OTCEI Full Form

Introduction

The Companies Act of 1956 allowed for the incorporation of Over the Counter Exchange of India (OTCEI) in 1990, and the Securities Contracts Regulation Act of 1956 granted it recognition as a stock exchange. It started running in 1992. It aims to offer small and medium-sized businesses simple access to the financial market. OTCEI is a single window exchange system that is entirely computerised. The OTC exchange in the United States, NASDAQ, serves as a model for OTCEI. UTI, ICICI, IDBI, LIC, IFCI, GIC, and SBI Financial Services all pushed OTC. Trading happens over telephones and other forms of communication at its counters or offices, not in a particular area. It serves as a meeting place for buyers and sellers to discuss conditions of trade. It offers a practical, open, and successful channel for capital market investment. Due to the fact that only businesses with an issued capital of at least Rs. 30 lakh are eligible to list on the OTCEI, it includes a unique list of companies. It operates on a fair trade structure and gives the securities movement. It also intends to offer public and small businesses more affordable and simple trade options.

Requirements to launch OTCEI:

Since the requirements set forth by the stock exchanges could not be met, many small enterprises in India are finding it challenging to raise sufficient capital through them. The minimum capital required for listing is likewise rather high, and the companies must have been in operation for at least three years and made a profit. Therefore, by developing a new Stock exchange with acceptable terms, small and medium-sized businesses in India will be able to raise enough money. These businesses can list themselves in the standard stock exchanges after their resources are increased.

key ideas

• Small- and mid-cap companies trade on the Over-The-Counter Exchange of India (OTCEI), an electronic stock exchange in India.

• Smaller businesses can raise capital through the OTCEI since they are unable to do so at national exchanges because of their unwillingness to meet with exchange rules.

• The OTCEI has particular capitalization standards that favour small- to medium-sized businesses while banning the listing of larger businesses.

• Brokers, market makers, custodians, and transfer agents are some of the major participants in the OTCEI.

Two reasons for establishing OTCEI.

The OTCEI was established for two reason:

• For giving small and medium businesses access to the financial market so they can raise money quickly.

• For giving investors a simple, effective, and open channel for capital market investment.

Benefits of India's Over-the-Counter Exchange

To businesses:

• Method for Raising Money: It offers a way to raise money using instruments on the capital market that are fairly priced. The company will have the opportunity to bargain with the sponsorers who will market the issue in Over the Counter regarding the issue price.

• Reduces Unnecessary Costs: It reduces unneeded issue costs for capital market funding. There will be no need for a public issue because the sponsors will be distributing the scrips to Over the Counter members who would then distribute them to the general public. As a result, practically all related expenses will be cut.

• Management Stability Retention: It preserves a higher level of management stability. With 20% of the capital easily accessable for public trading, the Over the Counter market will list scrips.

• Access controls: By making a sizable captive investor base more reachable, it significantly increases the ability to raise money. Over the Counter Exchange will establish a national network where investors that make up a company's captive investor base will be served to.

To the Investor:

• Short Length of time: The assignment will be completed in 28 days and trading in 30 days in the case of a public issue or offer for sale. The investors will gain a great deal from this.

• Quick Transactions: It makes it possible to finish transactions rapidly. Investors can settle transactions over the counter, and the money or stock proceeds will be settled within a few days, if not sooner.

• Smarter Investment: Stock investing will get simpler. The extensive network of Over the Counter Exchange will bring the stock exchange to the corner of the street.

• Stability: The fact that all scrips have been investigated and that members are willing to invest in them may provide investors a stronger sense of confidence.

• Instant Payments: It makes it possible to finish money transfers rapidly. Investors can settle transactions over the counter, and the money or stock proceeds will be settled within a few days, if not sooner.

Background of OTCEI

OTCEI was established in 1990 and has its headquarters in Mumbai, Maharashtra. It was founded in accordance with the 1956 Companies Act and certified under the Securities Regulation Act. It was the first exchange for small businesses and the first screen-based national stock market.

In India, OTCEI was established so that business promoters may obtain cutting-edge technology. This was done to develop new products efficiently and transparently for investors while also being cost-effective.

The Industrial Development Bank of India, Unit Trust of India, Industrial Investment and Credit Corporation of India, and additional institutions that are recognised stock exchanges under the SCR act all contributed to the promotion of OTCEI. Due to the SEBI's ruling dated March 31, 2015, OTCEI is currently no longer operational as an exchange.

Aim of India's Over-the-Counter Exchange (OTCEI)

The following are the aims of OTCEI:

• Faster availability for the securities at a set, fair price.

• Give dealers simple, affordable ways to sell new issues in public.

• Ensure liquidity for the less liquid or the stock of smaller enterprises.

• Give the traders a straightforward purchasing and selling procedure.

Substances in OTCEI

In 1992, OTCEI started operating. The following parties participate in various transactions in OTCEI:

• Government

• Dealers

• SEBI

• transfers of authority

• Firm

• Member

• Investors

• OTCEI

The Over the Counter Exchange of India (OTCEI) and the National Stock Exchange of India are comparable (NSEI)?

The Over the Counter Exchange of India (OTCEI) and the National Stock Exchange of India are comparable (NSEI) share the following characteristics:

• There is no trading floor for either the NSEI or the OTCEI. In other words, both exchanges use a computer network for their trading.

• Screen-Based Trading: Using computers and a satellite link, transactions on the NSEI and OTCEI are carried out electronically.

• Entities that have been incorporated include the National Stock Exchange of India and the Over the Counter Exchange of India, which are both promoted by top banks, financial institutions, insurance providers, and other financial intermediaries.

• National Reach: Both the NSEI and the OTCEI have a national reach. It indicates that neither the National Stock Exchange of India nor the Over the Counter Exchange of India are restricted by geographic or physical distance.

• Clear Market: Both NSE and OTCEI offer traders a transparent market because all transactions are screen-based. Additionally, investors can verify the actual price of the securities at which the transaction occurred.

What separates the NSEI and OTCEI?

NSEI:

A major stock exchange in India that enables trading in securities of various kinds is the National Stock Exchange of India (also known as NSEI or NSE). Incorporated in 1992, it didn't begin operations until 1994. Along with the futures and options section for other derivative instruments that the NSE introduced in 2000, a capital market segment was also introduced in 1994. The NSE is run by renowned experts and senior executives from the promoter institutions. It was founded by the top financial institutions, banks, insurance firms, and other financial intermediaries. These people exchange goods and services directly or indirectly. The trading members of the National Stock Exchange of India let investors buy and sell assets.

OTCEI:

The Over the Counter Exchange of India (OTCEI) is a company that was established in 1990 and is governed by the Companies Act of 1956. A completely computerised, single window, and transparent exchange, trading in OCTEI began in 1992. OTC Market, also known as Over the Counter, is a setting where buyers and sellers look for one another with the goal of coming to terms and conditions for the sale and purchase that are agreeable to both parties. OTCEI was created to give small and medium-sized businesses access to the capital market so they could raise money efficiently and offer investors a convenient, effective, and transparent route for capital market investment.