INTRODUCTION

Investment Banking as the term suggests, is concerned with the primary function of
assisting the capital market in its function of capital market intermediation, i.e. the movement
of financial resources from those who have them means investors, to those who need to make
use of them means issuer for generating profit. Banking & financial institutions on the one
hand & capital market on the other hand are two broad Platforms of institutional
intermediation for capital flows in the economy. Therefore, it could be inferred that
investment banks are those institutions that are the counterparts of banks in the capital market
in the function of intermediation in resources allocation. Investment banks carried on various
activities it helps companies and governments and their agencies to raise money by issuing
and selling securities in the primary market. They assist public and private corporations in
raising funds in the capital markets both equity and debt, as well as in providing strategic
advisory services for expansion

acquisitions, mergers and other types of financial

transactions.
Investment banking is much wider term than merchant banking as it implies significant fund
based exposure to the capital market. Internationally, investment banking have progressed
both in fund based & fee based segments of industry. In India, the dependence is heavily on
merchant banking, more particularly with issue management & underwriting. However
downturn in primary market has forced merchant banks to diversify & become full fledged
investment banks. Over the decades, backed by evolution & also fuelled by recent
technological developments, investment banking has transformed repeatedly to suit the needs
of the finance community & thus become one of the vibrant & exciting segments of financial
services. The future for investment banks is bright with scope for merchant banks to convert
themselves into investment banks. Much of the investment banking in its present form, thus
owes its origins to the financial market in U.S.A due to which, American investment banks
have been leader in the American & Euro market as well. Therefore, the term investment
banking can be said to be American origin. Their counterparts in U.K were termed as
merchant banks since they had confined themselves to capital market intermediation until
the U.K & European markets & extended the scope of such businesses.

TYPES OF PLAYERS IN INVESTMENT BANKING

Full-Service Firms- These are type of investment banks who have significant presence in all
areas like underwriting, distribution, M&A, brokerage, structured instruments, asset
management etc. They are all rounder 0f the game.
Commercial Banks- Commercial Banks operating through Section 20 subsidiaries
referring to the subsidiaries formed under section 20 of the Glass- Steagall Act which were
allowed to carry on limited investment banking services.
Boutique Firms-These are the type of players which specialist in particular areas of
investment banking.
Brokerage Firms- These firms offers only trading services to retail & institutional clients.
They have huge investor base which is also used by underwriters to place issues.
Asset Management Firms- These firms offer on investment services. This includes activities
like fund management, wealth management, cash management, portfolio management
depending on the type of investors, tenure of corpus, purpose of investments, type of
instrument invested in etc.
STRUCTURE OF INDIAN INVESTMENT BANKING INDUSTRY
Investment banking in India has evolved in its own characteristic structure over the years
both due to business realities & the regulatory regime.
On the regulatory front, the Indian regulatory regime does not allow all investment banking
functions to be performed under the entity for two reasons(a- To prevent excessive exposure to business risk under the one entity.
(b- To prescribe & monitor capital adequacy & risk management mechanisms.
-Therefore bankruptcy remoteness is the key feature in structuring the business lines of an
investment bank so hat the risk & rewards are defined for the investors who provide
resources to the investment banks.
- In addition, the capital adequacy requirements & leveraging capability for each business
have been prescribed differently under relevant provisions of law.
- Therefore, Indian investment banks structure their segments in different corporate entities to
able to meet regulatory norms. For e.g. it is desirable to have merchant banking in separate
company as it requires a separate merchant banking license from the SEBI. However, since
banks are subject to the Banking Regulation Act, they cannot perform investment banking to
a large extent on the same balance sheet. Asset management business in the form of mutual

fund requires a three-tier structure under the SEBI regulations. Equity research should be
independent of the merchant banking business so as to avoid the kind of conflict of interest.
Stock broking has to be separated into a different company as it requires a stock exchange
membership apart from SEBI registration.
- The Indian investment banking industry has a heterogeneous structure. The bigger
investment banks have several group entities in which the core & non- core business
segments are distributed. Others have either one or more entities depending upon the activity
profile. The heterogeneous & fragmented structure even if Indian investment banks are
classified on the basis of their activity profile. Some of such as- SBI,IDBI, ICICI, IL & FS,
ICICI

Mahindra, Citibank & other offer almost whole of investment banking services

permitted in India. Among these, the long term financial institutions transforming themselves
into full service universal banks. They also have full service investment banking under their
fold. Other entities such as NBFCs or subsidiary of public sector banks mainly offer
merchant banking & corporate advisory services. There are also several others who are
providing only corporate advisory services but prefer to hold merchant banking or
underwriting.
- Presently, there are no global Indian investment banks although there is a number of
investment banks in India that have some overseas presence to serve Indian issuers & their
investors. At the middle level are several niche players including the merchant banking
subsidiaries of some public sectors banks. Some of these subsidiaries have been either shut
down or sold off in the wake of the securities scams.
- However certain banks such as Canara Bank & Punjab National Bank have had successful
merchant banking activities. Among the middle level players are also merchant banks
structured as non- banking financial services companies such as Rabo India Finance Ltd.,
Alpic Finance etc. There are also in the middle level, some pure advisory firms such asLazard Capital, Ernst & Young, KPMG, Price waterhouse coopers etc. At the lower end are
several niche players & boutique firms, which focus on one or more segments of the
investment banking spectrum.

POTENTIAL FOR INVESTMENT BANKING IN INDIA

The bane of Indian capital market today is lack of investor confidence. This is reflected in the
poor performance of both primary & secondary markets. The causes for existing situation are
many but primarily arise on account of lack of liquidity, unscrupulous issuers & merchant

bankers & poor or unappraised issues. Investment banking can solve this problem because
investor would be dealing with reputed investment banker in the primary market rather than
unknown issuers. The investment banks whatever be their issue management techniques have
their own capital on hold. The issues are likely to be properly appraised & priced & sponsors
on OTCEI have a two year lock-in period. Similarly investment banks would hold the issues
until market conditions are appropriate for issue, thus reducing the risk exposure of investors
in gestation for issue. Moreover, the price of reissue will be a better indicator of issues
performance. Investment banks make the primary market subscription. In sum, the quality of
pricing, appraisal, & primary market functions will improve resulting in substantial
improvement in investor confidence. Since the investment banker lends its name to the issue
it will imply an issue investors can trust. Investment bankers may gradually replace merchant
bankers in India.
SERVICE PORTFOLIO OF INVESTMENT BANKS
Investment banks handle significant fund-based business of their own in capital market along
with non-fund service portfolio which is offered to clients. All this activities are segmented
across three broad platforms equity market activity, debt market activity & mergers &
acquisition activity. Investment banks differ in the way they conduct their activities. These
differences may arise due to their evolution, strategies & the way the strategies are
implemented. Other factors that can influence investment banking operations are as follows:

Wide & narrow geographical presence like global & local firms.

Extent of integration between the activities.

Inter relationships between activities of relates industries. E.g. As those between

commercial banks & investment banking industries.

The activities of an investment banks depend upon the service provided. The services
provided by an investment bank can be broadly given below~

CORE SERVICE PORTFOLIO

Non- Fund Based

Fund Based

Merchant Banking Service for

Management of public offers of equity

& debt instruments.

Buy back offers.

Book-running

Advisory & transaction service in

Project financing,

Syndicate loan

Venture capital

Private equity

Private placements of equity & debt

Business advisory & structuring

Financial restructuring

Corporate reorganizations such as

Merger & acquisition, asset sales, sell-off & exit

etc.

Acquisition & takeovers

Government disinvestments & privatization

Asset recovery agency services

SUPPORT ACTIVITY PORTFOLIO

Underwriting

Market making

Bought out deals

Investment in primary market

Non Fund Based

Secondary market services

Stock broking

Derivative product

Portfolio Management

Sales & distribution

Equity research

Fund Based

Venture capital

Private equity

Asset management

Proprietary trading & dealing in securities.

Issue of securities, underwriting & merchant banking

Investment banks play a vital role in primary market. They are responsible for finding
investors for initial public offering of securities in primary market. By bringing the buyers &
sellers together, they create a market. Such sales can take the form of best offers or agency
arrangement. Best offer activity is resorted to in the case of either new or small companies in
whose case of either new or small companies in whose case underwriting would be risky or
established & popular companies whose issues are enthusiastically received. Investment
bankers may also help as a finder for private placement of securities with institutions. They
also purchase new issues from security issuers & arrange for their resale to the investing
public. Investment bankers buy the new issue at an agreed price & hope to resell it at a higher
price. In this capacity they are said to underwriter, or guarantee, an issue. A group of
investment bankers join together to underwriting syndicate. The commission received by the
investment bankers consist of differential or spread between purchase & resale prices. The
underwriting risk would be that the issue may not attract buyer at positive differential.
Investment banks put its effort in managing & placement of an issue. Investment banks helps
in issue by helping in deciding type of security, size of the issue according to the financial
requirement of the issuer. It also helps in deciding time, pricing of issue which is one of the
important aspects of success of the issue. Investment banks help in listing of issue, issue of
prospectus underwriting of issue etc.
The primary market which was quite small in India was revitalized with the abolition of the
Capital Issuers (control) Act 1947 & the passing of the Securities & Exchange Board of India
Act, 1992. The SEBI functions as the regulator for the capital markets similar to its
counterpart, the SEC in USA. SEBI vide its guidelines dated June 11, 1992 introduced free
pricing of securities in public offers for the first time in India. The purpose of this law is to

require security issuers to fully disclose all information that affects the value of their
securities. Over the last ten years, there have been two distinct phases of primary market
boom- the first between 1992-1996 & the second between 1998-2001. The third wave of the
primary market issuers could be shape up in near future. This market is very closely regulated
by SEBI. In the days when the public offers market is very vibrant, this area of service forms
the main activity for investment banks. In the past few years, through public offers have been
very few, the private placement market, especially in the debt segment have been very active
& has served as an important source of funds for prime rated corporate. Once the private
placement markets also come under regulatory stipulations, investment banks would have a
wider role to play in such issuances.
Mergers & Acquisitions Advisory
The merger & acquisitions industry was pretty nascent in India prior to 1994 & continues to
be tiny compared to the global scale transactions. However, two main factors that given
below given a big push to this industry are:
The forces of liberalization & globalization that have forced the Indian

industry to

consolidate.
The intitutionalisation of corporate acquisitions by SEBI through its guidelines, popularly
known as the Takeover Code.
One of the cream activities of investment banks has always been M&A advisory. The larger
investment banks specialize in M&A as a core activity. While some of them provide pure
advisory services in relation M&A, other valid merchant banking licences from SEBI also
manage the open offers arising out of such corporate events.
The investment bankers play the role of an advisor in M&A deal. The financing capability of
the investment banks is beginning to play a crucial role in securing the goal. Those firms that
have networks with banks & other financial institutions & thereby can provide finance or
have necessary resources to finance the deal themselves a better chance of success of deal.
Investment banks thus helps in finding a buyer/seller, in working out the terms of the
transaction, financing the structure, arranging bridge loans. It is necessary that the M&A
group keep a close watch on the various industries, companies in order to identify the
potential M&A candidate. Similarly, close relationship with the securities research people,
traders also help to identify the companies vulnerable to takeovers. The task of doing M&A
deals begins with analyzing & structuring the transaction. This comprises of analyzing the

companies that offer attractive strengthening or diversification possibilities & then which
among these could be purchased. The M&A group will value the prospect companies &
estimate what price will have to be paid to acquire them. Once the target for the merger or
acquisition is identified, the banks would advice the firms on how to approach for that.
Financing is the final aspect in structuring an M&A. The form of financing includes cash,
common stocks, preferred stocks or debt or convertible securities. When these negotiations
reach to a point agreement, the investment banks of the parties must ensure that all the
regulatory & legal aspects of the deal are complied with. Thus investment bankers act as
chain for companies.
Asset management services
This is a service provided by investment banks to local fund managers for cross border
settlement & administration. It involves receipt of dividends & interest, subscribing to the
right issues & adjusting portfolio. Asset management is the unglamorous aspect of investment
banking, the prosaic bank office work of settling traders, making payments, keeping records
& such related tasks. Investment banks provide this service for a fee to investors such as
mutual funds, pension fund & insurance companies, enabling fund managers to buy & sell
securities at home & abroad. It is a hi-tech, hi-volume, low margin business, revolutionized
by advances in computer technology & information exchanges.
Asset management services are growing at the rate 15-20%. The primary reason for such
growth is the growing need to diversify beyond domestic markets to reduce risk & boost
returns. Custody fees are based on the value of assets under consideration. This increased
competition, banks fees are falling to levels insufficient to cover operating expenses. This
leads to diminishing interest in custody services. Most of the top financial group in India
which investment banking businesses such as the ICICI, the IDBI, ICICI Mahindra, DSP
Merrill Lynch, JM Morgan Stanley, SBI also have presence in the asset management business
through separate entities. As per the three structure propounded by SEBI, the parent
organization acts as the sponsor of the fund & the fund itself is constituted as a trust.
Secondary market activities
Investment banks also indulge in proprietary trading. Some investment banks have
proprietary trading desks which take risk on of institutions behalf, based on a view of
economic & market perceptions & expectations. The trader in securities or derivatives for the
account of the firm itself rather than on behalf of its clients. Proprietary trader tends to take
decisions based on detailed technical & fundamental research, analytic calculations & time

series forecasting. The banks incur profit out of the price movement in the market. Secondly,
as a market maker the trader investment banks take position in the market through purchase
& sale of equities, debt & other securities, execute the customer orders & manage the
customers, institutions market risk. Investment banks perform the following functions: The traders of investment banks help in making market. The traders maintain a position in
the stock that their firms has underwritten, quote the bid & ask prices & sell at those
price.
Advise the salespeople, client & research analysts on the market activity & pricing for
different equity issues.
Put major trades together by negotiating with the salespeople, client & the other dealers.
Manage the firms investment risks.
Develop a sound knowledge about the markets, companies & the industries.
The commonly traded securities by investment banks include the sovereign securities,
equities, money market instruments, investment grade corporate debt, high yield debt,
derivatives, mortgages, etc.
Most of the universal banks such as ICICI & IDBI & ICICI Mahindra have their broking &
distribution firms in both the equity & debt segments of secondary market. In addition several
other investment banks such ad JM Morgan Stanley, DSP Merrill Lynch have a strong
presence in this area of activity. In the past few years, the derivative segment has been
introduced in the Indian capital market & this provides an additional avenue of specialization
for investment banks. Derivative trading, & risk management & structured product offerings
are the new segments that are fast becoming the areas of future potential for Indian
Investment banks. The securities business also provides extensive research offerings &
guidance to investors. The secondary market services cater to the both the institutional &
non- institutional investors.
Full service brokers & Discount brokers
Investment banks act as Full service brokers & Discount brokers.

Full service brokers provide a whole range of services, including giving specific
investment advice. They keep close tracks of the markets & keep the client abreast of
opportunities that suit their objective. They also offer detailed about the clients financial
picture, structure & monitor the assets, make recommendations about investments &
implement the transactions about investments & implement the transactions as required.

A full service brokerage therefore suits those investors who do not have the time to watch
the markets.

Discount brokers are called so because they generally charge lower fees than the full
service brokers do. Investors who like to do their own research & make their own
decisions use discount brokers. Discount brokers offer little or no advice & merely
execute the transaction as ordered.

Sales & Distribution

In the present scenario, the financing needs are immense for both corporates & governments,
while the investment managers are constantly on the lookout for optimal allocation of funds
for optimal Returns. The link between the two is filled by investment banks, in particular, by
the sales & Distribution operations. Sales & Distribution bring together the primary issuers &
secondary sellers with the buyer of the instruments. These could be equity, fixed income
instruments.
In general, there could be two product categories:

Institutional sales group

Retail segment

Institutional segment
The salespersons at the investment banks have counterparts at the institutions. These
counterparts are normally referred to as buy- side analysts or portfolio managers. If the
investment banks analyst is respected, they also act as sell-side analyst, as a part of
investment decision.

Retail segment
Investment banks act as an advisor to his clients. He is more multi-market oriented & can
recommend stocks as well as bond unlike specialists in the institutional product group. The
success of a salesperson reflects not just in his selling abilities, but also his ability to fulfill
client expectation
Research
The research operations of an investment bank are concerned with studying the economic
trends, industry developments, & individual companies stocks & providing proprietary

investment advice to the institutional clients, & to its sales & trading divisions. The research
division is also an important part of the underwriting process, both in attracting the clients by
their knowledge of clients industry & in providing a critical link to the institutions that own
the clients stocks once the stocks is publicly traded. An efficient research team provides an
information advantage to the investment banks that can use it for in-house trading purpose &
also can use for the benefit of their clients.

Equity Research

The Equity Research division of a securities house or investment bank provides in-depth
stock market analysis & a broad perspective & knowledge regarding the industry trends.
They also provide an insight into the including valuation of quoted companies & evaluation
of companies prospects. The research evaluations usually include:

Industry evaluations, which analyze the trends in the industry, compare the companys
performance to the industry averages.

Company evaluations that examine the particular company, its financial position, its
securities from an investment perspective & thereby recommend a buy/ hold/ sell
decisions.

Technical analysis that focuses on the performance of the securities in the various
markets.

Portfolio analysis that helps to manage the clients investment objective with a suitable
investment program.

Like this investment bankers perform equity research service.

Fixed-income research

The fixed income research division provides research focus on the instruments like corporate
debt including investment grade debt, high-yield debt, corporate & portfolio strategy
derivatives, mortgage backed securities, asset backed securities. Fixed- income research is
considerably more quantitative than equity research. The analysts in this division assess the
fairness of the spreads between the fixed- income instruments of different maturities &
different risk classes & makes trading recommendations based on the deviations from the fair
spreads, estimate the value of the options in the mortgages & mortgage backed products. The
fixed income research groups work closely with the clients in order to identify their needs &
work to provide customized solutions to the clients.

Institutional investing
Institutional investors have been a recent phenomenon in the Indian capital market, Which till
then had the presence of a handful of public financial institutions such as the & the insurance
companies. The term lending institutions such as the IFCI did not participate in secondary
market dealing as a matter of policy. With the advent of liberalization, there are presently a
large number of domestic institutional investors in the secondary market apart from approved
foreign institutional investors. In addition, institutional investment have risen significantly in
the primary markets through venture capital & private equity investments by investors in both
the domestic & non- resident categories. Several of the leading investment banks either have
dedicated venture funds or private equity funds that invest on primary market through their
dealings & market making activities.
Wealth management services
Wealth management services also called as private banking. Many reputed investment banks
nurture a separate segment to manage the portfolio of high networth individuals, households,
trust, & other type of non- institutional investors. This can be structured either as a pure
advisory services wherein the investment manager does not have any access to the funds or as
a fund management service wherein the investment manager is given charge of funds. In the
former case, it becomes it becomes a non-discretionary portfolio & in the latter case, it
becomes a discretionary portfolio. Such activity is regulated under the guidelines. In other
case, wealth management may be restricted to a research based activity wherein in the
investors is a provided good investment recommendation from time to time.
Corporate Advisory
Investment banks in India also have large practice in corporate advisory services relating to
project financing, corporate restructuring through equity repurchase including management of
buyback offers under section 77A of the Companies Act,1956 raising private equity,
structuring joint- ventures & strategic partnerships & other such value added specialized
areas. Several investment banks have longstanding relationships with government & firms.
Their advise is sought because investment banks are not big traders & distributors of
securities or do not have a commercial parent.

REGULATORY FRAMEWORK FOR INVESTMENT BANKING

Investment banking in India is regulated in its various facets under separate legislations or
guidance issued under statute. The regulatory powers are also distributed between different
regulators depending upon the constitutions & status of the investment bank. Pure investment
banks which do not presence in the lending or banking business are governed primarily by
the capital market regulator i.e. SEBI. However universal banks & NBFC investment banks
are regulated primarily by the RBI 9in their core business of banking or lending & so far as
the investment banking segment is concerned, they are also regulated by SEBI. An overview
of the regulatory framework is furnished below:1. At the constitutional level, all investment banking companies incorporated under the
Companies Act 1956 are governed by the provision of the act.
2. Investment banks that are incorporated unde4r a separate statute such as the SBI or the
IDBI are regulated by their respective statue. IDBI is in the process of being converted
into Companies Act.
3. Universal Banks are regulated by RBI of India under the RBI Act 1934 & the Banking
Regulation Act which put restrictions on the investment banking exposures to be taken by
the banks. The RBI has relaxed the exposure limits for merchant banking subsidiaries of
the commercial banks. Till now, such companies were restricting their exposure to a
single entity through the underwriting business & other fund based commitments such as
standby facilities etc. to 25% of their net owned funds. Therefore these companies are
now on par with other investment banks which can do so upto 20 times their net owned
fund.
4. Investment banking companies that are constituted as non-banking financial companies
are regulated operationally by the RBI under Chapter IIIB section 45H & 45QB of the
RBI Act, 1934. Under these sections RBI is empowered to issue directions in the area of
resources mobilization, accounts & administrative controls. The following directions have
been issued by the RBI so far:
Non-Banking Financial Companies Acceptance of Deposits (Reserve Bank) Directions,
1998.
NBFCs prudential Norms (Reserve Bank) Directions, 1998.

5. Functionally, different aspects of investment banking are regulated under the securities &
Exchange Board of India Act, 1992 & the guidelines & regulations issued under. These
are listed below:
Merchant banking business consisting of management of public offers is a licensed &
regulated activity under the SEBI Act (Merchant Bankers), 1992.
Underwriting business is regulated under the SEBI (underwriters) Rules & Regulations,
1993.
The activity of secondary market operations including stock broking are regulated under
the relevant by-law of the stock exchange & the SEBI (stock broker & sub broker) Rules
& Regulations, 1992. Besides for restricting unethical trading practices, SEBI has issued
the SEBI (Prohibition of fraudulent & unfair trade practices relating to securities markets)
Regulations 1995& also SEBI prohibited insider trading under regulations, 1992.
The business of asset management as mutual funds is regulated under the SEBI (Mutual
Fund) Regulations, 1996.
The business of portfolio management is regulated under the SEBI (Portfolio mangers)
Rules & Regulations, 1993.
The business of venture capital & private equity by such funds that are incorporated in
India is regulated by the SEBI(venture capital) Regulations,1996 & by those that are
incorporated outside India is regulated under the SEBI ( Foreign venture capital funds)
Regulations,2000.
The business of institutional investing by foreign investment banks & other investors in
Indian Secondary markets is governed by the SEBI (Foreign Institutional Investors)
Regulations 1995.
6. Investments banks that are set up in India with foreign direct investment either as joint
ventures with Indian partners or as fully owned subsidiaries of the foreign entities are
governed in respect of the foreign investment by the Foreign Exchange Management Act,
1999& Foreign Exchange Management (Transfer or issue of a person resident outside
India) Regulations 2000 issued there under as amended from time to time through
circulars issued by the RBI.
7. Apart from the above specific regulations relating to investment banking, investment
banks are also governed by the other laws applicable to all other underwriting support on
government securities issue & participate in auctions held by the RBI.

SKILLS SUGGESTED FOR INVESTMENT BANKERS

Technical Skill

Academic Background- In the early days of investment banking, not much importance
was attached to academic background. Today, the business has become very complicated
and the skill requirements have multiplied. Consequently, investment banks find it
important to recruit people with the right academic credentials. Typically, for most of the
important jobs, an MBA is a must. Investment banks rely heavily on campus recruitments
Conceptual Soundness- One of the major benefits for a professional in an investment
bank is the learning associated with work. The financial skills of an expert are tested to
the core while handling a complicated deal. Comprehensive and in-depth knowledge of
financial and business concepts are essential to sustain business. Multiple relationships
between various factors render decision-making difficult. Financial solutions can be
provided to the clients only when the advisor is competent to understand all or at least a
majority of them. Before practical solutions emerge, the tools for decision-making will
give greater choice to the solution provider. A strong grounding in theory and concepts
facilitates this.

Product Specialization- One way to specialize in an investment bank is

through products. An expert in a particular product, say hybrid instruments, can work out
financial solutions for any client across the industries. Each client has his or her
individual risk taking ability. To cater to the client on an in basis, appropriate products
that would suit their risk profile should be identified. The clients will also feel at home
while dealing with a product specialist.

Legal Knowledge- While clear cut guidelines can be issued to the traders regarding their
market related activities that are governed by the law, the complexity multiplies for an
M&A deal. The regulators guidelines have to be strictly followed, even while envisaging
a combination. Legal knowledge is also important for structuring such deals, which will
help identify the constraints associated with proposed solution. The situation gets more
intense when the deal is a cross-border M&A proposal. Apart from the knowledge of the
inland laws, foreign laws also have to be considered. Any regulation by the foreign
government can make an otherwise desirable deal, unviable.

 Knowledge of Capital Markets and Functioning- More than any other industry, it is the
investment banking industry that has a direct bearing on the way capital markets function.
Any changes in the capital market regulations affect the brokerage side of the business,
along with the trade clearing and settlement houses. The trading personnel should be
conversant with the regulations, guidelines, procedural formalities and actual trade
execution processes involved in capital market. E.g. Trading system involves a lot of
additional skills than online trading. He has to be conversant with the codes, symbols and
conventions followed by the market. Quick signaling and accurate interpretation are of
utmost significance. Any mistake in these would lead to faulty execution of orders and
might entail additional costs to the firm in correcting the errors.
Knowledge of Regulatory Bodies involved in the Various Operations- It is necessary
for an investment banker to be aware of all the regulatory bodies that govern the activities
in which he/she is involved. A thorough knowledge of all such bodies is absolutely
essential to perform extraordinarily. In India, the SEBI & central bank acts as a watchdog
and regulator of market related activities.
Knowledge of International Business Scenario and Economic Trends:-Though a
researcher is primarily involved in economic and business cycle studies, it is the duty of
all the investment bankers to have a general overview of these affairs. Salespersons, who
also act as financial consultants/advisors, should essentially be aware with economic and
business cycles, lest they lose the respect and trust of the client. The requirement for
global perspective and international exposure is becoming increasingly important. The
firm should offer services across the national borders to the corporate clients and
informed services are possible only when the employee is well-equipped with
international business information.
Knowledge of Software Tools, Developments in the Field of Information TechnologyOne of the most important technical skills is the usage of computers, tools and internet
technologies. Marketing, brokerage, research and capital mobilization have all undergone
sweeping changes owing to technology.
The securities trader has changed into a tech-savvy professional, executing online orders
& maintaining databases. The technology helps management and other departmental
professionals and even the clients to disseminate such data in negligible time. Asset

managers have now complicated tools for scientific and in-depth valuation of portfolios.
Comp frameworks can be solved with minimum effort using technology.

Communication Skills
Ability to Cater to the Audience According to its Awareness LevelsCommunication skills include both the means of communication written and oral.
However, the audiences vary extensively, and hence, the requisite communication skills
also differ widely. A marketer handling individual investors will necessarily have to keep
the content very simple and express t in laymans terms. Usage of financial terms &
jargons will not fetch results. Cash flows, the characteristics of the instruments & the risk
class to which the investment belongs to must be explained in simple & easily
understandable terms.

Negotiation Skills- Negotiation skills is important at a variety of places. Institutional

clients have to be convinced about the prospects of the investments that are solicited by
the firm. Investors in syndicated debt must be satisfied with the payment streams and
interest rate terms. M&A transactions are the toughest assignments for negotiations. Even
a friendly transaction would be difficult if not for patient and mutually negotiations. The
common issues that pertain to negotiation are terms of offer, offer price, post merger
integration, organization and reporting structure, business lines to be developed above all
dealing with the overlapping functions. While negotiating, the banker should always keep
the prime object in the mind & quickly evaluate the various counter offers & suggestions
made by other party.

Personality Traits- Personality Traits plays an important role in

developing the skill set of an investment banker. Creativity is an important feature. It
comes in use while handling prospectus, clients & team members. It is essential when
solutions are to be identified for complex problem. Innovations & creativity are required
structure deals.

Other Skills
Marketing Skills- The marketing skills would be an application of skills
mentioned above. One of the important marketing skill would be relationship
management. Unlike most other industries where relationship plays a facilitating role in
conducting business, it is fundamental issue in the investment banking industry. An

attitude for creating, establishing & maintaining relationships, during boom & down
period, is of utmost importance in getting mandates.
Inter-Personal Skills-Inter-personal skills are basically blended from communication
skills, and personality traits. They include interactions with superiors, subordinates,
colleagues, clients, competitors, team members and even politicians and public office
bearers. Inter-personal skills come to the fore during team exercises where diplomacy and
manners become essential. Team exercises can also include dealing with members from
other departments or even with other firms. Such situations call for greater application of
team skills and an element of mutual respect towards each other.
Networking Skills- Networking refers to the process of developing a web of contacts and
acquaintances. Some of the special attributes required to develop networking abilities
would include:
Knowledge of human psychology;
Presence of mind to apply the appropriate skills as situation demands;
Approaching through proper channels that would lend credibility respectability to
contacts;
Persuasion skills;
Highest standards of professionalism.

ROLE OF INVESTMENT BANKERS IN DEVELOPING AN ECONOMY.

Investors (generate savings)

savings will definitely like to earn something out of it rather keeping the funds idol. So
the question of investment arises and with the investment risks arises. So for proper and
safe deployment of funds investment bankers help them in the process of investing their
funds.
2) Role of investment bankers: The investment bankers act as an intermediary between the
investors and capital market which consists of primary market and secondary market. The
investment bankers with their intense research guide them to invest their money in
banks/FI, Capital and money market, foreign exchange market, commodity market, real
estate/gold etc. Proper deployment of funds will help the investors to earn good returns
with safety of their initial invested funds.
3) Business Activity: All these investments from the investors will lead to business activity
in different sectors. The funds deployed by the investors will be utilized by the users of
the deployed funds will lead production of goods and services in the economy.
4) Twin Advantage: The investors will not only earn returns, capital appreciation etc but also
they will utilize the goods and services produced by the users of the deployed funds. This
will in return create satisfaction in the minds of consumer/investor and will also earn
profits for the user of the funds because of utilization of goods and services.
This will be a win-win factor and also will develop the economy as a whole.

Foreign Exchange Market (fnancial economy)

1) Investors: Investors are the persons who generate savings. The investors who generate

economy)
(fnancial
Commodity futures Market (fnancial
Capital
Market / Money Market
etc (real economy)
Real Estate
/ Goldeconomy)

EXPLANATION

CASE -STUDY
INTRODUCTION
ICICI Securities., is India's leading stock broking house with a market share of around 8%.
ICICI SecuritiesLtd. has been the largest in IPO distribution.
The accolades that ICICI Securitieshas been graced which include:
Prime Ranking Award (2003-04) - Largest Distributor of IPO's
Finance Asia Award (2004) - India's best Equity House
Finance Asia Award (2005)-Best Broker In India

The company has a full-fledged research division involved in Macro Economic studies,
Scrotal research and Company Specific Equity Research combined with a strong and well
networked sales force which helps deliver current and up to date market information and
news.
ICICI Securities is also a depository participant with National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services
wherein the investors can use the brokerage services of the company for executing the
transactions and the depository services for settling them.
ICICI Securities has 122 branches servicing more than 1, 70,000 customers and coverage of
187 cities. ICICI securities.com, the online division of ICICI Securities Limited offers
Internet Broking services and also online IPO and Mutual Fund Investments. ICICI Securities
manages assets over 2500 crores of Assets under Management (AUM) .The portfolio
Management Services provide top class service, catering to the high end of the market.
Portfolio Management from ICICI Securities comes as an answer to those who would like to
grow exponentially on the crest of the stock market, with the backing of an expert.

AREA OF BUSINESS FOR ICICI SECURITIES

ICICI Securities has five main areas of business:

Institutional Business

This division primarily covers secondary market broking. It caters to the needs of foreign and
Indian institutional investors in Indian equities (both local shares and GDRs). The division
also incorporates a comprehensive research cell with sectoral analysts who cover all the
major areas of the Indian economy.

Private Client Services

Private Client Services (PCS) is a special investment division for High Net-worth individuals,
retail investors, Non-Resident Indian investors, trusts, corporates and banks. The investment
product range at PCS is among the widest in the country and covers debt and equity, mutual
funds and specialised structured investment products.

Client Money Management

This division provides professional portfolio management services to high net-worth

individuals, retail investors, and corporates. Its expertise in research and stock broking gives
the Company the right perspective from which to provide its clients with investment advisory
services.

Retail distribution of financial products

ICICI Securitieshas a comprehensive retail distribution network, comprising approximately

7000 agents, 13 branches and over 20 franchisees across India. This network is used for the
distribution and placement of a range of financial products that includes company fixed
deposits, mutual funds, Initial Public Offerings, secondary debt and equity and small savings
schemes.

Depository Services

ICICI Securitiesis a depository participant with the National Securities Depository Limited
and Central Depository Services (India) Limited for trading and settlement of dematerialized
shares. Since it is also in the broking business, investors who use its depository services get a
dual benefit. They are able to use its brokerage services to execute transactions and its
depository services to settle these.

PRODUCTS OF ICICI SECURITIES

Once you invest with ICICI SECURITIES, you can enjoy access to a wide range of products
and services to help you make the most of your investments.
Easy Equity: Want your capital to appreciate fast? Invest in Easy Equity.
a) Sms Alerts
b) Call & Trade
c) Top Gainers and Losers notification
d) Super multiple
e) Portfolio Tracker
Easy Derivatives: The higher your risk, the greater the returns on your investments.
a) Put Call ratios
b) Top value traded
c) Open interest
d) Stock future/Stock options
Easy IPO: Invest early for greater returns.
a) Forthcoming issues
b) New listings
c) Call & Trade
d) IPO news
e) Open issues
Easy Mutual Fund: Looking to diversify your risk? Invest in Easy Mutual Fund.
a) Find out NAV of a Scheme
b) View Scheme details
c) Mutual fund News
d) Compare Schemes
e) My portfolio
Easy Insurance: Secure your future and your familys. Theres more to insurance than just
security.
a) How does the plan work?
b) Advantages of the plans
c) Eligibility

d) Other Benefits
ACCOUNT TYPES
The first question in an individuals mind where to open an account
Want to start investing? Open an investing account with ICICI SECURITIESand begin right
away. Whether you are a beginner or an expert trader, they have different accounts to suit
your needs:
ICICI Gateway Account:
If you are new to trading, ICICI Securitiesopens the gateway to a world of investing
opportunities for you - online and on-phone. Their in-depth research will guide you in
making smart investment decisions. Open the ICICI SecuritiesGateway Account and get
started.
Your Benefits:
ICICI Securities Knowledge Center that helps you learns more about stock
markets and investments.
Enjoy higher returns by investing early - through Easy IPO.
Research Reports on the economy, select industries and companies help you make
informed investment decisions while dealing in Easy Equity.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important buying and selling opportunities.
Buy and sell stocks on phone using Call & Trade.
Access to 14 top-performing mutual funds through Easy Mutual Fund.
Free news and market updates.
Exposure of upto 15 times your initial margin on select stocks with Super
Multiple.
How to activate?
You can activate ICICI Securities Gateway with any amount between Rs 20,000 to
5, 00,000/- as margin. This can be in form of cash deposit or the value of the shares you buy.

Open your account:

Step 1: To open your account, simply download and print an application form, fill it in and
post it along with the essential documents to the address as mentioned in the form.
You can call them and they will have their representative meet you and help you open the
account
You can also email them at gateway@icicisecurities.com. Their representative will get in
touch with you.
Step 2: They will inform you as soon as your account is activated, and you can start trading
instantly
This procedure is common for all accounts.
ICICI Value Account:
Becoming a wise investor requires a good deal of research and education. You must learn not
only how stocks and mutual funds work, but also to make your own investment decisions.
The ICICI Securities Value Account is specially equipped to make investing simpler for you.
Your benefits:
ICICI Securities Knowledge Center that helps you learn more about stock markets
and investments.
Their Research Reports on the economy, select industries and companies help you
make informed investment decisions while dealing in Easy Equity.
Buy and sell stocks on phone using Call & Trade.
Invest in IPOs with Easy IPO.
Access to 14 top-performing mutual funds through Easy Mutual Funds.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important market movements.
Free news and market updates.
The facility to trade in amounts 5 times greater than your capital.

 Lower delayed payment interest.

Access to K.E.A.T Desktop - specialised financial software that makes trading
easier.
Exposure of upto 15 times your initial margin on select stocks with Super
Multiple
How to activate?
You can activate ICICI Securities Value with any amount between Rs.

5, 00,000/- and

Rs. 10, 00,000/- as margin. This can be in form of cash deposit or the value of the shares you
would have currently.
ICICI Privilege Circle Account
ICICI Securities offer you nothing but the best. At ICICI SECURITIES, they make sure you
get to enjoy premier and top-line trading services - with ICICI Securities Privilege Circle
Your benefits:
A dedicated Privilege Circle customer service desk offers you assistance in
opening accounts, handling day-to-day problems, and more.
Independent market expertise and support through a dedicated relationship
manager.
Place orders phone through Call & Trade.
Access to Easy IPO and 14 top-performing mutual funds through Easy Mutual
Funds.
Their Research Reports on the economy, select industries and companies.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important market movements.
6 times exposure on the margin.
Access to K.E.A.T Premium - an exclusive premium analysis tool with 52
Indicators for Technical Analysis, Derivative Chains, Multiple Watchlists, and
more.
Lowest delayed payment interest.

 Exposure of upto 15 times your initial margin on select stocks with Super
Multiple
How to activate?
You can activate ICICI Securities Privilege Circle with any amount more than Rs. 10,
00,000/- as margin, by way of cash or stock
ICICI High Trader Account:
For daily traders, they have the ICICI Securities High Trader exposure - an account specially
designed for intra-day traders. This is an Auto Square Off product where you can enjoy the
benefits of intra-day trading. All open orders will be automatically squared off at 3.10 pm.
Your benefits:
6 times exposure on the margin.
Access to K.E.A.T Desktop - specialised financial software that makes trading
easier.
Access to KEAT Premium - an exclusive analysis tool with 52 Indicators for
Technical Analysis, Derivative Chains, Multiple Watchlists, and more.
Intra day calls from our experts for a nominal fee.
Their Research Reports on the economy, select industries and companies.
Research advice via ICICI SecuritiesSMS alerts, so you don't miss out on
important market movements.
Free news and market updates.
Access to 14 top-performing mutual funds through Easy Mutual Funds.
Place a paper-free order for IPO, through Easy IPO.
How to activate?
You can activate ICICI Securities High Trader with any amount less than Rs 5, 00,000/- as
margin, by way of cash or stock.
ICICI Freeway Account:

Trading unlimited! ICICI Securities Freeway enables you to trade as many times as you like at a fixed brokerage. Just pay a fixed brokerage of Rs. 999/- a month and trade as many times
as you want

Your benefits:
4 times exposure on the margin.
Access to K.E.A.T Desktop - specialised financial software that makes trading
easier.
Intra day calls from our experts for a nominal fee.
Their Research Reports on the economy, select industries and sectors and
companies.
Research advice via ICICI Securities SMS alerts, so you don't miss out on
important market movements.
Free news and market updates.
Access to 14 top-performing mutual funds through Easy Mutual Funds.
Place a paper-free order for IPO, through Easy IPO.
How to activate?
You can activate ICICI Securities Freeway with any amount less than Rs.

1, 25,000/- as

margin, by way of cash or stock.

PLANNING WITH ICICI
Why you need to plan?
When it comes to important life goals it is important to develop a financial roadmap to move
your goals forward and to help you make the most of life's changes.
You need to plan to protect yourself and your family against financial risks. Sure, no financial
planner can protect you from the risks you face in life. But good financial planning can

protect you from suffering the financial loss that may result when any of those risks become
reality.
Step 1: Sound financial planning can help you chart a clear course to your retirement goals.
So no matter whether you're just starting out or approaching the end of your career, ICICI
Securitiesprovides you with comprehensive planning and support.
Step 2: Plan taxes as ongoing process and not a one-time event. Good planning will increase
your after-tax cash flows, and may mean greater savings during tax time.
Step 3: Make your money work smarter and harder. Get higher returns from your
investments. Here's how.
Say if you were to invest Rs. 100. Tax-saving schemes like Post Office Schemes, Mutual
Funds and Government Bonds are safe and long-term avenues. Fixed Deposits also give you
a 5.5%* interest, while the share market brings you returns of 18.88%#.
PORTFOLIO MANAGEMENT
Why Portfolio management?
As you drive towards your objective of creating wealth, you need to employ the right
investment vehicles, at the right time. Given the unpredictable nature of equity markets,
staying on course requires expert maneuvering, time and effort.
That's where Portfolio Management comes in. It gives your portfolio the edge by skillfully
sifting through available investment opportunities to help you reduce risk and maximize your
returns; even as you are left with ample time to focus on more pressing matters.
Benefits of Portfolio management with ICICI
ICICI Portfolio Management lets you effortlessly build and maintain a safe and healthy
investment, providing you with multiple benefits.
Count on experience

Their Portfolio Managers bring 10 years of experience to the table, with an in-depth
understanding of diverse investment instruments.

REASEARCH OF ICICI SECURITIES

ICICI Securities Research Center
Welcome to the ICICI SecuritiesResearch Center - the special research cell where some of
India's finest financial analysts bring you intensive research reports on how the stock market
is faring, when is the right time to invest, when to execute your order and more. Depending
on what kind of investor you are, they bring you fundamental or basic research and technical
research. As an investor with ICICI SECURITIES, you get access to these research reports
exclusively. You get access to the following reports.
Intraday calls:
These calls are provided according to changing market situations. Be it news, momentum or
technical perspectives; be updated with what our experts advise you to do during the market
hours.
Special Report:
These reports give you an in depth coverage on special events such as the Budget Report,
Quarterly results, RBI Credit & Monetary Policy, Monsoon Report and much more.
Market Morning:
A technical view summarizing the previous day movement and what is expected to happen on
the current day. This report will also provide you with technical calls for trading along with
various supports and resistances of chosen stocks.
Daily Morning Brief:

A report providing you information with fundamentally researched stocks everyday. You also
have information on all daily economic, political and various other factors which affect the
fundamentals of a company.

Weekly Technical Analysis:

This Weekly Technical Analysis brings you a complete round up of the week gone by recommendations, major supports and resistances, what to look forward to and more.
Sectoral Reports:
Deciding which sector to invest in? Their Super Sector report can guide you. Know details
including the effect of government policies and regulations and estimates about how the
sector is expected to behave.
Stock Ideas:
Ever wanted to pick a needle from a stack of Hay. That's exactly what a stock Idea is. Their
research desk picks out potential stocks which can provide immense scope for returns on
investments. This is a report which is completely based on fundamentals.
Derivative Reports:
You can view the put call ratio, the most active derivative contracts and the top change in
open interest. You can also get FII Statistics, the top gainers and losers and the cost of
carrying out various derivative contracts.
Portfolio Advice:
You can avail the advice of our experts by simply writing an email to them. Whether it is on
choosing a stock or sector or anything regarding investments all your queries will be
answered. If you need advise simply.

ICICI Securities SMS Alerts:

And last, but not the least, you can get these expert tips and recommendations as SMS on to
your mobile phone.
MUTUAL FUND RESEARCH
Mutual Fund Research
When you decide to invest in a Mutual Fund, selecting from hundreds of Mutual Funds can
get tough. With Mutual Fund Research, you can take your pick easily - from equity-based or
debt-based funds, to growth funds or dividend-based funds.
Quick Research for investments
Get access to in-depth research. Or zero in from our concise list of funds, stocks and bonds
based on your preferred criteria.
Analyse with in-depth research
Get independent research with reports, ratings, and rankings from expert analysts; plus,
insight into current analyst recommendations and their historical performance.
Monitor your investments
Get breaking news and set alerts for your portfolio, and track performance with watch lists

INVESTING WITH ICICI SECURITIES

At ICICI SECURITIES, this is precisely what they believe in. They are committed to make
trade easy for you. They understand your level of expertise in trading and provide you
solutions to fit your needs - whether you are a beginner, a seasoned investor or a professional
trader. They can help you invest wisely while taking into account, the amount you wish to
invest. ICICI Securities conducts research for all class of customers.
Beginners
Looking to invest but don't know where and how? Wondering whether online trading would
be a good and reliable way to invest? At ICICI SECURITIES, they make online investing
really easy for you - so you can trade from the comfort of your home or office, or even while
you are on the move.
Seasoned Investors
Given the volatile nature of the stock markets, you can never be really sure of getting stable
returns every time, from your investments. If you have a family to look after, the need for
planning your investments in the long run becomes greater than ever. So whatever youre life
goals, investing wisely could make all the difference between a fortune gained and an earning
lost. ICICI SECURITIES, help you plan investments keeping your future in mind.
Super Trader
If the research for beginners and seasoned are taken care of by them, super tradershaving a
huge volume of transactions, who are dedicated customers, research is conducted to
maximize their returns with minimizing risks.