Ghaziabad Chapter of NIRC of ICSI

NAVCHETNA (नवचेतना )GHAZIABAD CHAPTER (E NEWSLETTER)

DECEMBER

2019

Ghaziabad Chapter

Of NIRC Of ICSI

Chairperson

CS Aarti Jain

Vice Chairperson

CS Sakshi Mittal

Secretary

CS Sonal Jain

Treasurer

CS Pooja Bhasin

Members

CS Nimisha Madan

CS Charu Gupta

CS Arjunn Kumar Tyagi

Editors for this issue

CS Aarti Jain

CS Sonal Jain

Ghaziabad Chapter of NIRC of

ICSI,

B-23, Nehru Apartment, Nehru

Nagar,

Ghaziabad – 201 001

Tel: 0120-4559681

Email ID: ghaziabad@icsi.edu

Chapter Office Staff

Mr. Vinay Kumar

Mr. Anil Upadhyay

Mr. RahulVerma

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DECEMBER 2019

From the Desk of the Chairperson, Ghaziabad Chapter of NIRC of ICSI

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As I took my pen so many emotions,experiences, memories surrounded me butpenning down the same I felt is Herculean taskfor me, still taking up the challenge trying tosum up my feelings.How time flies, it was like yesterday like anwandering traveller I started my journey byfiling nomination….unsure of my role andresponsibilities, not being one of the knownface of Ghaziabad Chapter, but destiny had itsown plan…not only Management Committeemember but also given a chance to lead theGhaziabad Chapter.

After being bestowed with its responsibilities,the next big question was how to deliver ….inlimited time with limited resources….but as it issaid “With great power comes greatresponsibilities”, and the hindrances /difficulties I faced as a Member of ICSI, acted asmy mentors and inspired me to took care ofchallenges faced by all of us in totality.

At this juncture I would like to thank andacknowledge the efforts previous managementcommittee of Ghaziabad chapter because ofwhose untiring efforts I got this opportunity ofmaking positive contributions to my Professionand Professional brethren.

“Every right implies a responsibility; Everyopportunity an obligation, EveryPossession a Duty.”- John D. Rockefeller

Every new day came with new challengeand each challenge was a learningexperience but like a coin has two sides, ifon one hand the challenges weredemanding, on other hand the strengthsupport and acknowledgement ofMembers and Students motivated me andmy Team, to keep on progressing towardsvarious new initiatives for the bettermentof Ghaziabad Chapter.

The experiences gained, support receivedfrom members and students wasenormous, where dream of one becamegoal of all. In strive of excellence, we triedto make positive contributions to impactall our stake holders. Annual ProgressReport of 1st year of present GhaziabadChapter committee is enclosed for yourkind reference.

“Life is a journey, not a destination.”-Ralph Waldo Emerson

DECEMBER 2019

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Acknowledgements:

Before putting my pen down, would like toacknowledge the contribution and Selflessinvolvement of Eminent Speakers and SeniorMembers of the Profession standing besideme towards making the impact.

I would also like to take this opportunity toplace on record hearty thanks to all theMembers and Students of Ghaziabad Chapterwithout involvement of whom the programswould not have been conductedsuccessfully.

I would like to acknowledge the efforts of my Energetic dynamic hardworking committeeteam without their wholehearted andcommitted support the journey would nothave been as satisfying as it is now.

Last but not the least, the Staff of GhaziabadChapter, Mr. Vinay Kumar, Executive Officer,Mr. Anil Upadhyay and Mr. Rahul Verma fortheir continued support in organizing all theprograms efficiently for their perfect logisticsupport.

I wish all the best to the Office Bearers for takingthe Ghaziabad Chapter to new heights in theyears to come.

“We make a living by what we get, but wemake a life by what we give.” —WinstonChurchill.

Happy Reading,

Yours sincerely,CS Aarti Jain ChairpersonGhaziabad Chapter of NIRC of ICSI.

DECEMBER 2019

Annual Progress Report Ghaziabad Chapter

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During the last one year, Our Team has tried tomake positive contributions holistically to themembers and students of Ghaziabad Chapterprofessionally as well as Socially. GhaziabadChapter has been continuously performing atits best capacity and many academic,professional, student related and social welfareevents and activities were organized by theChapter.

A. Professional:1.Conduction of two very important Class RoomSeries for budding professionals and studentson GST and NCLT. The Classroom Series wasaddressed by Eminent Speakers and touchedupon the basics of the subject as well asupdated the participants with the latestamendments on the subject.2.Seminars have been held in regular intervalsspecifically on situational demand topics thattoo mostly on round table basis, to avoid themonologue. This helped the participants tohave direct interaction with subject matterexperts for resolving their queries.3.Excel workshop: This workshop was donewith the motive of value addition to the skills ofmembers and students which will help them intheir professional pursuits.4.Another initiative pertained to workingtowards resolution of big issue, “Non-receipt ofChartered Secretary” Magazine by Members.After taking a series of proactive measures,protracted email communication with ICSI andwith support fromAshish Gargji, webreakthrough and

our Vice President, Sh.were able to make a nowmembers whose

complaints were forwarded by us are largely receiving the Journal on a regular basis.

5.Another first of its kind initiative wasintroduction of Live Webinar at Chapter level.This helped greatly in reaching out tomembers and students who are unable to jointhe Seminars because of time factor orlocation constrain and the team gainedappreciation from our CS family.6.In another first, NAVCHETNA, the e-newsletter of Ghaziabad Chapter has beenlaunched successfully. The Newsletter hascreated a platform for all Members andstudents to express themselves not only onacademic topics but also on spiritual, out ofbox topics. My sincere thanks to my colleague,Co-editor Navchetna and Secretary of theChapter for all her efforts to help in bringingout the Newsletter timely. All the issues ofNavchetna can be accessed athttps://www.icsi.edu/ghaziabad/e-newsletter/7.Based on feedback received from Membersand Students about difficulty in locating theChapter premises, Geo Tagging of GhaziabadChapter was corrected on GoogleMaps.8.The next and most important landmark taskdone was revamping of our child portal,www.icsi.edu/ghaziabad/home, including:

a. E-Library for members and students-important addition in Child Portal relates todirect link to few important sites which ouryoung members may be unaware of. Theselinks will help the members and students getauthenticated help at click of a button, kindlygo through the link below for details:https://www.icsi.edu/ghaziabad/e-library/

DECEMBER 2019

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b. Resources- We have created a repository ofall Presentations from our Esteemed Facultieskeeping in mind interest of those Members andstudents who were not able to attend thesession, the link of the same is:https://www.icsi.edu/ghaziabad/resources/c. Placement Portal- We have initiated andmade functional the placement portal of thechapter which will benefit Both - aspiringtrainees and professionals. Ghaziabad Chapterhas initiated the Placement portal Link.https://www.icsi.edu/ghaziabad/vacancy/9. Launch of Corporate Membership Scheme-Another first initiative was launching ofCorporate Membership Scheme for GhaziabadChapter .

B. Brand Building:1. Media Coverage- Nearly all the programs ofGhaziabad Chapter have been covered by printmedia. For viewing the media coverage one canclick at the following link:https://www.icsi.edu/ghaziabad/media-presence/

2. Career Awareness Program- We have left nostone unturned to cover all nook and corner ofGhaziabad Chapter Zone reaching out toremote areas like Baghpat, Loni, Muradabadetc. for Brand building and creating awarenessabout the profession by medium of CareerAwareness Program. My sincere thanks to mycolleague and Chairperson Career AwarenessCommittee to contribute positively forachieving the same. Link can be viewed at https://icsi.edu/ghaziabad/career-awarenessprograms/

3. Health Initiatives- Recognizing the medicalneeds of the members and in an attempt toprovide certain level of social securities to ourmembers and students we have entered intocollaborations with leading hospitals andpathology labs to make available qualitymedical facilities at affordable cost and to helpour Members and Students avail the benefit ofMedical Facilities at affordable cost, weempanelled Ghaziabad ChapterDiagnostic Labs and Hospitals.

with fewPlease for

complete details, view at this linkhttps://www.icsi.edu/ghaziabad/health-initiatives/This has led to a twin benefit, creatingawareness of Brand ICSI among theInstitutions with whom we have tied up alongwith getting the cost effective medicalfacilities for our Members.

C. Students Related:1. Moot Court Competition- In anotherinitiative for professional development ofStudents, a Moot Court Competition wasorganized at Chapter level, and the winners ofthe Moot Court were awarded financial awardto give motivation to other students also tocome forward for similar events to be held infuture.

2. Student Month Celebrations- Nearly all theactivities for the Student Month wereorganised and students participated in largenumbers in the same. My sincere thanks to mycolleague in Management Committee Teamand our Treasurer for her untiring efforts tomake it a big success.

And the efforts will go in…………

S. No Particulars Page No.1. Chairperson’s Message 022. Past Event Photographs 073. Members & Students Corner

(i)(ii)

“Key Factors to decide Career“ by CS Shalini Aggarwal 13Learning & Reflecting to Dreaming & Doing: 2019 2020by CS Trigun Sharma 16

(iii) Growing landscape of Derivative market in Indiaby CMA Kalyani Karna 17

4. Poem by Dr. Raj Singh5. Legal Updates by CS Anjali Kansal and Ms. ShwetaDwidedi6. Career Fair and Career AwarenessPrograms7. Future Programmes8. Health Initiatives9. Other Initiatives

10. Oral Tution Classes (Foundation) 11. Oral Tution Classes (Executive)

2425283132333435

DECEMBER 2019

INDEX

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Ghaziabad Chapter of NIRC of ICSI organized a Full Day Seminar on“Interactive Session with Regulators “Ease of Doing Business” on January

04, 2020

PAST EVENTS PHOTOGRAPHS

DECEMBER 2019

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DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized a Full Day Seminar on“Interactive Session with Regulators “Ease of Doing Business” on January

04, 2020

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Ghaziabad Chapter of NIRC of ICSI organized a Full Day Seminar on “CSR and Art of Living” on December 07, 2019

DECEMBER 2019

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DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized a Full Day Seminar on “CSR and Art of Living” on December 07, 2019

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DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized One Day Orientation Programme for Foundation & Executive Students on December 13, 2019

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DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized One Day Orientation Programme for Foundation & Executive Students on December 13, 2019

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Hello friends

After qualifying the prestigious CS course, thebiggest dilemma before every new aspirant is todecide whether to opt for job as a Full TimeCompany Secretary or start career as a PracticingCompany Secretary (PCS). I will share my thoughtson the aspect of initiating career as a CompanySecretary in Practice and fulfill the aspirations ofestablishing your own firm.

Choosing career as a PCS offers several benefitssuch as: independence at work, choosing yourown clients, providing services in your specializedarea of interest. In order to become a successfulpractitioner, self assessment with regard tofollowing attributes in mandatory:

Professional Competence: You should have firmbelief in offering services independently? Startyour own practice, only if you are interested andnot because others insist.

Financial Viability: Initially CS practice can bestarted without much amount of investment. Butunlike job your cash inflow might be negligibleand may even be negative.

Family Support: In addition to time spent withclients, an independent practice will takeadditional hours to promote yourself. Make surethat your family is supportive and enthusiastic forthe same otherwise it may lead to mentalstress.

Shalini AggarwalPracticing Company Secretaries

“Key Factors to decideCareer"

Time Management: Make sure that you havethe skills to organize your time according tonature of work so that optimum results can beensured. Sometimes we are so engrossed inexecution of task and forget to analyze timevalue criteria.

Apt Soft Skills: Soft skills are required to collectfees/ advance from clients. Moreover, usingthem in right way, at right time and place is anart. It seems to be easy, but it is not.

Mentoring: Initially, availability of feedback orsupervision from an experienced mentor isanother factor.

Ethics: Governing practice according to ethicalstandards of the profession is anotherchallenging task to be addressed. Maintainingbalance between administrative duties ofprivate practice and requisite level ofprofessional ethics is important.

Responsibility: Are you prepared to take onusof your success or failure in the profession? Youshould always be ready to learn from yourmistakes and change yourself to become abetter professional.

Health: Practice requires a dynamic approachat every front. Make sure your physical healthis capable to meet the expectations of privatepractice.

DECEMBER 2019

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DECEMBER 2019

Continuous updation: Are you open toembrace new upcoming areas of practice andupdate yourself in this era of modernization ofsystems and procedures. Sincere efforts toconsolidate and update with various rules andregulations on a continuous basis ismandatory.

CS Practice: Advantages & Disadvantages

The attributes which is advantageous in oneway may turn out to be disadvantageous inanother way. Some of such facts with respectto practice are discussedhere:

Attribute Advantage Disadvantage

Independence at work

You haveliberty tochoose yourwork. Youare THEBOSS.

As you are the boss, all responsiblitie s are yours. Viz.Administration, Marketing,HR,Accounting, etc

Financial Aspect

you are at liberty to decide your fees based on your experience and quality of work.

You have to manage financial deficit in the day ofunavailability of work, client unwillingness to pay,bearing fixed business expense

Time Flexibility

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9 to 6 job is outof question. Youcan set workinghours decide volumeyour ease.

The fact thatfor apractitioner

and there is no work time limit

as per with regardto workinghours. So aconscious effort tomaintain the time limit is sometimes very difficult.

Clients Another interestingfeature is chooseown clients.

In the Initial phrase,

to Clientele list your is too short,

which can beharmful forother positiveattributes ofpractice.

Reputation Vs Accountabi lity

Ability provideservices generates yourreputation.Fame acts as a motivation.Reputation built onbasis of your knowledge, experience,your ethicalpractices, yourvalue systemand quality ofwork.

to You are best accountable

yourfor errors. Howeversometimes Self

is assessmentthe becomes very

difficult in practice.

DECEMBER 2019

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As closing remarks I would narrate a quote by the greatest philosopher - Aristotle .

“FOR THE THINGS, WE HAVE TO LEARN BEFOREWE CAN DO THEM, WE LEARN BY DOING THEM.”

So analyse your strength, believe in it, moveahead and embrace the opportunities.

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While New Year brings a lot of joy and enthusiasmto set up resolutions and embark on the journeytowards success with new rigor, I consider it as thebest time to reflect and learn from whathappened in the past just so that our enthusiasmis utilized in the best possible way.That’s why I say nothing much has changed from31st December 2019 to 1st January 2020; just thatit’s a nice little halt in our journey to learn &reflect so we further dream and star doingaccordingly.

As far as my reflection & learning goes, it is outlined as under:2019 witnessed my journey –

From an employee to coming back to doing what Ilove and from a father of one to having an angel'Aarya' with us!

From enthusiasm of finding new ways in life to feeling dejected at various times;

From well-wishers who told me why LeaderShaalamay not sustain with already so much competitionin market to people who came out of nowhereand supported me through the course of theyear;

From thinking that I know a lot of things havingworked with some of the finest organisations toestablishing that I just know 'a little' of what thisuniverse has on offer;

DECEMBER 2019

CS Trigun Sharma

Learning & Reflecting to Dreaming & Doing: 2019 2020

From letting go of fear & greed to feelingdejected when business didn't do well in theinitial few months to remaining resilience andjust 'keep trying';

From learning website development toknowing more of social media, networking withthousands of people, following up with possibleclients, winning a deal, having fun, customerdelight....and so on and so forth.

And all of this was possible 'ONLY' due to "Family support".

As has been the case in the last 33 years, 2019was also a year of "learning, resilience,fulfillment, happiness and fun". With this, 2019signs off with a hope that 2020 will bringgreater happiness, hope and humility ineveryone's life.

Please write to me atTrigunSharma@LeaderShaala.com to help meunderstand how you reflect & learn from 2019with the dream and passion you carry gettinginto 2020.

Until next time, keep trying and keep learningkyunki “koshish karne se ho jatahai”.

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INTRODUCTION:

India has been proved to be a vibrant market forderivatives. The trading value of capital marketenlisted at National Stock Exchange of India wasRs. 2,810,893 crores for the year 2011-12 whilethis value climbed to Rs. 4,236,983 crores in theyear 2015-16 with compounded annual growthrate of 8.55%. According to the report of Forbes,India will be the third largest economy withexpected GDP USD 9.6 trillion in the world in 2020(China at number one and United States atnumber two position).The wave of globalisationand liberalisation has increased the risks ofinvestments due to variations in interest rates andfluctuations in exchange rates. The increase inrisks of investments in financial market led to theadoption of derivative trading in India. RBI gavepermission for over the counter forward rateagreement and interest rate swap on 7th July 1999on recommendations of L.C. Gupta Committeeand the trading of derivative market commencedin India from the year 2000. This article describesdifferent derivative instruments and their growthin India and throws a beam of light on the failureof Lehman Brothers in context with derivativetrading.

MEANING OF DERIVATIVE:

Derivative has been defined as the financialinstrument whose value is derived from the valueof other variables. The variables here can be theprice of traded assets or it can be othervariables

DECEMBER 2019

CMA Kalyani Karna Practicing Cost Accountants

Growing landscape of Derivative market in India

like reference rate or index. For example, astock option is a derivative whose value willdepend on the price of stock in the market.Derivative is considered as most complexinstrument in the capital market. There arefour most common types of derivatives-forwards, futures, swaps and options.

The Securities Contracts (Regulation) Act of1956 defines the word “derivative” includes:

(a) A security derived from a debt instrument,share, loan, whether secured or unsecured,risk instrument or contract for differencesor any other form of security;

(b)A contract which derives its value from theprices, or index of prices, of underlyingsecurities.

PARTICIPANTS IN DERIVATIVE MARKET:

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Derivatives are versatile instruments and it can beused for hedging the risk, speculation and forarbitrage. This implies that there are three mainparticipants in the derivative market, hedgers,speculators, and arbitrageurs.

Hedger is the person who use derivative to hedgeor prevent risk of loss in future. Hedgers arepessimistic and worried about the decline inprices of their investments or increase in value oftheir obligations payable in future.

Speculator is the person who uses to bet on futuremovement in price of an asset. Speculators areoptimistic and they expect to the increase in valueof market price and they accept the risk passed onby the hedgers.

Arbitrageur is the person who takes theadvantage of difference of prices between twomarkets. He buys from one market and sells thesame asset in another market and gains the profitfrom the difference in price between twomarkets. For example, a stock is traded at BombayStock Exchange and New York Stock Exchange.The price of the stock at Bombay Stock Exchangeis Rs.150 and the price at New York StockExchange is $10. The exchange rate betweendollar and Rs at that time is Rs 65 per dollar. Anarbitrageur can simultaneously buy 100 shares atBombay Stock Exchange and sell them at NewYork Stock Exchange. The profit to arbitrageur willbe:

DECEMBER 2019

However, this situation will not go for long. Asthe arbitrageurs buy from BSE the forces ofdemand and supply will cause the dollar priceto decline or the value of Rs will incline to makethe two prices equivalent in twomarkets.

Besides, the three main participants there arespreaders, scalpers, day traders and positiontraders.

TRADING OF DERIVATIVES:

Derivatives can be traded from the stockexchanges or over the counter. Over thecounter market of derivatives involve banks,fund managers, and corporations. Forward andswaps are traded over the counter while thefuture and options are normally traded throughexchanges.

Table 1: OTC and Exchange Traded Derivatives

The arbitrageur can get the profit Rs. 50,000 inabsence of transaction cost by buying the stockfrom BSE at Rs. 150 selling at NYSE for $10.

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RBI gave permission for over the counter forward rate agreement and interest rate swap on 7th July 1999 on recommendations of L.C. Gupta Committee. However, the trading of derivative commenced from 9th June 2000. SEBI gave the permission to trade derivative from Bombay Stock Exchange, and National Stock Exchange and their clearing houses. The chronology for the trading of derivatives in India can be viewed as follows: Table 2: Chronology of trading of derivatives in India

DECEMBER 2019

Forward contract:Forward Contract is an agreement to buy or sell an asset at a specified future date for a specified price agreed between buyer and seller. Forward is relatively simple derivate and it is traded over the counter. The trade agreement of forward can be made between financial institution and one of its clients. One party in the forward contract will agree to who will buy the asset will be at long position and buy the underlying asset at specified price at specified future date. The party another party who agrees to sell the asset will be at shortposition. The foreign exchange forwardcontract is more popular and banks employspot market traders and forward foreignexchange traders. This foreign exchangeforward contract is used to hedge foreigncurrency risk.

Over the counter market is the market wherecompanies agree for the transaction ofderivative without the involvement ofexchange. There will credit risk involved withthe OTC market trading. The parties at thetrade of derivative might make default inpayments when they are at loss in thetransaction. Hence, there will be credit risk anddefault risk associated with OTC market tradingof derivatives. RBI derives power to regulateOTC derivative market under Reserve Bank ofIndia Act, 1934, the Banking Regulation Act,1949, the Foreign Exchange Management Act,1999 and the Securitisation and Reconstructionof Financial Assets and Enforcement of SecurityInterest Act, 2002. RBI Amendment Act, 2006mandates that an OTC derivative transactionwill be legally valid, when one of the parties tothe transaction has to be a RBI regulated entity.It will ensure that the transactions of OTCmarket will be within regulatory framework ofRBI.

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Future contract:

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Future Contract is an agreement to buy or sell anasset at a specified future date for a specifiedprice with the involvement of exchange. Futurecontract are normally traded at stock exchangeand the terms for the trade of future are specifiedby exchange. The future contracts for overnightare cleared with the help of clearing member ofexchanges. The buyer of the future contract willbe at long position while the seller of contract issaid to be at short position. The future contractcan be made for commodities or for financialassets. The commodities include pork, live cattle,bellies, sugar, wool, lumber, and copper,aluminium, gold and tin. The financial assets willinclude stock indices, and currencies. The futureprices are reported at websites of stock exchangesand financial press releases at regular interval.The exchange specifies the contract size (what willbe number or amount of asset bought or sold inone contract), where delivery can be made, andwhen the delivery will be made. Here, theexchange acts as a guarantor, regulator, andintermediary for future contract..

Margin requirement for index future: There ismargin requirement or minimum amount to bedeposited by both parties to make future contract.There are three types of margin in the case offuture contract of index.

Initial margin:

The exchange makes is mandatory to depositsome amount by both parties (buyer and seller) atthe time of entering in contract. The marginrequirement is decided by the exchange afterconsidering the volatility (risk) faced by thesecurity. The initial margin is computed with thehelp of several methods like STANS (Monte CarloSimulation method), and SPAN (grid simulation

DECEMBER 2019

method). It is usually 10% of total contractvalue. The initial margin will be always kept byboth parties in their accounts opened atexchange.

Maintenance margin:

Maintenance margin is the minimum marginrequired to hold either long or short position offuture. It is sub-limit within initial margin limit.Maintenance margin is normally 75% to 80% ofthe initial margin (It will be 8% of total contractvalue). For example, the initial margin is 10% offuture contract value Rs 100,000. The initialmargin will be Rs. 10,000. The maintenancemargin is 80% of initial margin then it will beRs.8,000. Hence, the maintenance margin willbe 8% of total contract value Rs.100,000. Thereis daily settlement of account in future knownas “mark-to-market” and maintenance marginhelps in daily settlement process. Maintenancemargin is minimum amount which is alwaysrequired to be kept by both parties entering infuture contract. When the balance in theaccount goes below the maintenance marginlevel a margin call is made by the exchange tomaintain the level of initial margin. The mark-tomarket and the maintenance of initial andmaintenance margin can be easily understoodwith the help of followingexample:

Assume that Mr. A has undertaken a buyposition (long position) in 2 future contracts ofSBI at a future price of RS. 1000. One futurecontract equals to 100 shares. It means thetotal number of shares contracted to buy underfuture is 200 shares. The future contract pricefor one contract is Rs. 1,000. Thus, the totalvalue of the contract will be (2 x 100 x 1000)RS. 200,000. If the initial margin limit is 10%,then Mr. A will be required to deposit RS.20,000 as initial margin (10% of Rs.200,000).

If the maintenance margin is 8% of the contractvalue or 80% of initial margin level then exchangewould keep Rs. 16,000 as a benchmark fordeciding whether a margin call has to be made. Ifthe margin account balance falls below Rs.16,000on any day, margin call would be made and Mr. Ahas to fill margin account back to initial marginlevel of Rs20,000. The change in margin accountunder different cases can be viewed as follows:

Table 3: Marking to market

DECEMBER 2019

maintenance margin facility and the amount inmargin account should always be equal to initialmargin.

Variation margin: It is the additional moneybrought by the party from whom margin callhas been made. The additional money broughtto bring the balance to the level of initialmargin is variation margin.

Indian future Market and Global futureMarket:The volume of future traded at NSE stood atsecond position for the year 2016. The positionof NSE for future market can be viewed asfollows:Table 4: Top ten exchanges in world dealingwith single stock futures

Nowadays, most brokers do not permit maintenancemargin facility. Absence of maintenance marginfacility or 0% maintenance margin implies that eventhe stock price falls by a single rupee, the margin callwill be made and the parties will be required tomaintain the initial margin. If the maintenancemargin is 0% and the future contract price is Rs.1,000and the market price falls to Rs 999 then margin callwill be made irrespective of the thing that theamount in margin account does not falls belowmaintenance margin. Zero percent maintenancemargin implies that there isno

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Source: World Federation of ExchangereportOptions:Option is a derivative where the buyer or holderof option has right to buy or sell the underlyingasset at the agreed price to the seller of option. Itcan be traded both at exchange and over thecounter. There are two types of options, call andput option. Call option gives right to buy an assetto buyer at specified date and specified price. Putoption gives the right to the sell option to buyer(holder) at specified date and specified price. Thehistorical growth of stock options in India can betracked as follows:

Swaps:The first over the counter currency swap deal was

negotiated between IBM and World Bank in 1981.A swap deal is over the counter agreementbetween buyer and seller to exchange cash flowsin future. Swap agreement can be made for theexchange of currency or interest payable in future.The most popular swap is interest rate swapwhere LIBOR (London Inter-Bank Offered rate) isexchange for fixed rate of interest. LIBOR is usedas a proxy for risk-free discount rate.The business growth of stock futures and index

future in India at NSE can be viewed as follows:

Table 5: Number of trades of futures and options at NSE

Source: Fact book 2018 ofNSE

DECEMBER 2019

CONCLUSION:Derivatives are important tool for the risk

management and play the economic functionof price discovery. It has redefined thelandscape of capital market since introductionin India. Derivative instruments help to hedgerisk of currency exchange rate fluctuations withthe increase in globalisation. It helps to pass onthe risk from pessimist or hedgers to optimist orspeculators. The equity derivative market ofIndia has shown tremendous growth andNational Stock Exchange of India has enrolleditself at the second position in world top tenexchanges for single stock futures. The analysisshows that there has been 13.35% of grossturnover is institutional investors, 37.33% inretail investors, and 49.32% in proprietaryinvestors for the year 2015-16. It shows thatthe proprietary investors have been increasingin the derivative market and using it as riskmanagement tool. Derivatives can be used tominimise the risk and maximise return on theportfolio of investors. Bankruptcy of LehmanBrothers was filed on September 15, 2008being the largest bankruptcy in the history stillthe survival was expected till the end of theyear 2008.

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It was fourth largest investment bank of UnitedStates at the time of collapse. Several companieslike Korean Development Bank, Barclays bank inUnited Kingdom and Bank of America showedinterest in buying it but Lehman proved to be “toobig to fail”. The bankruptcy of Lehman Brothersleft a lesson for the investment bankers fordealing with over the counter derivatives. Thefailure was a combination of risky investments,high leverage and liquidity. Lehman Brothersactively traded in over the counter derivativemarket and it had more than one millionoutstanding transactions with approximately8,000 different counter parties.

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References:•Report of World Federation of Exchange for 2016.

• Report of IOMA for the year 2016 .

•Fact book of NSE 2016 , Book for Option, futures, and other derivatives by John C. Hull.•Research paper on derivatives of Dr. Himanshu and Dr. Nilesh Gujjar .

•Study material for Strategic FinancialManagement of Institute of Cost Accountantsof India.

“ मर्यादर्ओंकी चर्दर "

ममलर्ही नही,ंकोई नर्र्ाबसर्तोहफर्तम् ु हर्ररमलतमु कहो, तो ख ु द को ही तम् ु हें उपहर्रकर दं ?

र्िु रूह तो कबकी हो च ु की है तम् ुहर्री,अब कहो तो,र्िु तन भी तम् ु हर्ररनर्मकर दं ?

होठं हहलितही नही ं तम् ु हर्रर,जमर्िनिकडर िस ,कहो तो तम् ु हर्ररमल,स्वरं् को बदनर्मकर दं ?

कबतक दबर्कररखोिि,मोहब्बत िकरर्ज़को, इजर्जतहमें हो, तो मैं ही इजहर्रकर दं ?

तमु कहो तो,इस च ु नररर्ा को भी तर्र-तर्रकर दं?

कबतकजलोिि इस ववरहकीतवपशमें ,अबआकरतरी बर्होंमें,शीतल र्िु आि कर दं ?

र्िु वर्णीपहिल ही मौन करच ु िकहो हमर्ररमल, अब कहो तो तररुी कलम भी बिजर्नकर दं?

- डाराज सिहं

DECEMBER 2019

Dr. Raj SinghPh.D

"नववर्“

वर्ुय और कु छ भीनही ं

,बस समर् कर्पमर्नर्है।नर्ा बस पडर्वहै उसकर् ,जो रर्होंकर्फ़सर्नर्है |

कु छख ु शनमु र्अहसर्स

है,रर्स्तर्जो भी िजु रिर्ा।ववरल वक्तिकललर्टपर ,अककतभी कु छकरिर्ा।

चचतनहो अब उसिकमल, चक्रनर्ा जो शरूहआ।

शर्दा और भी होिंि चर्हिनवर्िल तम् ु हर्रर , वविवचनर्उस वर्ुय कीहो,कहो तो सबको तम् ु हर्रर्इकंर्रकर दं? सग्रहर्लर्में जो रखर् हु आ।

बहतु कु छकहच ु की ह,इशरं् रों में तमु को,कर्मनर्ुं शभु उसिकमल,

अब कहो तो लर्न बिर्वतसरिआ म करदं ? सफरजो अब शरू हु आ।

तरर्रर्स्तर्उसउपवन िसिजु र,िु

कु छ ज््रर्दर्हीओढ़ली ह,मर्यादर्ओै ुं की चर्दर , जो सिु न्धिर्ुोुं िसहो भरर् ह ु आ

- डाराजसिहं

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UPDATES UNDER SEBIREGULATIONS

The Securities and Exchange Board of India videits Circular No.SEBI/HO/IMD/DF1/CIR/P/2019/169datedDecember 27th, 2019 has issued a circularregarding measures to strengthen the conduct ofInvestment Advisors (IAs) in which to protect theinterest of Investors and to promote and developthe Securities Market, SEBI has guided to IAs toprovide investment advice only for a considerationin return after proper taking into account of riskprofile of the client. Also, suggested that theconsideration must be accepted only throughbanking channels. The circular will be effective w.e.f. Jan 1st 2020.T

The detailed circular can be accessed at the linkgiven hereinafter:

https://www.sebi.gov.in/legal/circulars/dec

2019/measures-to-strengthen-the-conduct-ofinvestment-advisers-ia-_45490.html

The Securities and Exchange Board of India videits CircularSEBI/HO/IMD/DF3/CIR/P/2019/166

No. dated

December 24th, 2019 has issued the guidelines related with the Investment in units of MutualFunds in the name of minor throughguardianand ease of process for transmission of units inwhich to bring the uniformity in the process ofAsset Management Companies (AMCs), in respect of investments made in the name ofMinor

Through a Asset Management Companies Inrespect of investments made in the name ofMinor through a guardian and to enable theefficient name the investment was made mustapproach transmission of units, SEBI hassuggested that the payment made for investmentby the minor shall be accepted from the minorbank account or the minor with its guardian onlyand upon attaining the status of majority theminor in whose the concerned parties involved inthe investment to update the status of attainingmajority, failing which the Systematic InvestmentPlan (SIP), Systematic Transfer Plan (STP) andSystematic Withdrawal Plan (SWP) will besuspended.

The circular can be accessed at the link givenhereinafter:

https://www.sebi.gov.in/legal/circulars/dec-2019/circular-on-investment-in-units-of-mutual-funds-in-the-name-of-minor-through-guardian-and-ease-of-process-for-transmission-of-units_45457.htT

The Securities and Exchange Board of India videits Circular No. CIR/CFD/CMD1/162/2019 datedDecember 24th, 2019 has issued a Format onStatement of Deviation or Variation forproceeds of public issue, rights issue,preferential issue, Qualified Institutions

DECEMBER 2019

CS ANJALI KANSAL MEMBER

SHWETA DWIVEDI (STUDENT)

NAVCHETNA Page 25

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Placement (QIP) etc. in which in order to bring theuniformity SEBI has prescribed a particular formatfor disclosures made by listed entities onstatement of deviation or variation for proceeds ofpublic issue, right issue, preferential issueetc.

The circular can be accessed at the link givenhereinafter:

https://www.sebi.gov.in/legal/circulars/dec-2019/format-on-statement-of-deviation-or-variation-for-proceeds-of-public-issue-rights-issue-preferential-issue-qualified-institutions-placement-qip-etc-_45447.html

The Securities and Exchange Board of Indiavideits Circular No.SEBI/HO/DDHS/DDHS/CIR/P/2019/161dated December 24th, 2019 has issued the guidelines for filing of Placement Memorandum - InvITs proposed to be listedwhere the Infrastructure Investment Trust (InvITs) proposed to list their units issue on private placement basis to a selected group of persons shall issue a draft placement memorandum along with a due diligence report to SEBI and Stock exchange through SEBI registered merchant banker not less than 30 days prior to the opening of issue.The Circular shall come into effectfrom January 15,2020for all InvITs issuing units on privateplacement basis and are proposed to belisted.

The detailed guidelines can be accessed at the link given hereinafter:

https://www.sebi.gov.in/legal/circulars/dec2019/g uidelines-for-filing-of-placement-memorandum-invits-proposed-to-be-listed_45446.html

The Securities and Exchange Board of India videits Circular No.CFD/DIL1/CIR/P/2019/0000000154datedDecember 11th, 2019 w.r.t. Filing of Offer

•

Documents under Securities and Exchange. Board of India(Issue of Capital and Disclosure Requirements)Regulations, 2018in which SEBI has prescribed theregional offices of SEBI to whom the draft offerdocument is required to be filed by the issuer companydepending upon the issue size of the proposed offer

The Circular shall come into effect from its publication i.e.December 11th 2019.

The detailed guidelines can be accessed at the link givenhereinafter:

https://www.sebi.gov.in/legal/circulars/

ec-2019/filing-of-offer-documents-under-

securities-and-exchange-board-of-india-

issue-of-capital-and-disclosure

requirements-regulations-2018 45272.html

UPDATES UNDER RBI CIRCULARS

The Reserve Bank of India vide its Circular datedDecember 30th, 2019 has issued clarification w.r.t.Enhancing facilitation of National Electronic TollCollection (NETC) system, where in order to allowingmore payment choices for the customers, the NETCsystem allows all authorized payment systems andinstruments [non-bank PPIs, cards and Unified PaymentsInterface (UPI)] shall from now be permitted for linkingwith the FASTags, which can be used for various types ofpayments (vehicle toll, parking fee, etc.)

The circular can be accessed at the link given hereinafter:

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.as px?Id=11769

The Reserve Bank of India vide its Circular datedDecember 24th, 2019 has introduce a new type of semi-closed Prepaid Payment Instrument (PPI) –PPIs upto ₹

10,000/- with loading only from bank account, in whichto give impetus to small value digital payments RBI hasintroduce a new type of semi-closed PPI with variousfeatures including that the amount loaded in such PPIsduring any month shall not exceed ₹ 10,000 and the total

DECEMBER 2019

amount loaded during the financial year shall notexceed ₹ 1,20,000 and these PPIs shall be usedonly for purchase of goods or services and not forfund transfer. However, the amount outstandingin such PPIs at any point of time shall not exceed ₹10,000.The circular can be accessed at the linkgiven hereinafter:

NAVCHETNA Page 27

•https://www.rbi.org.in/Scripts/BS_CircularIndexDi splay.aspx?Id=11766

The Reserve Bank of India vide its Circular datedDecember 23rd, 2019 has amended the masterdirections Non-Banking Financial Company – Peerto Peer Lending Platform (Reserve Bank)Directions, 2017, in which the lenders can giveaggregate exposure to all the borrowers of notmore than 50 lakh across all P2P platforms at anypoint of time. However, the lenders investing morethan 10 lakh shall issue a certificate to all P2Pplatform from a Practicing Chartered Accountantcertifying minimum net-worth of ₹ 50 lakh alongwith a declaration that they have understood allthe risks associated with lending transactions andthat P2P platform does not assure return ofprincipal/payment of interest.The circular can beaccessed at the link given hereinafter:

https://www.rbi.org.in/Scripts/BS_CircularIndexDis play.aspx?Id=11764

The Reserve Bank of India vide its Circular datedDecember 16th, 2019 w.r.t. Furthering DigitalPayments – Waiver of Charges –NationalElectronic Funds Transfer (NEFT) System, in whichto give further impetus to digital retail payments, ithas now been decided that member banks shallnot levy any charges from their savings bankaccount holders for funds transfers done throughNEFT system which are initiated online.The circularcan be accessed at the link given hereinafter:

***************************************

https://www.rbi.org.in/Scripts/BS_CircularIndexDispl ay.aspx?Id=11756

The Reserve Bank of India vide its Circular datedDecember 6th, 2019 w.r.t.Acquisition of financialassets by Asset Reconstruction Companies (ARCs)from sponsors and lenders, in which the ARCscannotaccept the Non - performing Assets (financial assets)from those banks or Financial Institutions who arethe sponsors of that ARC or who is either a lender orsubscriber to the fund, if any raised by that ARC oran entity in the group to which that ARC is belong to.However, they may participate in the auction ofthose financial assets provided such auctionisconducted in a transparent manner, on arm’s lengthbasis and the prices are determined by marketforces.The circular can be accessed at the link givenhereinafter:

https://www.rbi.org.in/Scripts/BS_CircularIndexDispl ay.aspx?Id=11749

DECEMBER 2019

DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI participated in 01 Career Fair organized by DLF Public School, Sahibabad, Ghaziabad on December 07, 2019

NAVCHETNA Page 28

DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized 04 Career Awareness Programmes at Ingraham Inter College, Dr. Ambedkar Inter College,

Maharishi Dayanand Vidyapeeth Inter College and Vidyavati Mukund LalGirls College on December 09, 11, and 16, 2019

NAVCHETNA Page 29

DECEMBER 2019

Ghaziabad Chapter of NIRC of ICSI organized 04 Career Awareness Programmes at Ingraham Inter College, Dr. Ambedkar Inter College,

Maharishi Dayanand Vidyapeeth Inter College and Vidyavati Mukund LalGirls College on December 09, 11, and 16, 2019

NAVCHETNA Page 30

DECEMBER 2019

FUTURE PROGRAMME

NAVCHETNA Page 31

DECEMBER 2019

HEALTH INITIATIVES BY GHAZIABAD CHAPTER

NAVCHETNA Page 32

DECEMBER 2019

OTHER INITIATIVES BY GHAZIABAD CHAPTER

NAVCHETNA Page 33

ORAL COACHING CLASSES

DECEMBER 2019

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ORAL COACHING CLASSES

DECEMBER 2019

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