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Risk of Trade Execution: Various types of transaction risk may involved due to delay between agreement on a trade and its execution in the securities market Delay is obviously required to execute the transaction Clearing and settlement period E.g., in Nepal : T+3 for equity (Previously it was T+5) and T+0 for bonds Securities market may have mechanism to address those risk to some extent Following types of risks of trade execution 1.        Principle risk: Risk to the seller that the buyer will fail to make payment of the securities May occur if there is gap between handing over securities and receiving money Can be eliminated by making delivery against payment (DAP) 2.        Replacement Risk Risk that a counterparty will fail to execute an agreement leaving you to find another deal The seller may face loss faced due to; Price fall of the security Cost associated to find another buyer etc. 3.        Liquidity Ris

GENERAL ORGANIZATION OF SECURITIES MARKETS ·          Primary Market Market for first hand securities Securities are issued in two ways; Private placement Issuing securities to less number of institution and individuals (maximum number is specified in the respective act; in case of Nepal , as provisioned by Companies Act, 2006, securities can be issued to less than 50 institutions or individual through private placement) Issued on negotiation through letter or telephone or personal contact  Public offering Basic three types of public offering Initial public offering (IPO): Issuing securities to the public for the first time by the company Further public offering (FPO): Another public offering after having IPO Rights offering: Offering securities to the existing shareholders ·          Secondary Market Stock exchanges Over-the-Counter (OTC) Markets Third and Fourth Markets Stock Exch

SECURITIES MARKETS: ·          Important part of efficient financial system ·          Offer financial intermediation for debt, equity and other securities instruments ensuring greater competition among financing sources and thereby greater efficiency ·          facilitate the sale and resale of transferable securities ·          Addresses the basic three mismatches among the savers and borrowers (Company) in the economy in the following manner                 1.              Size mismatch:                                 Companies always want to raise large amount (large size) of fund while individual savers always have small amount to invest. Securities market reconciles this mismatch by permitting aggregation of a large number of small investors in to the large sums required by the borrowing companies through securities issue.                 2.              Duration mismatch:                                 Borrowers (entrepreneurs) always want