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About SLBM, IPO and Bonds

Initial Public Offering (IPO)

We at VCPL provide IPO distribution services. We offer services of Mainline IPO's and SME IPO's. 

Securities Lending and Borrowing Mechanism (SLBM)

SLB allows investors to borrow shares from other investors against collateral. Short selling means selling of a stock that the seller does not own at the time of the trade. Securities Lending and Borrowing (SLB) is a scheme that has been launched to enable settlement of securities sold short. SLB enables lending of idle securities by the investors through the clearing corporation/clearing house of stock exchanges to earn a return through the same. For securities lending and borrowing system, clearing corporations/clearing house of the stock exchange would be the nodal agency and would be registered as the “Approved Intermediaries”(AIs) under the Securities Lending Scheme, 1997.

Bonds

VCPL distributes all types of government bonds which include NHAI and REC tax saving bonds. Basic concept of Corporate Bonds is explained below:-

Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business. When one buys a corporate bond, one lends money to the "issuer," the company that issued the bond. In exchange, the company promises to return the money, also known as "principal," on a specified maturity date. Until that date, the company usually pays you a stated rate of interest, generally semiannually. While a corporate bond gives an IOU from the company, it does not have an ownership interest in the issuing company, unlike when one purchases the company's equity stock.

Corporate bonds tend to rise in value when interest rates fall, and they fall in value when interest rates rise. Usually, the longer the maturity, the greater is the degree of price volatility. By holding a bond until maturity, one may be less concerned about these price fluctuations (which are known as interest-rate risk, or market risk), because one will receive the par, or face, the value of the bond at maturity. The inverse relationship between bonds and interest rates that is, the fact that bonds are worthless when interest rates rise and vice versa can be explained as follows:

  • When interest rates rise, new issues come to market with higher yields than older securities, making those older ones worthless. Hence, their prices go down.
  • When interest rates decline, new bond issues come to market with lower yields than older securities, making those older, higher-yielding ones worth more. Hence, their prices go up.
  • As a result, if one sells a bond before maturity, it may be worth more or less than it was paid for.

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