Presentation on theme: "THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)"— Presentation transcript:
1THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
2Objectives of SEBITo protect the interest of the investors in securitiesTo promote the development of securities marketTo regulate the securities market24/1/2017SAPM
3Promoting and regulating self-regulatory organizations Functions of SEBIRegulating the business in stock exchange and any other securities marketRegistering and regulating the workings of intermediaries associated with securities marketRegistering and regulating the working of collective investment schemes including mutual fundsPromoting and regulating self-regulatory organizationsProhibiting fraudulent and unfair trade practices in the securities market34/1/2017SAPM
4Functions of SEBIPromoting investors education and training of intermediaries in securities marketProhibiting insiders trading in securitiesRegulating substantial acquisition of shares and take-over of companiesCalling for information, undertaking inspection, conducting enquiries and audits of the stock exchanges, intermediaries and self-regulatory organizations in the securities market44/1/2017SAPM
7SEBI & Primary Market Measures undertaken by SEBI:- Entry norms Promoters’ contributionDisclosureBook buildingAllocation of sharesMarket intermediaries74/1/2017SAPM
8Conti………..1. Entry normsTrack record of dividend payment for minimum 3 yrs preceding the issue.Already listed companies - when post-issue networth becomes more than 5 times the pre-issue networthFor Manufacturing company not having such track record – appraise project by a public financial institution or a scheduled commercial bank.For corporate body – 5 public shareholders for every Rs.1 lakh of the net capital offer made to the publicBanks – 2 yrs of profitability for issues above par.Offer documents to companies.84/1/2017SAPM
9Conti……….. 2. Promoters’ contribution 3. Disclosure 9 Should not be less than 20% of the issued capital.Receiving of promoters’ contribution.Lock in period as per SEBI.Cases of non-under written public issues.3. Disclosuredraft prospectusUn audited financial results94/1/2017SAPM
10Conti……….. 4. Book building 10 SEBI recommends two-tier under writing systemOne of the mode of public issue thru prospectus.Role of syndicate members and book runners.Minimum 30 centers.5. Allocation of sharesMinimum application of sharesReservation for small investorsAllotment of securities104/1/2017SAPM
11Conti……….. 6. Market intermediaries 11 Licensing of merchant bankers Licensing of underwriters, registrars, transfer agents, etc.,Merchant bankers net worth – Rs.5 croresSegregate fund based from fee based activities.114/1/2017SAPM
12SEBI & Secondary Market Reforms in the secondary market:-Governing boardInfrastructureSettlement & clearingDebt marketPrice stabilizationDelistingBrokersInsider Trading124/1/2017SAPM
13Conti……….. On-line screen based trading terminals 13 1. Governing boardBrokers and non-brokers representation made 50:5060% of brokers in arbitration, disciplinary & default committeesFor trading members 40% representation2. InfrastructureOn-line screen based trading terminals134/1/2017SAPM
14Conti……….. 14 Settlement & clearing Weekly settlements Auctions for non-delivered shares within 80 days of settlementAdvice to set up clearing houses, clearing corporation or settlement guarantee fundWarehousing facilities permitted by SEBI.144/1/2017SAPM
15Conti……….. 15 Debt market segment Regulates thru SEBI (depository & participants) regulation Act 1996.Listing of debt instrumentsInvt. Range for FIIsDual rating for above Rs.500 million154/1/2017SAPM
16Conti……….. 16 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 appliedImposing of special margins of 25% on purchase in addition to regular margin.Price filtersPrice bands164/1/2017SAPM
17Conti………..6. DelistingOn voluntary de-listing from regional stock exchanges – buy offer to all share holdersPromoters to buy or arrange buyers for the securities3 yrs listing fees from companies and be kept in Escrow A/c with the stock exchange.174/1/2017SAPM
18SEBI and the FIIs Union Govt. allowed- Foreign Institutional Investors (FIIs)Non-Resident Indians (NRIs), andPersons 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 movementsDetermines the market indicationsGuidelines announced in 1992In 1993, 12 FIIs got registeredAt the end of , 439 FIIs were registeredCan trade in securities of listed companies including OTCEI.
19The ceiling for overall investment for FIIs:- 24% of the paid up capital of the Indian company10% for NRIs/PIOs.20% of the paid up capital in the case of public sector banks, including the State Bank of India.Modifications in ceilings:-The ceiling of 24 % for FII investment can be raised up to sectoral cap/statutory ceiling, subject to the approval of the board and the general body of the company passing a special resolution to that effect.The ceiling of 10 % for NRIs/PIOs can be raised to 24% subject to the approval of the general body of the company passing a resolution to that effect.
20Monitoring Foreign Investments The Reserve Bank of Indiamonitors the ceilings on FII/NRI/PIO investments in 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.
22SEBI 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 –Have track record, professional & competence record, financial soundness, general reputation of fairness and integrity.Regulated by an appropriate foreign regulatory authority.Permission under the provisions of FERA Act 1973.(FEMA )Valid up to 5 yrs.
23Custodians Is an agency appointment of the custodian Maintenance of accountsSubmission of semi-annual reports (SEBI & RBI)Inspection of accountsSEBI Guidelines:-Foreign brokers can operate only on behalf of registered FIIs.Execution of orders for sale and purchase of securities are done by a member of an Indian stock exchangeTime stipulation for transaction b/w custodian & member of ISE is 48 hrs.4/1/2017SAPM23
24Preferential allotment -To boost up the financial resources Regulation:-Under mutual consent of the shareholdersAs per the ceilingsAllotment on the highest price (26 weeks)Permitted up to 15% of the equity within the ceilingHoldings of a single FII – increased from 5% to 10% of the equity of a company4/1/2017SAPM24
25Recent 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.4/1/2017SAPM25
26Critical review of SEBI DisclosuresDissemination processSettlementBadla tradeSpecial watchCapital adequacySingle authorityStricter registration of brokers4/1/2017SAPM26