Download - 53353159-SEBI-PPT (1)
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 1/30
6/4/12
Click to edit Master subtitle style
SEBI
Introduction
to
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 2/30
6/4/12
THRUST OF SEBI’s
REGULATION OFEQUITY MARKET
PRIMARY MARKETACCESS : RESTRICTED
INSTRUMENTS :
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 3/30
6/4/12
History :
The Securities and ExchangeBoard of India was established
by the government of India on12 April 1988 as an interimadministrative body topromote orderly and healthy
growth of the securitiesmarket and for investorprotection.
It was to function under the
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 4/30
6/4/12
History :
The SEBI was given astatutory status on 30 Jan
1992 through an ordinance.The ordinance was later
replaced by an Act of
Parliament known as theSecurities and Exchange Boardof India Act 1992.
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 5/30
6/4/12
Reasons for theestablishment of SEBI
The capital market had witnesseda tremendous growth during the1980’s characterized by theincreasing participation of thepublic.
This ever expanding investor
population and marketcapitalization led to a variety of malpractices on the part of
companies, brokers, merchantbankers, investment consultants
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 6/30
6/4/12
Continued…
The glaring examples of thesemalpractices include existence of self styled merchant bankers,unofficial private placements,rigging of prices, unofficialpremium on new issues, non
adherence of provisions of TheCompanies Act , violation of rulesand regulations of stock exchanges and listing
requirements, delay in delivering
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 7/306/4/12
Continued…
The government and the stock exchanges were rather helplessin redressing the investorsproblems because of lack of proper penal provisions in theexisting legislation.
Therefore the GOI decided to setup SEBI a separate regulatorybody
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 8/306/4/12
PURPOSE & ROLE OFSEBI :
To the issuers it aims to providea market place in which they canconfidently look forward toraising finances they need in aneasy fair and efficient manner.
To the investors it provides
protection of their rights andinterests through adequateaccurate and authentic
information and disclosure of information on a continuous
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 9/306/4/12
Continued…
To the intermediaries it offers acompetitive , professionalizedand expanding market withadequate and efficientinfrastructure so as to renderbetter service to investors and
issuers.
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 10/30
6/4/12
Objectives:
To regulate stock exchanges andthe securities industry and topromote their orderlyfunctioning.
To guide , educate and protectthe rights and interests of
individual investors.
To prevent trading malpracticesand achieve a balance between
self regulation by the securities
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 11/30
6/4/12
Continued…
To regulate and develop a codeof conduct and fair practices bybrokers , merchant bankers witha view to make them competitiveand proffesional.
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 12/30
6/4/12
Functions of SEBI :
REGULATORY FUNCTIONS
ØRegistration of brokers and
sub brokers and otherplayers in the market
ØRegistration of collective
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 13/30
6/4/12
Regulatory functions :
ØProhibition of fraudulent andunfair trade practices
ØControlling insider tradingand takeover bids and
imposing penalties for suchpractices
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 15/30
6/4/12
Organization structure
The activities of SEBI have beendivided into 5 operationaldepartments.
Each department is headed by anExecutive Director
apart from its head office atMumbai SEBI has regional officesin Kolkata, Chennai, Delhi toattend to investor complaints
and liaise with the issuers,
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 16/30
6/4/12
Continued…
SEBI has formed 2 advisorycommittees –
ØPrimary market advisorycommittee
ØSecondary market advisorycommittee
These committees are non
statutory in nature and SEBI is
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 18/30
6/4/12
• Announcing guidelines for parking
of funds in short-term deposits of scheduled commercial banks (SCBs)by mutual funds, the regulator saidthat investment cap would also take
into account the deposit schemes of the bank's subsidiaries.
•
The SEBI has also defined 'shortterm' for funds' investmentpurposes as a period not exceeding91 days.
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 22/30
6/4/12
NFOs can only beinvested at the close of
the NFO period :Earlier, Mutual funds would keep
an NFO open for 30 days, and theminute they received their first
cheque, the money would bedirectly invested in the market;creating a skewed accounting for
those that entered later sincethey get a fixed NFO price.
The market regulator hascorrected this by extendingA lication Su orted b Blocked
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 23/30
6/4/12
By the ASBA process one cancontinue to earn interest in the
bank account until the NFO closes(remember there is usually norejection or “oversubscription” in a
mutual fund NFO) which meansthat the cheque goes for clearingafter the NFO has closedirrespective of when it was sent.The fund manager will be able toinvest once the NFO closes.
Di id d l
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 24/30
6/4/12
Dividends can now onlybe paid out of actually
realized gains :It will reduce both the quantum
of dividends announced, and themeasures used by MFs to garner
investor money using dividend asa carrot to entice new investors.
E i M l F d l
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 25/30
6/4/12
Equity Mutual Funds playa more active role in
corporate governanceThis will help mutual fundsbecome more active and not justthat, they must reveal, in their
annual reports from next year,what they did in each “vote”.
SEBI has now made it mandatory
for funds to disclose whetherthey voted for or against moves(suggested by companies inwhich they have invested) suchas mer ers, demer ers,
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 28/30
6/4/12
Securities lending byMutual Funds
Mutualfunds
7/31/2019 53353159-SEBI-PPT (1)
http://slidepdf.com/reader/full/53353159-sebi-ppt-1 29/30
6/4/12
•The specifications regarding thevaluation of the collateral have
been prescribed in the guidelinesto minimize the risk involved insecurities lending transactions. To
ensure adequate checks andbalances regarding the securitieslending transactions, therequirement of reporting totrustees and SEBI have beenstipulated.