1. THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

2. Objectives of SEBI
To protect the interest of the investors in securities
To promote the development of securities market
To regulate the securities market 2
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3. Promoting and regulating self-regulatory organizations
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
Registering and regulating the working of collective investment schemes including mutual funds
Promoting and regulating self-regulatory organizations
Prohibiting fraudulent and unfair trade practices in the securities market 3
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4. 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
Calling for information, undertaking inspection, conducting enquiries and audits of the stock exchanges, intermediaries and self-regulatory organizations in the securities market 4
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5. Issue Mgt. & Intermediaries Dept.
Organization of SEBI
Primary Mkt. dept.
Issue Mgt. & Intermediaries Dept.
Departments
Secondary Mkt. dept.
Advisory
Committees
Institutional Invt. 5
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6. SEBI Regulates………. 6
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7. SEBI & Primary Market Measures undertaken by SEBI:- Entry norms
Promoters’ contribution
Disclosure
Book building
Allocation of shares
Market intermediaries 7
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8. Conti………..
1. Entry norms
Track 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 networth
For 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 public
Banks – 2 yrs of profitability for issues above par.
Offer documents to companies. 8
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9. Conti……….. 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. Disclosure
draft prospectus
Un audited financial results 9
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10. Conti……….. 4. Book building 10
SEBI recommends two-tier under writing system
One of the mode of public issue thru prospectus.
Role of syndicate members and book runners.
Minimum 30 centers.
5. Allocation of shares
Minimum application of shares
Reservation for small investors
Allotment of securities 10
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11. Conti……….. 6. Market intermediaries 11 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
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12. SEBI & Secondary Market
Reforms in the secondary market:-
Governing board
Infrastructure
Settlement & clearing
Debt market
Price stabilization
Delisting
Brokers
Insider Trading 12
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13. Conti……….. On-line screen based trading terminals 13
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
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14. Conti……….. 14 Settlement & clearing Weekly settlements
Auctions for non-delivered shares within 80 days of settlement
Advice to set up clearing houses, clearing corporation or settlement guarantee fund
Warehousing facilities permitted by SEBI. 14
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15. Conti……….. 15 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 15
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16. Conti……….. 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 applied
Imposing of special margins of 25% on purchase in addition to regular margin.
Price filters
Price bands 16
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17. Conti………..
6. Delisting
On voluntary de-listing from regional stock exchanges – buy offer to all share holders
Promoters to buy or arrange buyers for the securities
3 yrs listing fees from companies and be kept in Escrow A/c with the stock exchange. 17
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18. 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 , 439 FIIs were registered
Can trade in securities of listed companies including OTCEI.

19. The ceiling for overall investment for FIIs:-
24% of the paid up capital of the Indian company
10% 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.

20. Monitoring Foreign Investments
The Reserve Bank of India
monitors 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.

21. FIIs breakup in Indian Capital Market

22. 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 –
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.

23. Custodians Is an agency appointment of the custodian
Maintenance of accounts
Submission of semi-annual reports (SEBI & RBI)
Inspection of accounts
SEBI 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 exchange
Time stipulation for transaction b/w custodian & member of ISE is 48 hrs.
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24. Preferential allotment -To boost up the financial resources
Regulation:-
Under mutual consent of the shareholders
As per the ceilings
Allotment on the highest price (26 weeks)
Permitted up to 15% of the equity within the ceiling
Holdings of a single FII – increased from 5% to 10% of the equity of a company
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25. 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.
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26. Critical review of SEBI
Disclosures
Dissemination process
Settlement
Badla trade
Special watch
Capital adequacy
Single authority
Stricter registration of brokers
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