Financial market

Both statements are correct.
Repurchase (buyback) of G-Secs is a process whereby the Government of India and State Governments buy back their existing securities, by redeeming them prematurely, from the holders.
The objectives of buyback can be reduction of cost (by buying back high coupon securities), reduction in the number of outstanding securities and improving liquidity in the G-Secs market (by buying back illiquid securities) and infusion of liquidity in the system.

Statement 1 is correct. International Financial Sevices Centres Authority (IFSCA) is a statutory unified regulatory body under the Department of Economic Affairs established by an Act of Parliament to develop and regulate the financial products, financial services and financial institutions located / performed in the International Financial Services Centres in India.
Statement 2 is correct. The Authority will function as a unified regulator and is empowered to exercise the powers of RBI, SEBI, IRDAI and PFRDA in respect of financial services, financial products and financial institutions performed/located in the international financial services centres in the country.
IFSCA has introduced a framework for “Regulatory Sandbox”. Under this, entities operating in the capital market, banking, insurance and financial services space shall be granted certain facilities and flexibilities to experiment with innovative FinTech solutions in a live environment with a limited set of real customers for a limited time frame.

Both statements are correct.
An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders. London, New York and Singapore can be counted as global financial centres.
An expert panel headed by former World Bank economist Percy Mistry submitted a report on making Mumbai an international financial centre in 2007. However, the global financial crisis that unfolded in 2008 made countries including India cautious about rapidly opening up their financial sectors.
Finance Minister announced in the Union Budget 2015 that India’s first IFSC’s would be set up in GIFT City in Gujarat.
# The United Kingdom has entered into a strategic partnership to develop India’s fledgling international financial services centre GIFT City, and agreed to set up a new Fund of Funds to be managed by the State Bank of India group in order to route U.K.’s future capital investments into India.

Statement 1 is correct. The Indian Energy Exchange recently launched the GTAM on its power trading platform after receiving approval from the Central Electricity Regulatory Commission (CERC).
The market will offer trade in four types of green term-ahead contracts -Green Intra-day contracts, Day-ahead Contingency contracts, Daily Contracts and Weekly contracts. There will be separate contracts for Solar and Non-Solar energy to facilitate Solar and Non-Solar Renewable Purchase Obligations fulfillment.
Statement 2 is correct. The introduction of GTAM platform would lessen the burden on RE-rich States and incentivize them to develop RE capacity beyond their own renewable purchase obligations. This would promote RE merchant capacity addition and help in achieving RE capacity addition targets of the country.
The GTAM platform will lead to increase in number of participants in renewable energy sector. It will benefit buyers of RE through competitive prices and transparent and flexible procurement. It will also benefit RE sellers by providing access to pan- India market.

A negative bond yield is when an investor receives less money at the bond’s maturity than the original purchase price for the bond.
A negative bond yield is an unusual situation in which issuers of debt are paid to borrow. In other words, the depositors, or buyers of bonds, are effectively paying the bond issuer a net amount at maturity instead of earning a return through interest income.
Negative-yield bonds attract investments during times of stress and uncertainty as investors look to protect their capital from significant erosion.
These are generally issued by central banks or governments, and investors pay interest to the borrower to keep their money with them.

Market capitalization is the aggregate valuation of the company based on its
current share price and the total number of outstanding stocks. It is calculated by
multiplying the current market price of the company’s share with the total outstanding shares of the company.

Currency Swap Arrangement is an arrangement, between two friendly
countries, which have regular, substantial or increasing trade, to basically involve in
trading in their own local currencies, where both pay for import and export trade, at the
pre-determined rates of exchange, without bringing in third country currency like the
US Dollar.
•In such arrangements no third country currency is involved, thereby eliminating the
need to worry about exchange variations.
•The swap arrangement (in 2018) is an agreement between India and Japan to
essentially exchange and re-exchange a maximum amount of USD 75 Billion for
domestic currency, for the purpose of maintaining an appropriate level of balance of
payments for meeting short-term deficiency in foreign exchange.

Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential.
• These investments are generally characterized as high-risk/high-return opportunities.
• In the past, venture capital investments were only accessible to professional venture capitalists, although now accredited investors have a greater ability to take part in venture capital investments.

In the stock markets, the circuit breaker halts trading in all equity and equity derivative markets nationwide for a specified time, when the index hits predefined levels.
• Circuit breakers are applicable for individual securities as well.
• The market regulator, Securities and Exchange Board of India (SEBI) has introduced circuit breakers to curb severe market selling/volatility in the stock markets, with effect from July 2, 2001.
• The market-wide circuit breakers would be triggered by the movement of either BSE Sensex or NSE S&P CNX Nifty, whichever is breached earlier.
• Circuit breakers are triggered when either of the indices moves either ways (upside/downside) by 10 per cent or 15 per cent and 20 per cent, compared to the previous day’s closing level of the index.

Created by the Chicago Board Options Exchange (CBOE), the Volatility Index, or VIX, is a real-time market index that represents the market’s expectation of 30-day forward-looking volatility.
• Derived from the price inputs of the S&P 500 index options, it provides a measure of market risk and investors’ sentiments.
• It is also known by other names like “Fear Gauge” or “Fear Index”.
• Investors, research analysts and portfolio managers look to VIX values as a way to measure market risk, fear and stress before they take investment decisions.

Simply put, side pocketing is a framework that allows mutual funds to segregate the bad assets in a separate portfolio within their debt schemes.
• The Securities and Exchange Board of India (SEBI) introduced the framework in December — primarily triggered by the IL&FS fiasco — after it emerged that many fund houses have huge exposure to the beleaguered entity and could potentially take a huge hit on their net asset value thereby affecting investor returns.
• If a debt instrument is downgraded to default rating by credit rating agencies, then the fund house has the option to create a side pocket so that good assets can be ring-fenced.
• Side pocketing segregates the bad assets from the good ones.
• All existing investors in the scheme are allotted equal number of units in the segregated portfolio as held in the main portfolio and no redemption or subscription is allowed in the segregated portfolio.
• Thereafter, the units have to be listed on a stock exchange within 10 days to facilitate exit of the unit holders.
• Effectively, this makes the price discovery of the bad assets a transparent procedure with investors having the freedom of either selling it at prevailing price or holding it if they expect the value to recover in future

Statement 1 is incorrect. A municipal bond is a debt instrument issued by municipal corporations or associated bodies in India. These local governmental bodies utilize the funds raised through these bonds to finance projects for socio-economic development through building bridges, schools, hospitals, providing proper amenities to households, etc.
Statement 2 is incorrect. The INR 200 crore municipal bonds issue of the Lucknow Municipal Corporation (LMC) was listed at Bombay Stock Exchange recently.
With this, Lucknow has become the 9th city in the country to have raised municipal bonds, which has been incentivized by the Ministry of Housing and Urban Affairs, Government of India under the mission AMRUT (Atal Mission for Rejuvenation and Urban Transformation).
The Ahmedabad Municipal Corporation, in 1998, was the first to make a public offering. Since then, other local bodies in the cities of Nashik, Nagpur, Ludhiana, and Madurai, have also accessed the capital markets through municipal bonds.

Morgan Stanley Capital International (MSCI) has set up many global indices, one of which is a composite of Indian stocks-the MSCI India index.
The MSCI Indexes are a measurement of stock market performance in a particular area. Like other indexes, such as the Dow Jones Averages or the S&P 500, it tracks the performance of the stocks included in the index.
MSCI has indexes for a variety of geographic sub-areas, as well as global indexes for stock categories such as small-cap, large-cap, and mid-cap. The four most popular track emerging markets, frontier markets, developed markets excluding the United States and Canada, and the world market.
# MSCI Inc will cut seven Chinese firms from some of its global indexes, it said recently, the third major index publisher after S&P Dow Jones Indices and FTSE Russell to do so following U.S. restrictions on owning the companies.

The Board of Directors of the Reserve Bank of India formed a Sub-Committee of the Board to study matters and concerns in the microfinance sector insofar as they are related to the entities regulated by the Bank.

 The Sub-Committee was under the chairmanship of Y.H. Malegam.

 The terms of mention of the Sub-Committee included framing the description of ‘microfinance’ and ‘Micro Finance Institutions (MFIs)’ for the point of regulation of non-banking finance companies (NBFCs) undertaking microfinance by the Reserve Bank of India and giving proper recommendations.

 Also, the committee had to look at the widespread activities of MFIs in relation to interest rates, lending and recovery measures to identify trends that impose on borrowers’ interests.