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Over-The-Counter Exchange of India (OTCEI)

Over-The-Counter Exchange of India (OTCEI)
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What Is the Over-The-Counter Exchange of India (OTCEI)?

The Over-The-Counter Exchange of India (OTCEI) is an electronic stock exchange based in India that comprises of small-and medium-sized firms expecting to gain access to overseas capital markets, remembering electronic exchanges for the U.S. like the NASDAQ. There is no central place of exchange, and all trading happens through electronic networks.

Grasping the Over-The-Counter Exchange of India (OTCEI)

The OTCEI is based in Mumbai, India, and operates exclusively over a computer network. The exchange is recognized by India's Securities Contract Regulation Act, meaning all listed stocks on the OTCEI benefit similarly as other listed securities on other exchanges in India.

The exchange was laid out in 1990 to give investors and companies an extra method for trading and issue securities. It emerged principally from small companies in India finding it challenging to raise capital through mainstream national stock exchanges on the grounds that they couldn't satisfy the rigid requirements to be listed on them.

The OTCEI has rules that are not quite as inflexible as the national exchanges, permitting small companies to gain access to the capital they need to develop. The objective is that once they develop to a certain level and are able to meet the requirements to be listed on the national stock exchanges, they will do the switch over and leave the OTCEI behind.

Because of advances in technology that have yielded improvements in electronic trading platforms, the differences between traditional exchanges and over-the-counter (OTC) networks are as of now not huge, significantly benefiting the small-and medium-sized companies.

Elements of the Over-The-Counter Exchange of India (OTCEI)

The OTCEI has a few special elements that make it a unique exchange in India as well as a growth catalyst for small-to medium-sized companies. Coming up next are a portion of its unique elements:

  • Stock Restrictions: Stocks that are listed on other exchanges won't be listed on the OTCEI and, alternately, stocks listed on the OTCEI won't be listed on other exchanges.
  • Least Capital Requirements: The requirement for the base issued equity capital is 30 lakh rupees, which is roughly $40,000.
  • Enormous Company Restrictions: Companies with issued equity capital of in excess of 25 crore rupees ($3.3 million) are not permitted to be listed.
  • Part Base Capital Requirement: Members must keep a base capital of 4 lakh rupees ($5,277) to keep on being listed on the exchange.

Over-The-Counter Exchange of India (OTCEI) Listing Requirements

The OTCEI makes it more straightforward for small-to mid-cap estimated companies to be listed, in spite of the fact that there are still a few requirements that companies must meet before being permitted to be listed.

Limitations incorporate securing sponsorship from individuals from the OTCEI and having two market makers. Moreover, when a company is listed, it can't delisted for something like three years, and a certain percentage of issued equity capital should be saved by advertisers for at least three years. This percentage is 20%.

Over-The-Counter Exchange of India (OTCEI) Transactions

The transactions on the OTCEI spin around the dealers. Dealers operate in a couple of capacities, the two most important being as a broker and as a market maker. As a broker, the dealer transacts in the interest of purchasers and venders. As a market maker, the dealer needs to guarantee the availability of the shares for transaction purposes as well as to guarantee that the price stays reasonable through supply and demand levels.

Notwithstanding the dealers, the OTCEI likewise has custodians. The custodian, or pioneer, is the individual that plays out the huge number of administrative tasks essential for the legitimate working of the OTCEI. These tasks incorporate approving and putting away archives as well as facilitating daily clearing transactions.

At long last, the last group of players comprises of the [registrars](/enlistment center) and transfer agents, who are responsible for ensuring the right transfer and allotment of shares happen.

Features

  • The Over-The-Counter Exchange of India (OTCEI) is an Indian electronic stock exchange made out of small-and mid-cap companies.
  • The purpose of the OTCEI is for smaller companies to raise capital, which they can't do at the national exchanges due to their failure to meet the exchange requirements.
  • The OTCEI carries out specific capitalization rules that make it appropriate for small-to medium-sized companies while keeping bigger companies from being listed.
  • The key players in the OTCEI incorporate brokers, market makers, custodians, and transfer agents.