SEBI

SECURITIES AND EXCHANGE
BOARD OF INDIA (SEBI)

In 1988 the Securities and Exchange
Board of India (SEBI) was established by
the Government of India through an
executive resolution.
It became full autonomous body (a

statutory Board) in the year 1992 .
Objectives of SEBI
 To protect the interest of the investors in

securities
 To promote the development of securities
market
 To regulate the securities market
3 06/04/10 SAPM
Functions of SEBI
Regulating the business in stock
exchange and any other securities
market
Registering and regulating the workings
of intermediaries associated with
securities market
Prohibiting fraudulent and unfair trade
practices in the securities market
4 06/04/10 SAPM
Functions of SEBI
Promoting investors education and
training of intermediaries in securities
market
Prohibiting insiders trading in securities
Regulating substantial acquisition of
shares and take-over of companies
5 06/04/10 SAPM
Organization of SEBI
Primary Mkt. dept.
Issue Mgt. & Intermediaries Dept.

Departments
Secondary Mkt. dept.
Advisory Institutional Invt.

Committees
6 06/04/10 SAPM
SEBI Regulates……….
SEBI
regulates
Foreign
Primary Secondary Mutual
Institutional
Market Market Funds
Investment
7 06/04/10 SAPM
SEBI & Primary Market
Measures undertaken by SEBI:-
 Entry norms
 Promoters’ contribution
 Disclosure
 Book building
 Allocation of shares
 Market intermediaries
8 06/04/10 SAPM
Conti………..
1. Entry norms
a) Track record of dividend payment for
minimum 3 yrs preceding the issue.
b) For Manufacturing company not having
such track record – appraise project by a
public financial institution or a scheduled
commercial bank.
c) Banks – 2 yrs of profitability for issues
above par.
Offer documents to companies.
9 06/04/10 SAPM
Conti………..
4. 5. Allocation of shares
Minimum application of shares
Reservation for small investors
Allotment of securities
10 06/04/10 SAPM
Conti………..
6. Market intermediaries
Licensing of merchant bankers
Licensing of underwriters, registrars,
transfer agents, etc.,
Merchant bankers net worth – Rs.5 crores
Segregate fund based from fee based
activities.
11 06/04/10 SAPM
SEBI & Secondary Market
Reforms in the secondary market:-
1. Governing board
2. Infrastructure
3. Settlement & clearing
4. Debt market
5. Price stabilization
6. Delisting
7. Brokers
8. Insider Trading
12 06/04/10 SAPM
Conti………..
1. Governing board
Brokers and non-brokers representation
made 50:50
60% of brokers in arbitration, disciplinary &
default committees
For trading members 40% representation
2. Infrastructure
On-line screen based trading terminals
13 06/04/10 SAPM
Conti………..
4. Debt market segment

Regulates thru SEBI (depository &
participants) regulation Act 1996.
Listing of debt instruments
Invt. Range for FIIs
Dual rating for above Rs.500 million
14 06/04/10 SAPM
Conti………..
5. Price stabilization
Division to monitor the unusual movements
in prices.
Monitor prices of newly listed scrip from the
first day of trading.
Circuit breaker system and other monitoring
restrictions could be applied
Price filters
Price bands
15 06/04/10 SAPM
SEBI and the FIIs
Union Govt. allowed-
Foreign Institutional Investors (FIIs)
Non-Resident Indians (NRIs), and
Persons of Indian Origin (PIOs)
to enter into both Primary & Secondary market in India through the
portfolio investment scheme (PIS), under Liberalized policy regime.
Under this scheme, FIIs/NRIs can acquire shares/debentures of
Indian companies through the stock exchanges in India.
Implications:-
Affects the sensex movements
Determines the market indications
Guidelines announced in 1992
In 1993, 12 FIIs got registered
At the end of 1996-97, 439 FIIs were registered
Can trade in securities of listed companies including OTCEI.
The Reserve Bank of India
monitors the
Monitoring ceilings
Foreign on FII/NRI/PIO investments in
Investments
Indian companies on a daily basis.
For effective monitoring of foreign investment ceiling
limits, the Reserve Bank has fixed cut-off points that
are two percentage points lower than the actual
ceilings.
SEBI guidelines for FIIs:-
According to the 1995 regulations, FIIs should hold certificate
granted by SEBI to trade in Indian stock market.
To grant the certificate the applicant should –

1. Have track record, professional & competence record, financial
soundness, general reputation of fairness and integrity.
2. Regulated by an appropriate foreign regulatory authority.
3. Permission under the provisions of FERA Act 1973.(FEMA - 2006)
Valid up to 5 yrs.
Recent developments in FIIs
Exemption from attaching copy of RBI

approval with each market lots.
Allowed to invest in unlisted stocks of any
company.
Allowed to invest up to 100% in debt
instruments.
Mandatory to settle transactions thru
dematerialized mode for FIIs having securities
more than Rs.10 cr.
06/04/10 SAPM 19
Critical review of SEBI
1. Disclosures
2. Dissemination process
3. Settlement
4. Badla trade
5. Special watch
6. Capital adequacy
7. Single authority
8. Stricter registration of brokers
06/04/10 SAPM 20
Thank you

SEBI

Uploaded by

Copyright:

Available Formats

SEBI

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SEBI

Uploaded by

Copyright:

Available Formats

SECURITIES AND EXCHANGE

BOARD OF INDIA (SEBI)

It became full autonomous body (a

 To protect the interest of the investors in

Issue Mgt. & Intermediaries Dept.

Secondary Mkt. dept.

Advisory Institutional Invt.

4. Debt market segment

To grant the certificate the applicant should –

Exemption from attaching copy of RBI

You might also like