NCFM/NISM Capital Market Module Flashcards

Flashcards covering key definitions, formulas, and regulations according to the NCFM/NISM Capital Market Module.

Primary Market

A market segment where issuers like governments and corporations raise investment resources for the first time by issuing new securities.

Secondary Market

A market where previously issued or listed securities are traded among investors, covering equity, debt, and derivative markets.

Public Issue

The allotment of securities to 50 or more investors as defined under the Companies Act, 1956.

Private Placement

The issuance of securities to a select group of persons not exceeding 49, excluding rights or public issues.

OTC Market

Over-The-Counter market; an informal, trade-negotiated platform where parties buy and sell securities directly without a central exchange.

Three Asset Classifications

The foundational asset classes under Indian securities law consisting of Equities, Debt Securities, and Derivatives.

Demutualisation

A structural rule requiring a three-way separation of Ownership, Management, and Trading across Indian stock exchanges.

ASBA

Application Supported by Blocked Amount; a process where IPO application funds remain in the investor's account and are only debited upon allotment.

DvP

Delivery versus Payment; a settlement mechanism ensuring securities are only transferred if the corresponding payment is made.

T+2 Settlement

A settlement cycle where all trades are cleared and settled by the second working day after the trade date.

NEAT

National Exchange for Automated Trading; the screen-based trading platform used by the NSE's Capital Market segment.

OECLOB

Open Electronic Consolidated Limit Order Book; the automated matching engine of the NEAT system.

Odd Lot Market

A market for orders smaller than the standard market lot, requiring an exact match of price and quantity.

Mark To Market (MTM)

The daily process of revaluing open positions at current market prices to determine profit, loss, and margin obligations.

Value at Risk (VaR)

A statistical risk measure estimating the maximum potential loss on a portfolio over a specific time at a given confidence level.

Settlement Guarantee Fund (SGF)

A fund maintained by the NSCCL to guarantee trade settlements even if a member defaults.

Contract Note

A formal legal confirmation of trades executed on a specific day, which must be issued within 24 hours and kept for 5 years.

India VIX

The NSE Volatility Index that measures expected short-term market volatility based on Nifty 50 option prices.

Direct Market Access (DMA)

A facility allowing institutional investors to place orders directly on the exchange order book without broker intervention.

Market Capitalisation Formula

$$\text{Market Cap} = \text{Closing Price of Share} \times \text{Number of Outstanding Shares}$$

Turnover Formula

$$\text{Turnover} = \text{Traded Quantity} \times \text{Trade Execution Price}$$

Net Worth Formula

$$\text{Net Worth} = (\text{Capital} + \text{Free Reserves}) - \text{Non-Allowable Assets}$$

Maximum Brokerage Formula

$$\text{Maximum Brokerage} = 2.5\% \times \text{Total Transaction Value}$$

Demat Threshold for IPOs

Mandatory dematerialization is required for all public listed companies initiating an IPO of $\text{₹}10\,\text{crore}$ or more.

FII Capital Cap

Foreign Institutional Investors are permitted up to $24\%$ of paid-up capital under the portfolio investment route.

Arbitration Filing Deadline

References to arbitration must be filed within 6 months from the date the dispute arose.

Sub-Broker Minimum Age

The individual must be at least 21 years old.

NEAT Password Constraints

Passwords must be between 6 and 8 characters long.

NEAT Inactivity Sign-Off

An automatic Temporary Sign Off is triggered if a terminal is inactive for 5 consecutive minutes.

Pre-Open Session Timing

Occurs between 9:00 AM and 9:15 AM.

Standard Risk Warning Text

"Investments in securities market are subject to market risks, read all the related documents carefully before investing."

SEBI

Securities and Exchange Board of India; the primary regulator for the Indian securities market.

SAT

Securities Appellate Tribunal; an independent judicial body for appeals against SEBI, PFRDA, or IRDAI orders.

Price/Time Priority

The OECLOB matching rule where best-priced orders match first, and orders at the same price are prioritized by entry time.

ISIN

International Securities Identification Number; a unique 12-character alphanumeric code identifying a specific security.

In-Person Verification (IPV)

A mandatory KYC step performed by a trading member's internal staff.