sebi funktions

8/3/2019 sebi funktions

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THE SECURITIES AND

EXCHANGE BOARD

OF INDIA (SEBI)


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05/05/12 SAPM2

Objectives of SEBI

To protect the interest of the investors in securities

To promote the development of securities market

To regulate the securities market


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05/05/12 SAPM3

Functions of SEBI

Regulating the business in stock exchange and anyother 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-regulatoryorganizations

Prohibiting fraudulent and unfair trade practices in

the securities market


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05/05/12 SAPM4

Functions of SEBI

Promoting investors education and training ofintermediaries 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-regulatoryorganizations in the securities market


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05/05/12 SAPM5

Organization of SEBI

Departments

Primary Mkt. dept.

Issue Mgt. & Intermediaries Dept.

Secondary Mkt. dept.

Institutional Invt.Advisory

Committees


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05/05/12 SAPM6

SEBI Regulates.

SEBI

regulates

Primary

Market

Secondary

Market

Mutual

Funds

Foreign

Institutional

Investment


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05/05/12 SAPM7

SEBI & Primary Market

Measures undertaken by SEBI:-

Entry norms

Promoters contribution

Disclosure

Book building

Allocation of shares

Market intermediaries


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05/05/12 SAPM8

Conti..

1. Entry normsa) Track record of dividend payment for minimum 3 yrs

preceding the issue.

b) Already listed companies - when post-issue networthbecomes more than 5 times the pre-issue networth

c) For Manufacturing company not having such trackrecord appraise project by a public financialinstitution or a scheduled commercial bank.

d) For corporate body 5 public shareholders for everyRs.1 lakh of the net capital offer made to the public

e) Banks 2 yrs of profitability for issues above par.Offer documents to companies.


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05/05/12 SAPM9

Conti..

2. Promoters contribution 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 prospectusUn audited financial results


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05/05/12 SAPM10

Conti..

4.Book buildingSEBI 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 investorsAllotment of securities


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05/05/12 SAPM11

Conti..

6. Market intermediariesLicensing of merchant bankers

Licensing of underwriters, registrars, transfer agents,

etc.,

Merchant bankers net worth Rs.5 crores

Segregate fund based from fee based activities.


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05/05/12 SAPM12

SEBI & Secondary Market

Reforms in the secondary market:-1. Governing board

2. Infrastructure

3. Settlement & clearing

4. Debt market

5. Price stabilization

6. Delisting

7. Brokers

8. Insider Trading


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05/05/12 SAPM13

Conti..

1. Governing boardBrokers 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


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05/05/12 SAPM14

Conti..

3. 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.


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05/05/12 SAPM15

Conti..

4. Debt market segment

Regulates thru SEBI (depository & participants)

regulation Act 1996.

Listing of debt instrumentsInvt. Range for FIIs

Dual rating for above Rs.500 million


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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.

05/05/12 SAPM17


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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 1996-97, 439 FIIs were registered

Can trade in securities of listed companies including OTCEI.


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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.


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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, theReserve Bank has fixed cut-off points that are two percentage points

lower than the actual ceilings.


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FIIs breakup in Indian Capital Market


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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 1. Have track record, professional & competence record, financial

soundness, general reputation of fairness and integrity.

2. Regulated by an appropriate foreign regulatory authority.

3. Permission under the provisions of FERA Act 1973.(FEMA - 2006)

Valid up to 5 yrs.


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05/05/12 SAPM 23

Custodians

Is an agencyappointment 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 doneby a member of an Indian stock exchange

Time stipulation for transaction b/w custodian & member ofISE is 48 hrs.


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05/05/12 SAPM 26

Critical review of SEBI

1. Disclosures

2. Dissemination process

3. Settlement

4. Badla trade

5. Special watch

6. Capital adequacy

7. Single authority8. Stricter registration of brokers

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