Over The Counter Exchange of India (OTC)
February 19, 08 by FinanceTurfThe OTCEI was established to address the specific needs of small business enterprises.
Small companies find difficulty in meeting the stringent requirements for listing shares at stock exchanges.
Thus, shares issued by small companies become untradeable n do not carry any liquidity.
As a result, when these companies issue shares there are very few buyers for them.
Thus the OTC has been set up as a second tier exchange for small companies.
“An electronic stock exchange based in India that is comprised of small- and medium-sized firms looking to gain access to the capital markets. Like electronic exchanges in the U.S. such as the NASDAQ, there is no central place of exchange and all trading is done through electronic networks.”
Basic features of Over The Counter Exchange of India are:-
a) Compulsory market maker to provide liquidity – mandatory sponsorship from banks/financial institutions for appraising the securities.
b) Settlement – payment and delivery within one week of transaction.
