GLOPAC 2018- INTRODUCTORY PRESENTATION

Pawandeep

Securities and Exchange Board of India

(SEBI)

インドからのこんにちは

SECURITIES MARKETSEquity markets

• Equity shares are issued & traded.

• comes under the purview of SEBI

Exchange Traded Derivatives markets

• Equity Derivatives

• Currency Derivatives

• Interest rate Derivatives

• Commodities Derivatives

Debt markets

• Debt Market for Government Securities, CPs, CDs comes under the purview of RBI,

• Corporate Debt is governed by SEBI

Investment Products

• Mutual Funds

• Alternative Investment Funds

• Collective Investment Schemes

Securities Markets

APPLICABLE STATUTES

Companies Act

Securities Contract (Regulation) Act 1956

SEBI Act 1992

Depositories Act 1996

In addition, delegated legislation under the above Acts

Rules

Regulations

Guidelines / Circulars

SEBI ACT 1992

Establishes SEBI as a regulator ofIndian Securities Market with 3broad objectives

Promote the development of

securities markets

Regulate the

securities markets

Protect the interest of investors

POWERS UNDER SEBI ACT 1992 Frame regulations and guidelines

Call for information

Conduct inspections and inquiries

Initiate investigations

Issue direction to intermediaries and persons associated with the capital market

Passing of prohibitory orders under Section11B and 11(4) of SEBI Act

Levy penalty through adjudication process

Suspension/ Cancellation of registration for intermediaries

Initiation of criminal proceedings.

Cease and desist orders under Section 11D of SEBI Act

Suspension of trading in case of listed companies

SECONDARY MARKET IN INDIA

• Trading mechanism: Fully Automated, Electronic, Open Order Book, Order Matching based on Price/ Time priority.

• Settlement mechanism: Corporation provides novation with multilateral netting, Guaranteedsettlement, T+2 rolling settlement in Cash Market and T+1 settlement in derivatives segment.

• Products traded: Equity Shares, Index and Stock derivatives, Currency Derivatives, Corporate Debt,Interest Rate futures, Mutual Funds, ETFs, Warrants, etc.

Major Stock Exchanges Clearing Corporations Depositories

National Stock Exchange of

India Limited (NSE)

National Securities Clearing

Corporation Limited (NSCCL)

National Securities Depository

Limited (NSDL)

BSE Limited (BSE) Indian Clearing Corporation

Limited (ICCL)

Central Depository Services

(India) Limited (CDSL)

Metropolitan Stock Exchange

Limited (MSEI)

MCX-SX Clearing Corporation

Limited (MCX-SXCCL)

Multi Commodities Exchange

(MCX)

April 23, 2018 SECURITIES AND EXCHANGE BOARD OF INDIA Slide 6

SECURITIES MARKET INFRASTRUCTURE

Clearing

NSDL

MSEINSE

CDSL

NSCCL

Commercial “clearing” (settlement) banks

MCCIL

BSE

ICCL

Trading

Securities settlement

Cash settlement

SNAPSHOT OF SECONDARY MARKET IN INDIA

Market Capitalization (as on March 28, 2018)

NSE USD 2.23 trillion

BSE USD 2.26trillion

Number of listed companies(as on January 31, 2018)

NSE 1906

BSE 5613

MSEI 6

Avg. Daily Turnover (USD million) in January 2018

Cash Market Equity derivatives Currency derivatives

NSE 5,879 1,15,511 3,472

BSE 884 0.03 3,901

MSEI 0.03 ~0 76

April 23, 2018SECURITIES AND EXCHANGE BOARD OF INDIA Slide 8

MARKET INTERMEDIARIES (AS ON JANUARY 31, 2018)Stock Exchanges (Cash Market) 5

Stock Exchanges (Equity Derivatives Market) 3

Stock Exchanges (Currency Derivatives Market) 3

Stock Exchanges (Commodity Derivatives Market) 7

Brokers (Cash Segment) 3,265

Brokers (Equity Derivatives Market) 2,706

Brokers (Currency Derivatives Market) 2,465

Brokers (Debt Segment) 169

Brokers (Commodity Derivatives Market) 1185

Sub-brokers (Cash Segment) 25,999

Foreign Portfolio Investors (FPIs) 9,083

Custodians 19

Depositories 2

Merchant Bankers 193

Bankers to an Issue 65

Debenture Trustees 32

Credit Rating Agencies 7

KYC Registration Agency (KRA) 5

Registrars to an Issue & Share

Transfer Agents73

Venture Capital Funds 846

Foreign Venture Capital Investors 466

Alternative Investment Funds 374

Portfolio Managers 218

Mutual Funds 45

Investment Advisors 262

Research Analysts 195

Infrastructure Investment Trusts (InVIT) 1

Real Estate Investment Trusts (REITs) 6

Collective Investment Management

Company1

CAPITAL MOBILIZED IN PRIMARY MARKET

Total Number of Issues

In FY 17-18 (upto Jan) :

171

Public91%(156)

Rights9%(15)

FPO, 21

IPO, 150

Equity, 166

Debt, 5

Exchange Domestic market capitalization (USD millions) in February 2018

NYSE 23 276 426.5

Nasdaq - US 10 590 257.1

Japan Exchange Group Inc. 6 399 711.2 3

Shanghai Stock Exchange 5 281 384.3

Hong Kong Exchanges and Clearing 4 491 556.3

Euronext 4 470 761.1

LSE Group 4 353 235.9

Shenzhen Stock Exchange 3 596 850.5

BSE India Limited 2 263 490.0 9

Deutsche Boerse AG 2 248 787.0

National Stock Exchange of India Limited 2 235 714.2 11

TMX Group 2 228 033.5

Korea Exchange 1 745 818.4

SIX Swiss Exchange 1 633 446.3

Nasdaq Nordic Exchanges 1 551 213.4

TOPIC : APPLICATION OF BLOCKCHAIN / DISTRIBUTEDLEDGERS IN SECURITIES MARKET AND DEVELOPMENT OFREGULATORY FRAMEWORK FOR THE SAME

Potential Benefits:

• Transparent real-time data – No reconciliations and disputes amongstcounterparties

• Near real-time settlement

• Reduction in collateral requirements and operational overheads

• Reduction in the scope for data errors, disputes and reconciliation lags, speeding up the end-to-end process.

TOPIC : APPLICATION OF BLOCKCHAIN / DISTRIBUTEDLEDGERS IN SECURITIES MARKET AND DEVELOPMENT OFREGULATORY FRAMEWORK FOR THE SAME

• Various regulators & exchanges are exploring the idea of adoption of thistechnology in securities market.

• Areas of adoption post-trade processing between institutional investors andbrokers/dealers, settlement mechanism, share records maintenance, KYC records,elimination the need of clearing house / corporation, e-voting.

• As Regulator, it is necessary to undertake detailed Cost- Benefit Analysis,understand risks.

TOPIC : APPLICATION OF BLOCKCHAIN / DISTRIBUTEDLEDGERS IN SECURITIES MARKET AND DEVELOPMENT OFREGULATORY FRAMEWORK FOR THE SAME

Expectations from the program / areas

• Fundamental and basic understanding of Blockchain / Distributed ledgers.

• Exposure to various platforms of Blockchain / Distributed ledgers.

• Understanding of the nuances, challenges, risks, benefits, etc..

• Interaction with various people who have created (or making attempts to create) solutions / applications for securities market using Blockchain / Distributed ledgers.

• Interaction with internal team at FSA who is working on the subject matter

• Interaction with officials of Japanese Central Bank, other Japanese Regulators (and if possible with regulators of other countries)

• Access to various studies / research work undertaken by FSA or its associate entities on the subject matter.

• Solutions / Proof of concept that can be brought back to India and tried in Indian securities market.

THANK YOU