Tuesday, December 28, 2010
European Depositary Receipt (EDR)
After learning ADRs and GDRs and its difference, you should increase your learning by studying about EDRs. EDR means European depositary receipt. If any company wants to sell his shares in European countries, you need European depositary receipt. This receipt is provided by European banks. Suppose, an Indian company want to sell the shares in France. For this, Indian company has to acquire EDR after paying its minimum money. This is usable in the limited countries in Europe. Many European countries accept GDRs as substitute of EDRs.
American Depository Receipts
Definition of ADRs
American depository receipt is the receipt for trading of non US Company in the stock market of USA. IF any non USA company is interested to trade in USA stock market, then it can receive ADR level one, ADR level two and ADR level three. ADR for level one can easily get after accepting the conditions of SEC of USA but major problem is that this ADR can only use for getting investment from USA and it can not be used for getting investment money from any other country. It is the reason that Indian company prefers to get GDRinstead of ADR. Students who are studying finance should understand one thing that ADRs is compulsory to sell shares in USA. No one can sell shares with GDRs as the substitute of ADRs. Any company can start trading in USA stock exchange after buying ADRs from New York Stock exchange or NASDAQ.
American depository receipt is the receipt for trading of non US Company in the stock market of USA. IF any non USA company is interested to trade in USA stock market, then it can receive ADR level one, ADR level two and ADR level three. ADR for level one can easily get after accepting the conditions of SEC of USA but major problem is that this ADR can only use for getting investment from USA and it can not be used for getting investment money from any other country. It is the reason that Indian company prefers to get GDRinstead of ADR. Students who are studying finance should understand one thing that ADRs is compulsory to sell shares in USA. No one can sell shares with GDRs as the substitute of ADRs. Any company can start trading in USA stock exchange after buying ADRs from New York Stock exchange or NASDAQ.
Indian ADR Trading in US
| ADR ISSUE | SYMBOL | INDUSTRY | EXCH |
| DR. REDDY'S LABORATORIES LTD. | RDY | Pharmaceutical | NYSE |
| HDFC BANK LTD. | HDB | Banks | NYSE |
| ICICI BANK LTD. | IBN | Banks | NYSE |
| INFOSYS TECHNOLOGIES LIMITED | INFY | Technology Services | NASDAQ |
| MAHANAGAR TELEPHONE NIGAM LIMITED | MTE | Fixed Line Comm. | NYSE |
| REDIFF.COM INDIA LTD | REDF | Technology Services | NASDAQ |
| SATYAM COMPUTER SERVICES LIMITED | SAY | Technology Services | NYSE |
| SIFY LTD. | SIFY | Technology Services | NASDAQ |
| VIDESH SANCHAR NIGAM LIMITED | VSL | Fixed Line Comm. | NYSE |
| WIPRO LTD. | WIT | Technology Services | NYSE |
GDRs And its Importance
Definition of GDRs
GDRs mean global depository receipts. It is negotiable and transferable from one body to another. It is also evidence of ownership of a company's shares . When a bank purchases shares of foreign company, at that time it issues a certificate, that certificate is called global depository receipt.
Suppose A USA based company wants to buy the shares of Indian company, then it only possible by getting GDRs. USA Company can buy Indian company shares by the help of his bank. Bank takes some charges and issues GDR.
Suppose A USA based company wants to buy the shares of Indian company, then it only possible by getting GDRs. USA Company can buy Indian company shares by the help of his bank. Bank takes some charges and issues GDR.
Importance of GDRs
If any company gets GDRs for his purchased shares, then these can be sold in any stock market of world through global network of banks and financial institutions.
Global Depositary Receipts (GDRs) give power to investors and companies access to two or more markets, most frequently the US market and the Euromarkets, with one security. GDRs are most commonly used when the company is raising capital in the local market as well as in the international and US markets, either through private placement or public offerings.
Securities and Exchange Commission of USA has allowed USA companies and also foreign companies to buy and sell shares through GDRs
Among the Indian Companies, Reliance Industries Ltd. was the first company to get funds through a GDR issue , after this many other Indian Companies like Infosys,WIPRO AND ICICI have started to raise funds via GDRs.
It is the good way for getting foreign investment for developing economy .
Indian GDR
| THE COMPREHENSIVE GDR LISTING | |||||
| GDR Companies # euro convertible bond **adjusted for bonus | Industry Segregation | Date Of GDR Issue | Size Of GDR Issue US $ Mill | Shares per GDR | GDR Issue Price **(US$) |
| Arvind Mills | Textiles | 03-Feb-94 | 125.00 | 1.0 | 9.78 |
| Ashok Leyland | Autos | 20-Mar-95 | 137.77 | 3.0 | 12.79 |
| Bajaj Auto | Autos | 27-Oct-94 | 110.00 | 1.0 | 16.89 |
| Ballarpur Ind.# | Paper | 27-May-94 | 35.00 | 1.0 | 8.77 |
| Bombay Dye | Textiles | 16-Nov-93 | 50.00 | 1.0 | 9.20 |
| BSES Ltd | Power | 04-Mar-96 | 125.00 | 3.0 | 14.40 |
| Century Textiles | Diversified | 21-Sep-94 | 100.00 | 2.0 | 254.00 |
| CESC | Power | 14-Apr-94 | 125.00 | 1.0 | 10.67 |
| Core Parent | Pharma | 21-Jun-94 | 70.00 | 1.0 | 12.60 |
| Crompton Greaves | Electrical | 02-Jul-96 | 50.00 | 1.0 | 7.56 |
| DCW | Diversified | 19-May-94 | 25.00 | 5.0 | 13.55 |
| Dr. Reddy's | Pharma | 18-Jul-94 | 48.00 | 1.0 | 11.16m |
| E. I. Hotels | Hotels | 07-Oct-94 | 40.00 | 1.0 | 9.30 |
| EID Parry | Fertiliser | 07-Jul-94 | 40.00 | 1.0 | 8.39 |
| Finolex Cab | Cables | 19-Jul-94 | 55.00 | 1.0 | 16.60 |
| Flex Industries | Packaging | 30-Nov-95 | 30.00 | 2.0 | 8.05 |
| G.E. Shipping | Shipping | 17-Feb-94 | 100.00 | 5.0 | 15.94 |
| G.N.F.C | Fertiliser | 06-Oct-94 | 61.11 | 5.0 | 12.75 |
| GAIL | Oil & Refineries | 04-Nov-99 | 22.50 | 6.0 | 9.67 |
| Garden Silk | Textiles | 04-Mar-94 | 45.00 | 5.0 | 26.28 |
| Grasim (1st) | Diversified | 25-Nov-92 | 90.00 | 1.0 | 12.98 |
| Grasim (2nd) | Diversified | 09-Jun-94 | 100.00 | 1.0 | 20.50 |
| Guj Ambuja # | Cement | 26-Nov-93 | 80.00 | 1.0 | 5.95 |
| Himachal Futuri | Telecomm. | 02-Aug-95 | 50.00 | 4.0 | 9.30 |
| Hindalco (1st) | Aluminium | 22-Jul-93 | 72.00 | 1.0 | 10.73 |
| Hindalco (2nd) | Aluminium | 08-Jul-94 | 100.00 | 1.0 | 16.00 |
| Hindustan Dev. | Diversified | 21-Sep-94 | 76.00 | 1.0 | 2.05 |
| India Cements | Cement | 11-Oct-94 | 90.00 | 1.0 | 4.23 |
| Indian Alum. | Aluminium | 22-Feb-94 | 60.00 | 1.0 | 6.77 |
| Indian Hotels | Hotels | 28-Apr-95 | 86.25 | 1.0 | 16.60 |
| Indian Rayon | Diversified | 25-Jan-94 | 125.00 | 1.0 | 15.01 |
| Indo Gulf | Fertiliser | 18-Jan-94 | 100.00 | 1.0 | 4.51 |
| Indo Rama | Textiles | 21-Mar-96 | 50.00 | 10.0 | 11.37 |
| ICICI | Finance | 02-Aug-96 | 230.00 | 5.0 | 11.50 |
| ICICI (ADR) | Finance | 22-Sep-99 | 315 | 5.0 | 9.80 |
| Infosys | IT | 11-Mar-99 | 70.38 | 0.5 | 34 |
| IPCL | Petrochemicals | 08-Dec-94 | 85.00 | 3.0 | 13.87 |
| ITC | Cigarettes | 13-Oct-93 | 68.85 | 1.0 | 7.65 |
| J.K. Corp | Diversified | 17-Oct-94 | 55.00 | 1.0 | 8.00 |
| Jain Irrig | Plastics | 25-Feb-94 | 30.00 | 1.0 | 11.13 |
| JCT Ltd. | Textiles | 29-Jul-94 | 45.00 | 10.0 | 16.96 |
| Kesoram Ind | Diversified | 31-Jul-96V | 30.00 | 1.0 | 1.60 |
| L & T (1st) | Diversified | 18-Nov-94 | 150.00 | 2.0 | 16.70 |
| L & T (2nd) | Diversified | 01-Mar-96 | 135.00 | 2.0 | 15.35 |
| Mah & Mah | Autos | 30-Nov-93 | 74.75 | 1.0 | 4.46 |
| MTNL | Telecom | 04-Dec-97 | 418.53 | 2.0 | 11.958 |
| NEPC Micon | Diversified | 07-Nov-94 | 47.70 | 1.0 | 3.18 |
| Nippon Denro# | Steel | 03-Mar-94 | 125.00 | 10.0 | 21.36 |
| Oriental Hotels | Hotels | 14-Dec-94 | 30.00 | 1.5 | 12.75 |
| Ranbaxy Labs | Pharma | 29-Jun-94 | 100.00 | 1.0 | 19.38 |
| Raymond Woolen | Textile | 09-Nov-94 | 60.00 | 2.0 | 10.61 |
| Reliance | Diversified | 27-May-92 | 150.00 | 2.0 | 16.35 |
| Reliance (2nd) | Diversified | 15-Feb-94 | 300.00 | 2.0 | 23.50 |
| Reliance Petroleum | Diversified | 18-Oct-99 | 100 | 15.0 | 23.0 |
| S.A.I.L. | Steel | 07-Mar-96 | 125.00 | 15.0 | 12.97 |
| Satyam Infoway | IT | 19-Oct-99 | 75.00 | 1.0 | 18.0 |
| S.I.E.L. | Diversified | 14-Oct-94 | 40.00 | 3.0 | 14.64 |
| Sanghi Poly | Textiles | 28-Jul-94 | 50.00 | 5.0 | 9.56 |
| SIV Ind | Textiles | 01-Aug-94 | 45.00 | 1.0 | 6.37 |
| SPIC | Fertiliser | 28-Sep-93 | 65.00 | 5.0 | 11.15 |
| SBI | Banking | 03-Oct-96 | 369.95 | 2.0 | 14.15 |
| Sterlite India# | Diversified | 22-Dec-93 | 100.00 | 1.0 | 17.86 |
| Tata Electric | Power | 22-Feb-94 | 65.00 | 100.0 | 710.00 |
| Telco (1st) | Autos | 15-Jul-94 | 115.00 | 1.0 | 8.75 |
| Telco (2nd) | Autos | 06-Aug-96 | 200.00 | 1.0 | 14.25 |
| Tube Invest | Cycles & Acc. | 20-May-94 | 45.60 | 1.0 | 6.58 |
| United Phos. | Pesticides | 25-Feb-94 | 55.00 | 1.0 | 20.50 |
| Usha Beltron | Cables | 06-Oct-94 | 35.00 | 1.0 | 10.70 |
| Videocon Int. | Electronics | 26-Jan-94 | 90.00 | 1.0 | 8.10 |
| VSNL | Telecomm. | 24-Mar-97 | 527.00 | 0.5 | 13.93 |
| Wockhardt | Pharma | 25-Feb-94 | 75.00 | 1.0 | 14.35 |
Thursday, December 9, 2010
ஒரு பாறையின் கதை
- விவேகானந்தர் பாறை நினைவுச் சின்னம்
1963 ஜனவரி முதல் 1964 ஜனவரி வரை இந்திய அரசு, விவேகானந்தரின் நூற்றாண்டு விழாவைக் கொண்டாட முடிவு செய்தது. விவேகானந்தர் ஓர் ஹிந்துத் துறவி மட்டுமல்ல. ஒரு தேசிய அடையாளம். கொண்டாட்டம் அவசியமானது. மேற்கு வங்காளம் முதல் கன்னியாகுமரி வரை அவரைத் தெரியாதவர்கள் கிடையாது. ஆராதிக்காதவர்கள் கிடையாது. அவரால் உந்தப்படாதவர்களோ, உத்வேகம் அடையாதவர்களோ கிடையாது.
குமரி மாவட்ட மக்களுக்கு இந்தக் கொண்டாட்ட அறிவிப்பு சற்றே கூடுதல் மகிழ்ச்சியை அளித்தது. காரணம், விவேகானந்தர் கன்னியாகுமரிக்கு வந்திருக்கிறார். கடலுக்குள் சற்றுத் தொலைவில் உள்ள ஒரு பெரும் பாறைக்கு நீந்திச் சென்று, மூன்று தினங்கள் (டிசம்பர் 25,26,27) அமர்ந்து தியானம் செய்திருக்கிறார்.
இந்த நூற்றாண்டு விழாச் சமயத்தில் அந்தப் பாறையில் அவருக்கு ஒரு நினைவுச் சின்னம் எழுப்பினால் என்ன? பாறைக்குச் சென்றுவர ஒரு பாலமும் சேர்த்துப் போட முடிந்தால் நல்லது.
அந்தப் பாறைக்கு விவேகானந்தருக்கு முன்னால் சென்று தவமிருந்தது, தேவி கன்னியாகுமரி. இறைவி. சிவபெருமானை மணப்பதன்பொருட்டு அங்கே அவள் தவமிருந்ததாக ஐதீகம். பாறையில் பதிந்துள்ள பாதம் அவளுடையதுதான் என்பது ஹிந்துக்களின் நம்பிக்கை. ஸ்ரீபாதப் பாறை என்று அந்த இடத்தைக் குறிப்பிடுவார்கள்.
இது ஒரு புறமிருக்க, பாறையில் விவேகானந்தருக்கு ஒரு நினைவுச் சின்னம் அமைக்கலாம் என்று தீர்மானித்ததும் அதற்கென ஒரு குழு அமைக்கப்பட்டது. வேலாயுதம் பிள்ளை என்பவர் தலைமையில் அமைந்த அந்தக் குழுவில் சில ஆர்.எஸ்.எஸ். உறுப்பினர்களும் இருந்தார்கள். விஷயத்தையும் திட்டத்தையும் ராமகிருஷ்ண மடத்துக்குத் தெரிவித்தார்கள். ராமகிருஷ்ண மடத்தில் இருந்து விலகி,ராமகிருஷ்ண தபோவனம் என்ற இன்னொரு அமைப்பைத் தொடங்கி நடத்திக்கொண்டிருந்த சுவாமி சித்பவானந்தருக்கும் விஷயம் சொன்னார்கள்.
விவேகானந்தருக்கு நினைவுச் சின்னம் அமைப்பதில் யாருக்குக் கருத்து வேறுபாடு இருக்க முடியும்? எனவே எந்தத் தடையுமின்றிப் பரபரவென்று ஆலோசனைகள் நடைபெறத் தொடங்கின. விஷயம் வேகமாக வெளியே பரவ ஆரம்பித்தது.
சிக்கல், கன்னியாகுமரி கிறிஸ்தவர்கள் வடிவில் வந்தது. பாறையில் விவேகானந்தருக்கு நினைவுச்சின்னம் அமைப்பதை ஏற்க முடியாது. நாநூறு வருடங்களுக்கு முன்னால் புனித சேவியர் இங்கு வந்தபோது அவர் அமர்ந்து ஜபம் செய்த பாறை அது. கிறிஸ்தவர்களுக்குச் சொந்தமானது.
குரலெழுப்பியவர்கள், குமரி மீனவர்கள். பாறையின் நீள அகலம் என்ன என்றுகூட மக்கள் யாருக்கும் தெரியாத நிலையில், தினமும் மீன்பிடிக்கச் செல்லும் அவர்கள்தாம் பாறையில் இறங்கி இளைப்பாறுகிறவர்கள். அவர்களை இந்த விஷயத்தில் தூண்டி விட்டவர் உள்ளூரில் இருந்த ஒரு பாதிரியார். கத்தோலிக்கர். விடாதீர்கள். அந்தப் பாறை கிறிஸ்தவர்களுக்கே சொந்தம். நாம் அதை நிறுவியாகவேண்டும்.
மீனவர்கள் ஒரு காரியம் செய்தார்கள். யாருமறியாத ஓர் இரவில் பாறையின்மீது பெரிதாக ஒரு சிலுவையைக் கொண்டுபோய் வைத்துவிட்டு வந்தார்கள். கரையில் இருந்து பார்த்தாலே தெரியக்கூடிய அளவுக்குப் பெரிய சிலுவை.
சூடு ஏறத் தொடங்கிய தருணம் அது. கன்னியாகுமரி மக்கள், பாறையில் சிலுவையைக் கண்டதும் கொதித்துப் போய் அரசுக்குக் கடிதங்கள் எழுத ஆரம்பித்தார்கள். மாவட்ட ஆட்சித் தலைவரிடம் மனு அளிக்கப்பட்டது. மூலைக்கொரு கண்டனக் கூட்டங்கள், எதிர்ப்பு ஊர்வலங்கள் என்று ஆரம்பிக்கப்பட்டன. ‘ஸ்ரீபாதப்பாறை’ என்று அழைக்கப்பட்ட இடம். கிறிஸ்தவர்கள் எப்படி அங்கே சிலுவை நடலாம்?
மக்கள் ஒருபுறம் போராடிக்கொண்டிருக்க, தேவி கன்னியாகுமரி ஆலய நிர்வாகம், தன் பங்குக்குப் பாறை தனக்குத்தான் சொந்தம் என்று இன்னொரு தாக்குதலைத் தொடுத்தது.
எனவே விவேகானந்தர் நினைவுச் சின்னம் அமைக்க விரும்பிய குழு, கோயில் நிர்வாகத்துக்கு ஒரு கடிதம் எழுதியது. பாறையில் ஒரு நினைவுச்சின்னம் எழுப்பவும் போய்வர ஒரு பாலம் கட்டவும் அனுமதி வேண்டும்.
கோயில் நிர்வாகத்துக்குக் கிறிஸ்தவர்களைப் பற்றித்தான் கவலை. விவேகானந்தரைப் பற்றி அல்ல. எனவே அவர்கள் குழுவுக்கு அனுமதி கொடுத்தார்கள். நினைவுச் சின்னமும் பாலமும் கட்டலாம். ஆனால் எல்லாம் முடிந்ததும் அனைத்தையும் கோயிலின் பொறுப்பில் கொடுத்துவிட்டு ஒதுங்கிவிட வேண்டும்.
இதனிடையில் பாறையின் உரிமை குறித்த கோஷங்கள் மிகவே, அரசு இதில் தலையிட முடிவு செய்தது. பாறை யாருக்குச் சொந்தம்? விசாரணையில், நிச்சயமாக கிறிஸ்தவர்களுக்குச் சொந்தமில்லை என்று தெரிந்தது. எனவே பாறையில் அத்துமீறி நிறுவியிருந்த சிலுவையை அகற்றும்படி வருவாய்த் துறைக்கு உத்தரவு போனது.
இப்போது சிக்கல் பெரிதாகத் தொடங்கியது. ஏற்கெனவே நாநூறு வருடங்களுக்கு முன்னர் அங்கு சிலுவை இருந்தது. காலப்போக்கில் யாரோ அதை அழித்துவிட்டார்கள். இப்போது நடப்பட்ட சிலுவையைப் பாதுகாக்கவேண்டியது தமிழக அரசின் கடமை என்று கேரளத்தைச் சேர்ந்த கிறிஸ்தவ அமைப்புகளும் செய்தி ஊடகங்களும் பேச ஆரம்பித்தார்கள். வெறுமனே சிலுவை அமைத்தால் போதாது. புனித சேவியருக்கு அங்கொரு நினைவுச் சின்னமும் எழுப்பியாக வேண்டும்.
தமிழக அரசு யோசித்தது. அதைவிட, முதல்வர் பக்தவத்சலம் யோசித்தார் என்று சொல்லலாம். எதற்குப் பிரச்னை? விவேகானந்தருக்கு நினைவுச் சின்னம் என்று ஆரம்பித்ததால்தானே இத்தனை விவகாரங்கள்? வெகு நிச்சயமாக ஒரு மதக்கலவரத்துக்கு தூபம் போடுவதுபோல் இது அமைந்துவிடும்.
எனவே சிலுவையும் வேண்டாம், விவேகானந்தரும் வேண்டாம், பாறையை அப்படியே விடுங்கள் என்று பக்தவத்சலம் சொல்லிவிட்டார்.
ஆனால் தனிப்பட்ட முறையில் அவர் அந்தப் பாறையில் விவேகானந்தர் தவமிருந்ததை ஒப்புக்கொள்ளக்கூடியவராக இருந்தார். நிச்சயமாக அது சேவியர் பாறையல்ல. விவேகானந்தர் பாறைதான். வேண்டுமானால் ஒரு பலகை வைக்கலாம். இங்கே விவேகானந்தர் வந்தார். தவமிருந்தார். அவ்வளவுதான். வேறொன்றும் வேண்டாம் என்று சொல்லிவிட்டார்.
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எனவே விவேகானந்தர் நினைவுச்சின்னக் குழுவில் இருந்த ஆர்.எஸ்.எஸ்காரர்கள் விஷயத்தைத் தம் தலைவருக்கு எடுத்துச் சென்றார்கள். எப்படியாவது பாறையில் விவேகானந்தருக்கு ஒரு நினைவுச் சின்னம் அமைத்தாக வேண்டும். கிறிஸ்தவர்கள் பிரச்னை செய்கிறார்கள். கோயில் நிர்வாகம் குறுக்கே நிற்கிறது. முதலமைச்சரும் ஒத்துழைப்பதாயில்லை. அனைத்தையும் மீறி நினைவுச் சின்னம் எழுப்பப்படவேண்டும். ஒரு வழி சொல்லுங்கள்.
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- ஏக்நாத் ரானடே
ஆர்.எஸ்.எஸ்ஸின் அப்போதைய தலைவர் கோல்வால்கர், ஏக்நாத் ரானடே என்பவரை அனுப்ப முடிவு செய்தார். ரானடே, அப்போது ஆர்.எஸ்.எஸ்ஸின் அகில இந்தியப் பொதுச்செயலாளர். தமிழகத்தைப் பற்றியோ, தமிழ்நாட்டின் அரசியல் சூழ்நிலை குறித்தோ, கன்னியாகுமரி மாவட்டத்தின் மதச்சிடுக்குகள் குறித்தோ அவருக்கு ஒன்றும் தெரியாது. அவர் மகாராஷ்டிரத்தைச் சேர்ந்தவர்.
விவேகானந்தருக்காகக் கன்னியாகுமரியில் ரானடே ஒரு கரசேவையைத் தொடங்க உத்தேசிப்பாரா? அல்லது வேறு ஏதேனும் திட்டம் வைத்திருப்பாரா?
குமரி மக்கள் காத்திருந்தார்கள். ஆர்.எஸ்.எஸ்காரர்கள் அதைவிட ஆர்வமுடன் காத்திருந்தார்கள்.
ரானடே அமைதியாக அமர்ந்து பாறை குறித்த அனைத்து வழக்கு விவகாரங்களையும் அது தொடர்பான அறிக்கைகளையும் அனைத்துத் தரப்பு வாதங்களையும் விரிவாகப் படித்தார். அன்றைய சூழ்நிலையில் பாறையில் விவேகானந்தருக்கு நினைவுச் சின்னம் கூடாது என்று தீவிரமாகச் சொல்லிக்கொண்டிருந்தவர்கள் இரண்டு பேர். ஒருவர் தமிழக முதல்வர் பக்தவத்சலம். இன்னொருவர் ஹுமாயூன் கபீர். அன்றைய கலாசாரத்துறை மத்திய அமைச்சர்.
சரியான எதிர்ப்பாளர்கள்தாம். மாநில முதல்வரும் மாற்று மதத்தைச் சேர்ந்த மத்திய அமைச்சர் ஒருவரும். சரி, பரவாயில்லை. பார்த்துவிடலாம் என்று ரானடே முதலில் கல்கத்தாவுக்குப் போனார். அது ஹுமாயூன் கபீரின் தொகுதி. கல்கத்தாவில் இருந்து வெளிவரும் அனைத்துப் பத்திரிகை ஆசிரியர்களையும் அவர் சந்தித்தார்.
பிரச்னை இதுதான். வங்கத்தின் தங்கமான விவேகானந்தருக்குக் குமரி முனையில் ஒரு நினைவுச் சின்னம் அமைப்பதை உங்கள் வங்காளத்து எம்.பியும் மத்திய அமைச்சருமான ஒருவர் எதிர்க்கிறார். எனவே இது குமரி மக்களின் பிரச்னையல்ல. உங்களுடைய பிரச்னை.
அந்த புத்திசாலித்தனம் வேலை செய்தது. மேற்கு வங்கப் பத்திரிகைகள் அனைத்தும் ஹுமாயூன் கபீரை விமரிசித்து எழுதின. அமைச்சர் பயந்துவிட்டார். நினைவுச் சின்னம் அமைத்தால் சுற்றுச்சூழல் கெடும் என்ற அர்த்தத்தில்தான் நான் சொன்னேன், அதற்குப் பிரச்னையில்லை என்றால் எனக்கொன்றும் ஆட்சேபணை இல்லை என்று சொல்லிவிட்டார்.
அடுத்தவர் பக்தவத்சலம். முதல்வர். மாநிலத்தின் அமைதி அவருக்கு முக்கியம். ஒரு மதக்கலவரத்தைத் தவிர்க்கும் நல்ல நோக்கம்தான். ஆனால் விவேகானந்தருக்கு நினைவுச் சின்னம் அவசியம். தவிரவும் அதைச் செய்யாமல் விடுத்தால் பாறையைக் கிறிஸ்தவர்கள் அபகரித்துவிடுவார்கள்.
ரானடே, லால் பகதூர் சாஸ்திரியிடம் பேசினார். சாஸ்திரியை உதவச் சொல்லிக் கேட்டார். நீங்கள் நேருவிடம் சொல்லி, பக்தவத்சலத்தைச் சம்மதிக்கச் செய்ய வேண்டும்.
மறுபுறம், நாடாளுமன்ற உறுப்பினர்கள் அனைவரையும் தேடித்தேடி விவேகானந்தர் நினைவுச் சின்னம் அமைக்க அவர்களது சம்மதத்தைப் பெறும் விதமாக ஒரு கையெழுத்து இயக்கத்தையும் தனி மனிதராக நடத்தினார். அத்தனை பேரும் ஆதரிப்பதை பக்தவத்சலம் ஒருத்தர் எதிர்த்துவிடுவாரா? பார்த்துவிடலாம்.
அதோடு அவர் நிறுத்தவில்லை. கன்னியாகுமரி முக்கியஸ்தர்களும் ஆர்.எஸ்.எஸ். உறுப்பினர்களும் மட்டும் இருந்த நினைவுச் சின்ன கமிட்டியை விஸ்தரிக்க முடிவு செய்தார். தி.மு.க. தலைவர் அண்ணாதுரையைச் சந்தித்தார். அவரை கமிட்டிக்குள் இழுத்தார். காங்கிரஸ்காரர்களுடன் பேசினார். அவர்களையும் அழைத்தார். கம்யூனிஸ்டுகளை நாடினார். உச்சக்கட்டம், ஜோதிபாசுவிடம் போய் நினைவுச் சின்னம் அமைக்க நன்கொடை கேட்டது.
‘நான் எப்படி விவேகானந்தருக்கு நினைவாலயம் அமைக்க நன்கொடை தருவேன்? என் கட்சிக்கொள்கை இடம் தராது’ என்று அவர் சொன்னபோது, உங்கள் மனைவி கம்யூனிஸ்ட் கட்சியில்இல்லையே, அவரை இழுத்துவிடுங்கள் என்று கொக்கிபோட்டு இழுத்தார். பணக்கார பிர்லாக்களைப் பேசிப்பேசி மசியவைத்தார். கிறிஸ்தவர்கள் மிகுந்த நாகாலாந்து மாநிலத்துக்குப் போய், முதலமைச்சரிடம் பேசி மக்களிடம் பணம் வசூலிக்க ஒப்புக்கொள்ள வைத்தார்.
ஒரு விஷயம். நாகாலாந்து மக்களுக்கு விவேகானந்தரைப் பற்றி அப்போது ஒன்றுமே தெரியாது. பெயர்கூடக் கேள்விப்பட்டதில்லை. ‘வெறும் ஆயிரம் ரூபாய் வசூலானால் போதும். எண்ணிக்கையல்ல, அவர்களது பங்களிப்புதான் முக்கியம்’ என்றார் ரானடே.
விவேகானந்தர் என்னும் சன்னியாசியை, ஹிந்து மதத் துறவியாக அல்லாமல், இந்தியாவின் அடையாளங்களுள் ஒன்றாகக் காட்டுவதற்காக மேற்கொண்ட முயற்சி அது. பல்வேறு கட்சிகள், பல்வேறு கொள்கைகள், பல்வேறு கோஷங்கள், பல்வேறு கருத்தியல் நிலைபாடுகள்.
ஆனால் ஏக்நாத் ரானடே என்னும் ஆர்.எஸ்.எஸ்.காரரால், தனி மனிதராக அத்தனைத் தரப்பையும் சமாளித்து, கன்னியாகுமரி கிறிஸ்தவர்களின் அதிருப்தியையும் சரி செய்து, எந்தப் பிரச்னையும் இல்லாமல் – திட்டமிட்டதைவிடப் பெரிய அளவில் குமரிக் கடலில் விவேகானந்தருக்கு மாபெரும் நினைவாலயம் எழுப்ப முடிந்தது.
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பாறையின் இடத்தில் மசூதி. கிறிஸ்தவர்களின் இடத்தில் முஸ்லிம்கள். ரானடேவின் இடத்தில் அத்வானியும் வாஜ்பாயும் பரிவாரக் கூட்டங்களும்.
சந்தேகமில்லை. அயோத்தி, ஆர்.எஸ்.எஸ்ஸைப் பொறுத்தவரை ஒரு பரிமாண வீழ்ச்சி.
Thursday, December 2, 2010
What are the 30 Stocks of BSE SENSEX
The SENSEX gives an indicative figure of the trading happened in BSE, which is the chief stock market of India. A group of 30 stocks that represent various industries of the economy are used for the calculation of SENSEX.
The base year for SENSEX calculation is 1978-79 and the base value is 100. It is calculated using Free-float Market Capitalization methodology. The SENSEX value is calculated every 15 seconds when the trade is going on.
Here is the list of the 30 stocks that constitutes the BSE SENSEX.
The BSE Index Committee meets every quarter to revise SENSEX constituents. In case a stock is to be replaced by another one, the announcement is made six weeks in advance of the actual change.
The base year for SENSEX calculation is 1978-79 and the base value is 100. It is calculated using Free-float Market Capitalization methodology. The SENSEX value is calculated every 15 seconds when the trade is going on.
Here is the list of the 30 stocks that constitutes the BSE SENSEX.
| Code | Name | Sector | Adj. Factor |
| 500410 | ACC Ltd. | Housing Related | 0.60 |
| 500103 | Bharat Heavy Electricals Ltd. | Capital Goods | 0.35 |
| 532454 | Bharti Airtel Ltd. | Telecom | 0.35 |
| 532868 | DLF Ltd. | Housing Related | 0.15 |
| 500300 | Grasim Industries Ltd. | Diversified | 0.75 |
| 500010 | HDFC | Finance | 0.85 |
| 500180 | HDFC Bank Ltd. | Finance | 0.85 |
| 500440 | Hindalco Industries Ltd. | Metal,Metal Products & Mining | 0.70 |
| 500696 | Hindustan Unilever Ltd. | FMCG | 0.50 |
| 532174 | ICICI Bank Ltd. | Finance | 1.00 |
| 500209 | Infosys Technologies Ltd. | Information Technology | 0.85 |
| 500875 | ITC Ltd. | FMCG | 0.70 |
| 532532 | Jaiprakash Associates Ltd. | Housing Related | 0.60 |
| 500510 | Larsen & Toubro Limited | Capital Goods | 0.90 |
| 500520 | Mahindra & Mahindra Ltd. | Transport Equipments | 0.80 |
| 532500 | Maruti Suzuki India Ltd. | Transport Equipments | 0.50 |
| 532555 | NTPC Ltd. | Power | 0.15 |
| 500312 | ONGC Ltd. | Oil & Gas | 0.20 |
| 500359 | Ranbaxy Laboratories Ltd. | Healthcare | 0.70 |
| 532712 | Reliance Communications Limited | Telecom | 0.35 |
| 500325 | Reliance Industries Ltd. | Oil & Gas | 0.50 |
| 500390 | Reliance Infrastructure Ltd. | Power | 0.65 |
| 500376 | Satyam Computer Services Ltd. | Information Technology | 0.95 |
| 500112 | State Bank of India | Finance | 0.45 |
| 500900 | Sterlite Industries (India) Ltd. | Metal,Metal Products & Mining | 0.40 |
| 532540 | Tata Consultancy Services Limited | Information Technology | 0.25 |
| 500570 | Tata Motors Ltd. | Transport Equipments | 0.60 |
| 500400 | Tata Power Company Ltd. | Power | 0.70 |
| 500470 | Tata Steel Ltd. | Metal,Metal Products & Mining | 0.70 |
| 507685 | Wipro Ltd. | Information Technology | 0.20 |
The BSE Index Committee meets every quarter to revise SENSEX constituents. In case a stock is to be replaced by another one, the announcement is made six weeks in advance of the actual change.
Basics of Finance
What are the Capital Components?
- Common Stock
- Preferred Stock
- Bonds (debt)
- Retained Earnings - (profit the company makes, but does not give to the shareholders in the form of dividends)
Each of these components has a cost. We can determine the cost of each capital component.
Cost of Retained Earnings
This is kind of weird to think about. It takes some time to understand so take it slowly. After a company makes money (earnings), who owns that money? The shareholders, right? But when you retain earnings you are not giving the money to the shareholders. You are keeping it. In a way, you are investing it for them in your company. Well those shareholders want some return on that money you are keeping.. How much return do they expect? They want the same amount as if they had gotten the retained earning in the form of dividends, and bought more stock in your company with them. THAT is the cost of retained earnings. You as a financial genius, have to ensure that if you are retaining earning, that the shareholders will get at least as good a return on the money as if they had re-invested the money back into the company.
If you don't understand this, re-read it and re-think it until you do get it. There is really no "cost" in the cost of retained earnings. I mean, no money is changing hands. You aren't paying anyone anything. But you are keeping the shareholders money. You can't say it is "free" money. Frankly if you did, it would screw up your capital budgeting. So when you are doing your capital budgeting, to ensure that the shareholders are getting a decent rate of return, you "guess" a cost of retained earnings. How?? One way is CAPM. Another way is the bond yield plus risk premium approach, in which you take the interest rate on the company's own long term debt and then add between 5% and 7%. Again, you are kind of guessing here. A third way is the discounted cash flow method, in which you divide the dividend by the price of stock and add the growth rate. Again, a lot of guessing.
Cost of Issuing Common Stock
| Flotation Cost of Common Stock | = | Costs of issuing the actual stock (ink, printing, paper, computers, etc.) | + | The cost of retained earnings. |
Cost of Preferred Stock
| Cost of Preferred Stock | = | What you give. | divided by | What you get. |
| Cost of Preferred Stock | = | Dividend | divided by | Price - Underwriting Costs |
Cost of Bonds (debt)
| Cost of Debt | = | Coupon rate on the bonds | minus | The Tax Savings |
Interest on bonds is tax deductible. So we can reduce our taxable income by the amount of money we pay to the bondholders.
WACC - The Weighted Average Cost of Capital.
Every company has a capital structure - a general understanding of what percentage of debt comes from retained earnings, common stocks, preferred stocks, and bonds. By taking a weighted average, we can see how much interest the company has to pay for every dollar it borrows. This is the weighted average cost of capital.
| Capital Component | Cost | Times | % of capital structure | Total |
| Retained Earnings | 10% | X | 25% | 2.50% |
| Common Stocks | 11% | X | 10% | 1.10% |
| Preferred Stocks | 9% | X | 15% | 1.35% |
| Bonds | 6% | X | 50% | 3.00% |
| TOTAL | 7.95% |
So the WACC of this company is 7.95%.
Kinds of Interest Rates
Let's say I give you a credit card and the interest rate on the card is 3% per month. What is the annual rate that you are actually charged?? 36%?? Well, no. It's actually 42.57%.
| Nominal Rate | Nominal means "in name only". This is sometimes called the quoted rate. |
| Periodic Rate | The amount of interest you are charged each period, like every month. |
| Effective Annual Rate | The rate that you actually get charged on an annual basis. Remember you are paying interest on interest. |
In the example
- The Nominal Rate is 36%.
- The Periodic Rate is 3% (you are charged 3% interest on your balance every month)
- The Effective Annual Rate is 42.57%
| Nominal Rate = Periodic Rate X Number of Compounding Periods |
| Effective Annual Rate = (1+ i / m)m -1 |
- m = the number of compounding periods
- i = the nominal interest rate
- Effective Annual Rate = (1+ i / m)m -1
- Effective Annual Rate = ( 1 + .36 / 12 )12 -1
- Effective Annual Rate = (1.03)12 - 1
- Effective Annual Rate = (1.4257) -1
- Effective Annual Rate = .4257
- Effective Annual Rate = 42.57 %
Capital Budgeting
Payback, Discounted Payback, NPV, Profitability Index, IRR and MIRR are all capital budgeting decision methods.
Cash Flow- We are going to assume that the project we are considering approving has the following cash flow. Right now, in year zero we will spend 15,000 dollars on the project. Then for 5 years we will get money back as shown below.
But when, exactly? Well, at the beginning of the year we had still had a -2,000 balance, right? So do this.
So we broke even 2/3 of the way through the 3rd year. So the total time required to payback the money we borrowed was 2.66 years.Discounted Payback - is almost the same as payback, but before you figure it, you first discount your cash flows. You reduce the future payments by your cost of capital. Why? Because it is money you will get in the future, and will be less valuable than money today. (See Time Value of Money if you don't understand). For this example, let's say the cost of capital is 10%.
So we break even sometime in the 5th year. When?
Net Present Value (NPV) - Once you understand discounted payback, NPV is so easy! NPV is the final running total number. That's it. In the example above the NPV is 563. That's all. You're done, baby. Basically NPV and Discounted Payback are the same idea, with slightly different answers. Discounted Payback is a period of time, and NPV is the final dollar amount you get by adding all the discounted cash flows together. If the NPV is positive, then approve the project. It shows that you are making more money on the investment than you are spending on your cost of capital. If NPV is negative, then do not approve the project because you are paying more in interest on the borrowed money than you are making from the project.Profitability Index
Ah, yes, but there are problems.
OK, MIRR assumes that the revenue is not invested back into the same project, but is put back into the general "money fund" for the company, where it earns interest. We don't know exactly how much interest it will earn, so we use the company's cost of capital as a good guess.
Why use the Cost of Capital?
Because we know the company wouldn't do a project which earned profits below the cost of capital. That would be stupid. The company would lose money. Hopefully the company would do projects which earn much more than the cost of capital, but, to play it safe, we just use the cost of capital instead. (We also use this number because sometimes the cash flows in some years might be negative, and we would need to 'borrow'. That would be done at our cost of capital.)
How to get MIRR - OK, we've got these cash flows coming in, right? The money is going to be invested back into the company, and we assume it will then get at least the company's-cost-of-capital's interest on it. So we have to figure out the future value (not the present value) of the sum of all the cash flows. This, by the way is called the Terminal Value. Assume, again, that the company's cost of capital is 10%. Here goes...
OK, now get our your financial calculator again. Do this.
Decision Time- Do we approve the project? Well, let's review.
Cash Flow- We are going to assume that the project we are considering approving has the following cash flow. Right now, in year zero we will spend 15,000 dollars on the project. Then for 5 years we will get money back as shown below.
| Year | Cash flow |
| 0 | -15,000 |
| 1 | +7,000 |
| 2 | +6,000 |
| 3 | +3,000 |
| 4 | +2,000 |
| 5 | +1,000 |
| Year | Cash flow | Running Total | |
| 0 | -15,000 | -15,000 | |
| 1 | +7,000 | -8,000 | (so after the 1st year, the project has not yet broken even) |
| 2 | +6,000 | -2,000 | (so after the 2nd year, the project has not yet broken even) |
| 3 | +3,000 | +1,000 | (so the project breaks even sometime in the 3rd year) |
| Negative Balance / Cash flow from the Break Even Year | = | When in the final year we break even |
| -2,000 / 3,000 | = | .666 |
| Year | Cash flow | Discounted Cash flow | Running Total |
| 0 | -15,000 | -15,000 | -15,000 |
| 1 | 7,000 | 6,363 | -8,637 |
| 2 | 6,000 | 4,959 | -3,678 |
| 3 | 3,000 | 2,254 | -1,424 |
| 4 | 2,000 | 1,366 | -58 |
| 5 | 1,000 | 621 | 563 |
So we break even sometime in the 5th year. When?
| Negative Balance / Cash flow from the Break Even Year | = | When in the final year we break even |
| -58 / 621 | = | .093 |
Net Present Value (NPV) - Once you understand discounted payback, NPV is so easy! NPV is the final running total number. That's it. In the example above the NPV is 563. That's all. You're done, baby. Basically NPV and Discounted Payback are the same idea, with slightly different answers. Discounted Payback is a period of time, and NPV is the final dollar amount you get by adding all the discounted cash flows together. If the NPV is positive, then approve the project. It shows that you are making more money on the investment than you are spending on your cost of capital. If NPV is negative, then do not approve the project because you are paying more in interest on the borrowed money than you are making from the project.Profitability Index
| Profitability Index | equals | NPV | divided by | Total Investment | plus | 1 |
| PI | = | 563 | / | 15,000 | + | 1 |
| Year | Cash flow |
| 0 | -15,000 |
| 1 | +7,000 |
| 2 | +6,000 |
| 3 | +3,000 |
| 4 | +2,000 |
| 5 | +1,000 |
| -15000 | g | CFo |
| 7000 | g | CFj |
| 6000 | g | CFj |
| 3000 | g | CFj |
| 2000 | g | CFj |
| 1000 | g | CFj |
| f | IRR |
Ah, yes, but there are problems.
- Sometimes it gets confusing putting all the numbers in, especially if you have alternate between a lot of negative and positive numbers.
- IRR assumes that the all cash flows from the project are invested back into the project. Sometimes, that simply isn't possible. Let's say you have a sailboat that you give rides on, and you charge people money for it. Well you have a large initial expense (the cost of the boat) but after that, you have almost no expenses, so there is no way to re-invest the money back into the project. Fortunately for you, there is the MIRR.
OK, MIRR assumes that the revenue is not invested back into the same project, but is put back into the general "money fund" for the company, where it earns interest. We don't know exactly how much interest it will earn, so we use the company's cost of capital as a good guess.
Why use the Cost of Capital?
Because we know the company wouldn't do a project which earned profits below the cost of capital. That would be stupid. The company would lose money. Hopefully the company would do projects which earn much more than the cost of capital, but, to play it safe, we just use the cost of capital instead. (We also use this number because sometimes the cash flows in some years might be negative, and we would need to 'borrow'. That would be done at our cost of capital.)
How to get MIRR - OK, we've got these cash flows coming in, right? The money is going to be invested back into the company, and we assume it will then get at least the company's-cost-of-capital's interest on it. So we have to figure out the future value (not the present value) of the sum of all the cash flows. This, by the way is called the Terminal Value. Assume, again, that the company's cost of capital is 10%. Here goes...
| Cash Flow | Times | = | Future Value of that years cash flow. | Note | |
| 7000 | X | (1+.1) 4 | = | 10249 | compounded for 4 years |
| 6000 | X | (1+.1) 3 | = | 7986 | compounded for 3 years |
| 3000 | X | (1+.1) 2 | = | 3630 | compounded for 2 years |
| 2000 | X | (1+.1) 1 | = | 2200 | compounded for 1 years |
| 1000 | X | (1+.1)0 | = | 1000 | not compounded at all because this is the final cash flow |
| TOTAL | = | 25065 | this is the Terminal Value |
| -15000 | g | CFo |
| 0 | g | CFj |
| 0 | g | CFj |
| 0 | g | CFj |
| 0 | g | CFj |
| 25065 | g | CFj |
| f | IRR |
Decision Time- Do we approve the project? Well, let's review.
| Decision Method | Result | Approve? | Why? |
| Payback | 2.66 years | Yes | well, cause we get our money back |
| Discounted Payback | 4.195 years | Yes | because we get our money back, even after discounting our cost of capital. |
| NPV | $500 | Yes | because NPV is positive (reject the project if NPV is negative) |
| Profitability Index | 1.003 | Yes | cause we make money |
| IRR | 12.02% | Yes | because the IRR is more than the cost of capital |
| MIRR | 10.81% | Yes | because the MIRR is more than the cost of capital |
Forex - Foreign Currency Exchange
Foreign Exchange - FX
Forex or FX for short means foreign exchange. Up until a few years ago, foreign currencies were usually traded by corporations, central banks, hedge funds, large financial institutions, and very wealthy individual traders. But like many things, foreign exchange changed dramatically with the Internet. Now, individual investors are able to buy and sell currencies much more easily than before.
Often, pairs of currencies fluctuate only around 1% or less per day, so foreign exchange is often considered to be a relatively stable market. Speculators sometimes use enormous leverage to try to make money off of these small fluctuations. Leverage in foreign markets can be as high as 250 to 1. With leverage of course comes risk, and high leverage, such as 250 to 1, can be extremely risky.
Foreign currency markets are often open around the clock, 24 hours a day, during most business days. Markets are relatively liquid. Investors are often able to open and close positions within minutes, or hold those positions for months. Because the currency markets are so large, even the largest players, such as central banks, are often unable to move prices it will.
Although the Forex market provides investors with plenty of opportunity, currency traders have to understand the basics of currency trading in order to be successful.
Forex or FX for short means foreign exchange. Up until a few years ago, foreign currencies were usually traded by corporations, central banks, hedge funds, large financial institutions, and very wealthy individual traders. But like many things, foreign exchange changed dramatically with the Internet. Now, individual investors are able to buy and sell currencies much more easily than before.
Often, pairs of currencies fluctuate only around 1% or less per day, so foreign exchange is often considered to be a relatively stable market. Speculators sometimes use enormous leverage to try to make money off of these small fluctuations. Leverage in foreign markets can be as high as 250 to 1. With leverage of course comes risk, and high leverage, such as 250 to 1, can be extremely risky.
Foreign currency markets are often open around the clock, 24 hours a day, during most business days. Markets are relatively liquid. Investors are often able to open and close positions within minutes, or hold those positions for months. Because the currency markets are so large, even the largest players, such as central banks, are often unable to move prices it will.
Although the Forex market provides investors with plenty of opportunity, currency traders have to understand the basics of currency trading in order to be successful.
People need foreign currency in order to conduct foreign business and trade with other countries. For example, if you're living in Japan and want to buy wine from California, you would have to change your Japanese yen to US dollars to purchase the wine. The same thing happens when you travel abroad. If you want to buy cheese from a supermarket in France you most likely won't be able to pay with US dollars.
Now imagine all of the international trade that occurs in the world and you'll see why the size of the Forex market is so large. In April of 2007, the Bank for International Settlements reported that daily turnover was over $3.2 trillion.
One thing that is unusual about the currency market is that there is no central marketplace. Transactions occur electronically over computer networks between traders all around the world in places like London, Tokyo, New York, Frankfurt, Paris, Hong Kong, Singapore and Sydney. The market is usually open around the clock, 5 1/2 days a week.
The futures market, the forwards market, and the spot market are three ways that corporations, institutions and individuals trade Forex. The underlying real asset is the spot market. The spot market is also the largest market. The futures markets and forwards markets are based on the spot market. When people talk about the Forex market they are usually talking about the spot market. The forwards and futures markets are usually more often traded by companies in order to hedge foreign exchange risks to a specific time in the future.
The spot market is where supply and demand meet and where currencies are bought and sold. The spot market price is based on many things including economic performance, current interest rates, local and international political situations, and a belief in the future performance of one currency against another. When a currency transaction is finalized it's called a spot deal. In a spot deal, one party agrees to deliver a certain amount of a certain currency to a counterpart and receives a certain amount of another currency at a certain exchange rate. The settlement is made in cash after the position is closed. Trades in the spot market usually take two days for settlement.
Forwards markets and futures markets are different from the spot market in that they do not trade actual currencies. They instead deal contracts. These contracts represent claims to specific currency types, specific future dates for settlement, and specific prices per unit. Contracts in the forwards market are bought and sold over-the-counter at the terms that the buyer and seller agreed to between themselves. Futures contracts are bought and sold in the futures market based on standard sizes and settlement dates. The National Futures Association regulates the futures market in the United States. Specific details in futures contracts include the number of units traded, delivery date and settlement date. The minimum price increments in futures contracts cannot be customized. The exchange provides clearance and settlement by acting as a counterpart into the trader.
Before they expire contract can be bought and sold. However, contracts are typically settled for cash when they expire. Both types of contract are binding. The futures markets and forwards markets can offer a degree of protection against currency trading risks. Large multinational companies often use the forwards and futures markets as a hedge against fluctuations in future exchange rates. Speculators also are known to take part in these markets.
Reading Quotes
Here is a currency quote, also called a currency pair: USD/JPY=95.50. The currency on the left-hand side of the slash is called the base currency. In this case the US dollar is the base currency. The currency on the right-hand side of the slash is called the quote currency or counter currency. In this case the quoted currency is the Japanese yen. The base currency is always equal to one unit so in this case one US dollar. This quote means that one US dollar can buy 95.50 Japanese yen.
The two ways to quote a currency pair are directly and indirectly. In a direct quote, the domestic currency is the base currency. In an indirect quote, the domestic currency is the quoted currency.
Nearly all currency exchange rate quotes are carried out to four digits after the decimal place. An important exception is the Japanese yen, which is carried out to two decimal places.
Now imagine all of the international trade that occurs in the world and you'll see why the size of the Forex market is so large. In April of 2007, the Bank for International Settlements reported that daily turnover was over $3.2 trillion.
One thing that is unusual about the currency market is that there is no central marketplace. Transactions occur electronically over computer networks between traders all around the world in places like London, Tokyo, New York, Frankfurt, Paris, Hong Kong, Singapore and Sydney. The market is usually open around the clock, 5 1/2 days a week.
The futures market, the forwards market, and the spot market are three ways that corporations, institutions and individuals trade Forex. The underlying real asset is the spot market. The spot market is also the largest market. The futures markets and forwards markets are based on the spot market. When people talk about the Forex market they are usually talking about the spot market. The forwards and futures markets are usually more often traded by companies in order to hedge foreign exchange risks to a specific time in the future.
The spot market is where supply and demand meet and where currencies are bought and sold. The spot market price is based on many things including economic performance, current interest rates, local and international political situations, and a belief in the future performance of one currency against another. When a currency transaction is finalized it's called a spot deal. In a spot deal, one party agrees to deliver a certain amount of a certain currency to a counterpart and receives a certain amount of another currency at a certain exchange rate. The settlement is made in cash after the position is closed. Trades in the spot market usually take two days for settlement.
Forwards markets and futures markets are different from the spot market in that they do not trade actual currencies. They instead deal contracts. These contracts represent claims to specific currency types, specific future dates for settlement, and specific prices per unit. Contracts in the forwards market are bought and sold over-the-counter at the terms that the buyer and seller agreed to between themselves. Futures contracts are bought and sold in the futures market based on standard sizes and settlement dates. The National Futures Association regulates the futures market in the United States. Specific details in futures contracts include the number of units traded, delivery date and settlement date. The minimum price increments in futures contracts cannot be customized. The exchange provides clearance and settlement by acting as a counterpart into the trader.
Before they expire contract can be bought and sold. However, contracts are typically settled for cash when they expire. Both types of contract are binding. The futures markets and forwards markets can offer a degree of protection against currency trading risks. Large multinational companies often use the forwards and futures markets as a hedge against fluctuations in future exchange rates. Speculators also are known to take part in these markets.
Reading Quotes
Here is a currency quote, also called a currency pair: USD/JPY=95.50. The currency on the left-hand side of the slash is called the base currency. In this case the US dollar is the base currency. The currency on the right-hand side of the slash is called the quote currency or counter currency. In this case the quoted currency is the Japanese yen. The base currency is always equal to one unit so in this case one US dollar. This quote means that one US dollar can buy 95.50 Japanese yen.
The two ways to quote a currency pair are directly and indirectly. In a direct quote, the domestic currency is the base currency. In an indirect quote, the domestic currency is the quoted currency.
Nearly all currency exchange rate quotes are carried out to four digits after the decimal place. An important exception is the Japanese yen, which is carried out to two decimal places.
Cross Currency
A cross currency is a currency quote that doesn't have the US dollar as one of its components. Common cross currency pairs include EUR/JPY, EUR/GBP and EUR/CHF. Although these currency pairs aren't as actively traded as pairs that include the US dollar, they do expand currency tradersf options in the Forex market.
Trading a Currency
When trading a currency pair there is a bid price and an ask price. When going long or buying a currency pair, the ask price is the amount of the quoted currency to be paid in order to buy one unit of the base currency.
When going short or selling a currency pair the bid price is how much of the quoted currency will be obtained when selling one unit of the base currency.
The bid price is the quote before the slash. The last two digits after the slash are the ask price. Often, only the last two digits of the full price or quoted. Generally, the bid price is smaller than the ask price. Here's an example:
USD/CAD=1.0000/05
Bid=1.0000
Ask=1.0005
Let's say that you wanted to buy this currency pair. In other words, you plan to buy the base currency and are watching the ask price to determine how much in Canadian dollars the market charges for US dollars. According to the example, one US dollar can be bought for 1.0005 Canadian dollars.
Now let's say you wanted to sell this currency pair. In other words, you plan to sell the base currency in exchange for the quoted currency. In this case, you would look at the bid price. According to the bid price, the market will buy one US dollar for 1.0000 Canadian dollars.
Transactions are conducted in whichever currency is quoted first. In other words, transactions are conducted in the base currency. You purchase the base currency or sell the base currency.
Pips and Spreads
A pip can be defined as the smallest amount that a price can move in a currency quote. A spread is the difference between the bid price and the ask price. Here's the previous example again:
USD/CAD=1.0000/05
In this case the spread would be 0.0005 or 5 pips. Pips are also sometimes called points. One pip equals 0.0001 units when talking about US dollars, British Pounds, Swiss Franc, or Euro. One pip equals 0.01 units when talking about the Japanese yen.
Currencies are quoted differently on the forwards and futures markets. Foreign exchange is quoted against the US dollar in the forwards and futures markets. In other words, pricing shows how many US dollars you need to buy one unit of a given foreign currency. This contrasts with the spot market where in some cases currencies are quoted against the US dollar and in other cases the US dollar is quoted against the foreign currency.
Forex versus Equities
The Forex market has very few traded instruments. This is a major difference between the Forex market and the equities markets. The equities market has thousands of stocks for traders to research and choose from, however most Forex trades revolve around seven major currency pairs. The seven major pairs are USD/JPY, GBP/USD, EUR/USD, USD/CHF, USD/CAD, NZD/USD and AUD/USD.
In the equities market it is sometimes difficult for traders to make money when the market declines. There are specific rules and regulations regarding short-selling US equities. However in the Forex market traders have the opportunity to profit in either rising or declining market. In the Forex market, short-selling is inherent in every transaction because traders are buying and selling simultaneously. Also, the Forex market is generally more liquid than the equities market so traders don't have to wait for an uptick before they enter a short position.
Margins are low and leverage is high on the Forex market, a result of its high level of liquidity. Such low margin rates are extremely difficult to find in the equities markets, where margin traders often need to maintain at least 50% of the value of the investment as margin. Forex traders on the other hand sometimes need only 1% equity. Commissions in the Forex market tend to be lower than in the equities market.
History of Currency Exchange
The gold standard monetary system was created in 1875. It was one of the most important events in the history of the Forex market. Previously, countries used to use gold and silver to make international payments. However, the value of gold and silver was affected by external supply and demand, which created problems. For example, if a new gold mine was discovered the price of gold would go down.
With the gold standard governments around the world agreed that they would convert currency into specific amounts of gold. To do this governments were required to have large gold reserves to meet the demand to make exchanges. By the end of the 19th century, most of the countries with large economies had defined a certain amount of currency as being equal to one ounce of gold. As time went on, the amount of each currency that was required to purchase one ounce of gold became exchange rates between two currencies. This was the beginning of currency exchange.
Around the beginning of World War I the gold standard broke down. European powers believed it was necessary to complete large military projects because of political pressure from Germany. The cost of these military projects was so high that there wasn't enough gold to exchange for all the currency that the governments were printing.
The gold standard returned briefly after World War I, however most countries went off the gold standard again before World War II.
Near the end of World War II the Allied nations decided to set up a monetary system to replace the gold standard. Over 700 Allied representatives met in Bretton Woods, New Hampshire, in July of 1944 to discuss the Bretton Woods system of international monetary management. Some of the main ideas that came out of the meeting were that the US dollar would replace the gold standard and become a primary reserve currency, that there would be fixed exchange rates and that there would be three international agencies to oversee economic activity would be created. These agencies were the international monetary fund (IMF), the General Agreement on Tariffs and Trade (GATT), and the International Bank for Reconstruction and Development.
The US dollar replacing gold as the primary standard for world currency conversions was one of the main ideas brought about by Bretton Woods. At the time the US dollar was the only currency that was backed by gold.
Over the next few decades, in order to remain the world's reserve currency, the United States had to have a series of balance of payment deficits. However, in the early 1970s, US gold reserves had become so depleted that the United States treasury lacked enough gold to cover the large number of US dollars that foreign central banks had in reserve. So on August 15, 1971, the United States effectively declared that it would no longer exchange gold for US dollars that were held in foreign reserves when US President Richard Nixon closed the gold window. President Nixon's actions brought the Bretton Woods system to an end.
In 1976, the world decided to use floating foreign exchange rates in what was called the Jamaica agreement. This agreement abolished the gold standard. However, not all governments have adopted a free floating exchange rate system. In fact, most governments still use one of three exchange-rate systems. They are Dollarization, a pegged rate, and managed floating rate.
Dollarization occurs if a country chooses to not issue its own currency and instead uses of foreign currency as its national currency. One advantage of dollarization is that the country may be seen as a relatively stable place for investment. Two disadvantages of dollarization are that the country's central bank can no longer make monetary policy nor print money.
Pegged rates happen if a country chooses to directly fix its exchange rates to a foreign currency. Pegged rates usually allow the country to have more stability than a normal float. The country's currency may be pegged at a fixed rate to a single currency or to a specific basket of foreign currencies. The currency only fluctuates when there are changes in the pegged currencies. An obvious example of a pegged currency is the Chinese yuan. Between 1997 and July 21, 2005 the Chinese Yon was pegged to the US dollar at a rate of 8.28 yuan.
Managed floating rates are created when a country's exchange rate changes freely and the currencyf value is subject to the forces of supply and demand in the market. With managed floating rates the country's central bank or government may intervene when there are extreme fluctuations in exchange rates. If, for example, a country's currency depreciates too much, the government could increase short-term interest rates, which would likely cause the currency to appreciate. Central banks generally have a wide variety of tools that they can use to manage their currency.
Participants in the Forex Market
Market participants in the equities market are often limited to investors who trade with either other investors or institutional investors like mutual funds. On the Forex market, however, there are market participants who are not investors.
Governments and central banks are probably the most influential participants in the currency exchange market. Many countries use their central banks as an extension of the government to conduct monetary policy. Other countries seem to believe their central banks would be more effective in finding a balance between keeping interest rates low and curbing inflation if they were more independent, and free of government control. In both cases, though, representatives from the government usually have regular meetings and discussions with the representatives of the central banks, leading, often, to similar ideas on monetary policy.
Reserve volumes are often manipulated by central banks in attempts to meet economic goals. China, for example, has been purchasing millions of dollars of United States treasury bills to keep the Chinese Yuan at its target exchange rate, a result of China pegging its currency to the US dollar. Central banks adjust their reserve volumes by participating in the foreign exchange market. Because these banks have a great deal of purchasing and selling power, they have a large influence on the direction of the currency markets.
Banks and other financial institutions are some of the largest participants in Forex transactions. The interbank market is where large banks conduct transactions amongst themselves. These transactions determine the currency. The interbank market is huge in volume when compared to the exchange individuals make when they need small-scale foreign currency transactions. Credit is the basis of the electronic brokering systems that allow the banks to transact with each other. The only banks that can engage in transactions are ones that have great relationships with each other. Larger banks generally have a wider array of credit relationships and therefore can access better pricing for their customers. On the other hand, small banks with fewer credit relationships often have lower priority in pricing. We can think of banks as being dealers because they are willing to buy or sell a currency at the ask or bid price. Banks are able to make money by charging a premium to exchange currency on the Forex market. The Forex market is decentralized so frequently different banks have slightly different exchange rates for a given currency.
A cross currency is a currency quote that doesn't have the US dollar as one of its components. Common cross currency pairs include EUR/JPY, EUR/GBP and EUR/CHF. Although these currency pairs aren't as actively traded as pairs that include the US dollar, they do expand currency tradersf options in the Forex market.
Trading a Currency
When trading a currency pair there is a bid price and an ask price. When going long or buying a currency pair, the ask price is the amount of the quoted currency to be paid in order to buy one unit of the base currency.
When going short or selling a currency pair the bid price is how much of the quoted currency will be obtained when selling one unit of the base currency.
The bid price is the quote before the slash. The last two digits after the slash are the ask price. Often, only the last two digits of the full price or quoted. Generally, the bid price is smaller than the ask price. Here's an example:
Bid=1.0000
Ask=1.0005
Let's say that you wanted to buy this currency pair. In other words, you plan to buy the base currency and are watching the ask price to determine how much in Canadian dollars the market charges for US dollars. According to the example, one US dollar can be bought for 1.0005 Canadian dollars.
Now let's say you wanted to sell this currency pair. In other words, you plan to sell the base currency in exchange for the quoted currency. In this case, you would look at the bid price. According to the bid price, the market will buy one US dollar for 1.0000 Canadian dollars.
Transactions are conducted in whichever currency is quoted first. In other words, transactions are conducted in the base currency. You purchase the base currency or sell the base currency.
Pips and Spreads
A pip can be defined as the smallest amount that a price can move in a currency quote. A spread is the difference between the bid price and the ask price. Here's the previous example again:
In this case the spread would be 0.0005 or 5 pips. Pips are also sometimes called points. One pip equals 0.0001 units when talking about US dollars, British Pounds, Swiss Franc, or Euro. One pip equals 0.01 units when talking about the Japanese yen.
Currencies are quoted differently on the forwards and futures markets. Foreign exchange is quoted against the US dollar in the forwards and futures markets. In other words, pricing shows how many US dollars you need to buy one unit of a given foreign currency. This contrasts with the spot market where in some cases currencies are quoted against the US dollar and in other cases the US dollar is quoted against the foreign currency.
Forex versus Equities
The Forex market has very few traded instruments. This is a major difference between the Forex market and the equities markets. The equities market has thousands of stocks for traders to research and choose from, however most Forex trades revolve around seven major currency pairs. The seven major pairs are USD/JPY, GBP/USD, EUR/USD, USD/CHF, USD/CAD, NZD/USD and AUD/USD.
In the equities market it is sometimes difficult for traders to make money when the market declines. There are specific rules and regulations regarding short-selling US equities. However in the Forex market traders have the opportunity to profit in either rising or declining market. In the Forex market, short-selling is inherent in every transaction because traders are buying and selling simultaneously. Also, the Forex market is generally more liquid than the equities market so traders don't have to wait for an uptick before they enter a short position.
Margins are low and leverage is high on the Forex market, a result of its high level of liquidity. Such low margin rates are extremely difficult to find in the equities markets, where margin traders often need to maintain at least 50% of the value of the investment as margin. Forex traders on the other hand sometimes need only 1% equity. Commissions in the Forex market tend to be lower than in the equities market.
History of Currency Exchange
The gold standard monetary system was created in 1875. It was one of the most important events in the history of the Forex market. Previously, countries used to use gold and silver to make international payments. However, the value of gold and silver was affected by external supply and demand, which created problems. For example, if a new gold mine was discovered the price of gold would go down.
With the gold standard governments around the world agreed that they would convert currency into specific amounts of gold. To do this governments were required to have large gold reserves to meet the demand to make exchanges. By the end of the 19th century, most of the countries with large economies had defined a certain amount of currency as being equal to one ounce of gold. As time went on, the amount of each currency that was required to purchase one ounce of gold became exchange rates between two currencies. This was the beginning of currency exchange.
Around the beginning of World War I the gold standard broke down. European powers believed it was necessary to complete large military projects because of political pressure from Germany. The cost of these military projects was so high that there wasn't enough gold to exchange for all the currency that the governments were printing.
The gold standard returned briefly after World War I, however most countries went off the gold standard again before World War II.
Near the end of World War II the Allied nations decided to set up a monetary system to replace the gold standard. Over 700 Allied representatives met in Bretton Woods, New Hampshire, in July of 1944 to discuss the Bretton Woods system of international monetary management. Some of the main ideas that came out of the meeting were that the US dollar would replace the gold standard and become a primary reserve currency, that there would be fixed exchange rates and that there would be three international agencies to oversee economic activity would be created. These agencies were the international monetary fund (IMF), the General Agreement on Tariffs and Trade (GATT), and the International Bank for Reconstruction and Development.
The US dollar replacing gold as the primary standard for world currency conversions was one of the main ideas brought about by Bretton Woods. At the time the US dollar was the only currency that was backed by gold.
Over the next few decades, in order to remain the world's reserve currency, the United States had to have a series of balance of payment deficits. However, in the early 1970s, US gold reserves had become so depleted that the United States treasury lacked enough gold to cover the large number of US dollars that foreign central banks had in reserve. So on August 15, 1971, the United States effectively declared that it would no longer exchange gold for US dollars that were held in foreign reserves when US President Richard Nixon closed the gold window. President Nixon's actions brought the Bretton Woods system to an end.
In 1976, the world decided to use floating foreign exchange rates in what was called the Jamaica agreement. This agreement abolished the gold standard. However, not all governments have adopted a free floating exchange rate system. In fact, most governments still use one of three exchange-rate systems. They are Dollarization, a pegged rate, and managed floating rate.
Dollarization occurs if a country chooses to not issue its own currency and instead uses of foreign currency as its national currency. One advantage of dollarization is that the country may be seen as a relatively stable place for investment. Two disadvantages of dollarization are that the country's central bank can no longer make monetary policy nor print money.
Pegged rates happen if a country chooses to directly fix its exchange rates to a foreign currency. Pegged rates usually allow the country to have more stability than a normal float. The country's currency may be pegged at a fixed rate to a single currency or to a specific basket of foreign currencies. The currency only fluctuates when there are changes in the pegged currencies. An obvious example of a pegged currency is the Chinese yuan. Between 1997 and July 21, 2005 the Chinese Yon was pegged to the US dollar at a rate of 8.28 yuan.
Managed floating rates are created when a country's exchange rate changes freely and the currencyf value is subject to the forces of supply and demand in the market. With managed floating rates the country's central bank or government may intervene when there are extreme fluctuations in exchange rates. If, for example, a country's currency depreciates too much, the government could increase short-term interest rates, which would likely cause the currency to appreciate. Central banks generally have a wide variety of tools that they can use to manage their currency.
Participants in the Forex Market
Market participants in the equities market are often limited to investors who trade with either other investors or institutional investors like mutual funds. On the Forex market, however, there are market participants who are not investors.
Governments and central banks are probably the most influential participants in the currency exchange market. Many countries use their central banks as an extension of the government to conduct monetary policy. Other countries seem to believe their central banks would be more effective in finding a balance between keeping interest rates low and curbing inflation if they were more independent, and free of government control. In both cases, though, representatives from the government usually have regular meetings and discussions with the representatives of the central banks, leading, often, to similar ideas on monetary policy.
Reserve volumes are often manipulated by central banks in attempts to meet economic goals. China, for example, has been purchasing millions of dollars of United States treasury bills to keep the Chinese Yuan at its target exchange rate, a result of China pegging its currency to the US dollar. Central banks adjust their reserve volumes by participating in the foreign exchange market. Because these banks have a great deal of purchasing and selling power, they have a large influence on the direction of the currency markets.
Banks and other financial institutions are some of the largest participants in Forex transactions. The interbank market is where large banks conduct transactions amongst themselves. These transactions determine the currency. The interbank market is huge in volume when compared to the exchange individuals make when they need small-scale foreign currency transactions. Credit is the basis of the electronic brokering systems that allow the banks to transact with each other. The only banks that can engage in transactions are ones that have great relationships with each other. Larger banks generally have a wider array of credit relationships and therefore can access better pricing for their customers. On the other hand, small banks with fewer credit relationships often have lower priority in pricing. We can think of banks as being dealers because they are willing to buy or sell a currency at the ask or bid price. Banks are able to make money by charging a premium to exchange currency on the Forex market. The Forex market is decentralized so frequently different banks have slightly different exchange rates for a given currency.
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