation for understanding how the securities market works—its *instruments, participants, transactions, and structure.*

🔑 *Key Concepts:*

📌 *1. What Are Securities?*

* *Securities* = Tradable financial assets
* Types: *Equity* (ownership), *Debt* (borrowed funds), *Derivatives*
* Function: Connects *investors* (money providers) with *issuers* (fund seekers)
* Markets enable *liquidity, capital allocation, and risk management*

📌 *2. Types of Instruments*

* *Equity Shares*
* Ownership in a company
* High return potential, high risk

* *Debentures/Bonds*
* *Convertible* → can turn into equity
* *Non-Convertible* → stays debt
* *Foreign Currency Bonds* → e.g., Masala Bonds in INR

* *Warrants / Convertible Warrants*
* Right to buy shares at a future date

* *Indices*
* Track market performance (Nifty, Sensex)

* *Mutual Funds / ETFs*
* Pooled investments from many investors

* *Hybrid & Structured Products*
* *Preference Shares:* Equity + fixed return
* *Depository Receipts:* GDRs, ADRs, IDRs
* *MBS/ABS:* Backed by mortgage or loan assets
* *REITs/InvITs:* Real estate or infrastructure-backed instruments

* *Commodities*
* *Hard:* Metals, oil
* *Soft:* Agricultural goods

📌 *3. Market Structure*

* *Primary Market*
* New securities issued via: IPOs, FPOs, Rights Issues, Private Placements

* *Secondary Market*
* Buying/selling existing securities
* Includes stock exchanges and OTC trades

📌 *4. Market Participants*

* *Intermediaries*
* Stock exchanges, depositories (NSDL/CDSL), brokers, custodians, merchant bankers

* *Institutional Investors*
* Mutual funds, insurance firms, pension funds, *FPIs, Hedge Funds, AIFs*

* *Retail Investors*
* Individuals, HNIs, NRIs

📌 *5. Types of Transactions*

* *Cash / Spot / Tom Trades*
* Immediate or short-term settlement

* *Derivatives*
* *Futures* & *Forwards:* Future delivery contracts
* *Options:* Right, not obligation, to buy/sell
* *Swaps:* Exchange of cash flows (e.g., interest swaps)

* *Strategies*
* *Hedging:* Reduce risk
* *Arbitrage:* Exploit price gaps
* *Pledging:* Use shares as loan collateral

📌 *6. Dematerialization & Rematerialization*

* *Dematerialization (Demat)*
* Physical → Electronic format
* Safer, faster, paperless

* *Rematerialization*
* Electronic → Physical
* Rare, legacy method

✅ *Conclusion*

Securities markets channel funds from savers to businesses and governments. They offer a range of products—from plain equity to complex derivatives—suited to various goals and risk appetites. With demat systems and strong intermediaries, markets have become more accessible, transparent, and efficient.

⏱ *Audiobook Timestamps*

00:00 – Learning Objectives
00:26 – 2.1 Introduction to Securities and Securities Market
04:58 – 2.2 Product Definitions / Terminology
05:15 – 2.2.1 Equity Shares
05:42 – 2.2.2 Debentures/Bonds/Notes
07:19 – 2.2.2.1 Foreign currency bonds
08:23 – 2.2.2.2 External bonds / Masala bonds
09:39 – 2.2.3 Warrants and Convertible Warrants
10:05 – 2.2.4 Indices
12:27 – 2.2.5 Mutual Fund Units
13:35 – 2.2.6 Exchange Traded Funds (ETFs)
14:32 – 2.2.7 Hybrids/Structured Products
14:35 – 2.2.7.1 Preference Shares:
15:49 – 2.2.7.2 Convertible Debentures & Bonds:
18:13 – 2.2.7.3 Indian Depository Receipts (IDRs), Global Depository Receipts (GDRs) and American Depository Receipts (ADRs):
22:27 – 2.2.7.4 Foreign Currency Convertible Bonds (FCCBs):
23:26 – 2.2.7.5 Equity Linked Debentures (ELDs):
24:17 – 2.2.7.6 Commodity Linked Debentures (CLDs):
24:43 – 2.2.7.7 Mortgage Backed Securities (MBS) and Asset Backed Securities (ABS):
25:25 – 2.2.7.8 REITs/InvITs
26:28 – 2.2.8 Commodities
27:38 – 2.2.8.1 Precious metals
28:00 – 2.2.8.2 Commodity ETFs
28:36 – 2.2.8.3 Managed futures contract
29:16 – 2.2.8.4 Warehouse receipts
29:31 – 2.3 Structure of Securities Market
30:26 – 2.3.1 Primary Market
38:23 – 2.3.2 Secondary Market
41:51 – 2.4 Various Market Participants and Their Activities
42:04 – 2.4.1 Market Intermediaries
48:34 – 2.4.2 Institutional Participants
58:05 – 2.4.3 Retail Participants
58:41 – 2.4.4 Proxy Advisory services firms
59:19 – 2.5 Kinds of Transactions
59:39 – 2.5.1 Cash, Tom and Spot Trades/Transactions
1:00:50 – 2.5.2 Forward transactions
1:02:13 – 2.5.3 Futures
1:03:21 – 2.5.4 Options
1:05:44 – 2.5.5 Swaps
1:07:13 – 2.5.6 Trading, Hedging, Arbitrage, Pledging of Shares
1:09:29 – 2.6 Dematerialization and Rematerialization of securities

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