national convention on capital market regulation & development - gopal krishna agarwal
TRANSCRIPT
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Capital Market Regulation
& Development
17-Dec-2015
National Conventionon
Gopal Krishna AgarwalMember Central Council, [email protected]
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Financial Sector Legislation Reform Commission (FSLRC)
• The financial framework governing the financial markets has been built up over century. These are 60 acts multiple rules and regulations.
• Unintended consequences include regulatory gaps, overlaps, inconsistencies & regulatory arbitrage.
• Fragmented regulatory architecture
• Has led to a loss of scale and scope that could be available from seamless financial markets with all its attendant benefits of minimizing the intermediary cost.
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Indian Financial Code (IFC)• Financial regulating architecture featuring seven agencies
and not unified financial regulator
• Seven AgenciesRBI to continueSEBI/FMC/IRDA/PFRDA to be mergedSAT to be subsumed in FSATDeposit Insurance and Credit Guarantee Corporation (DICGC) to
be subsumed into Resolution CorporationNew Financial Redressal Agency (FRA) will be createdA new debt management office for government created
Public Debt Management Agency (PDMA)FSDC to continue in the statutory framework.
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FSLRC Recommendations…Recommendation on regulation making process
• Regulator would be required to Articulate the objective of regulationA statement of market failure that the regulation seeks to addressAnalyze the cost and benefit associated with the regulation A systematic public consultation processSubjecting the regulation to Judicial review
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Financial Sector Development Council (FSDC)
• Constitution – Chairman of RBI/SEBI/FM/IRDA/PFRDA and Secretaries of Ministries
• RoleSupervision of EconomyLead regulator - Functioning of Large ConglomeratesInter regulatory coordinationFinancial sector development issuesFinancial LiteracyFinancial inclusionEarly warning group
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Union Budget 2015-16Task Force on
• Financial Data Management Center (FDMC)• Financial Sector Appellate Tribunal (FSAT)• The Resolution Corporation• Public Debt Management Agency (PDMA) • Financial Redressal Agency (FRA)
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FMC MERGER with SEBI – Expectations Post Merger
• New Products Freight Weather Electricity
• Options Trading
• Participation of Banks and Financial Institutions
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FMC MERGER with SEBI – Challenges• Regulatory Vaccum
Spot Market
• Government primary aim is to regulate commodity prices and not leave it to market forces
• Policy Adopted are complexMSP (Minimum Support Price)APMC ActEssential Commodity ActHoarding and black marketerSales TaxStamp DutyOctrayCash market of securities are highly organized
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Recent Developments• Signing MOU with European Regulators - 27 Members
State on 28th July 2014• Multilateral Competent Authority Agreement (MCAA) on
Automatic exchange of information on 3rd June 2015• Foreign Accounts Tax Compliance Act (FATCA) with US on
July 09, 2015 for international tax compliance• SEBI - International Financial Services centers (IFSC)
Guidelines 2015• SEBI’s Complaint Redressal System (SCORES) - platform to
approach concerned companies or SEBI• SEBI guidelines on Foreign Portfolio Investment (FPI) and
Foreign Institutional Investors (FII) - simplification• SEBI issue and listing of Debt securities by municipalities• SARAL account opening form
Macroeconomic Outlook• Projected GDP growth rate in 2015-16: 7.8% .
• India to be the fastest growing major economy in the world- IMF.
• Inflation expected to be under the target 6% for the year 2015-16.
• A double-digit growth trajectory for the Indian economy over the medium term is very likely.
• Successful auction of coal blocks and passing of Mines and Insurance Bills have given hope of continued action on the reform front.
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• India a bright spot in a slowing world economy: IMF.
• India occupies the topmost position globally in terms of greenfield foreign direct investment (measured by estimated capital expenditure) in the first half of 2015.
• In doing so it has beaten countries like USA and China, the long time global favourites for FDI.
• In the World Bank’s ‘Ease of Doing Business’, India has jumped 12 places.
India in Global Economy11
• In the latest global competitiveness ranking of the World Economic Forum (WEF) India is ranked 55 out of 140 countries, an improvement of 16 places over last year.
• Moody’s changed its outlook for Indian banking sector from negative to stable in Nov’ 2015.
• Similar opinion expressed by Fitch and S&P.
• India is the eighth best country in the world when it comes to protecting the interests of minority investors. (Source : World Bank)
India in Global Economy12
Indian Capital Market: Overview• Largest number of listed companies in the world–5624 as of
31st Mar’ 2015 (BSE).• 1st (NSE) and 5th (BSE) most liquid exchange globally for
Index Options.• 3rd (NSE)and 9th (BSE) largest exchange in the world in
terms of number of trades in Equity Shares• 2nd and 3rd largest in the world in terms of number of
currency futures contracts traded (NSE and BSE resp).• Number of Investor Accounts (March-15): 13.71 million
(NSDL) and 9.61 million (CDSL).
Market Intermediaries 2011-12 2012-13 2013-14
2014-15
Brokers (Cash Segment) 10,268 10,128 9,411 6,147Corporate Brokers (Cash Segment) 4,877 5,113 4,917 3,757Sub-brokers (Cash Segment) 77,141 70,242 51,885 42,351
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Indian Capital Market Overview
Indian Capital Market - Some selected figures
Year/ Month
Capital Raised from the Primary Market through
Public and Rights Issues
Foreign Portfolio
Investment
Foreign Portfolio
Investment: Cumulative
Assets with
Mutual Funds at
the End of Period
Market Capitalizatio
n of NSE
2008-09 3.48 -9.84 59.08 89.61 621.912009-10 12.20 30.25 89.33 130.20 1274.262010-11 14.88 32.23 121.56 130.33 1475.012011-12 9.79 18.92 140.48 118.56 1230.882012-13 5.98 31.05 171.53 129.35 1150.482013-14 9.56 8.88 180.41 141.82 1250.662014-15 3.16 45.70 226.10 178.33 1635.50
In billion $
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Investor Education Initiatives in India
Investor education initiatives in India are at 5 levels.
• SEBI (Securities and Exchange Board of India)
• Exchanges
• Ministry of Corporate Affairs
• Other Financial Institutions like RBI, IRDA & PFRDA.
• ANMI (Association of National Exchanges Members of India)
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