SECURITIES EXCHANGE BOARD OF INDIA

KALYANI
OBJECTIVES OF ESTABLISHMENT
#

To remove shortcomings and deficiencies and to regulate the capital market, the
Government of India set up the SEBI in 1998.

KALYANI
functions
#

To regulate all merchant banks on issue activity, lay guidelines and supervise and
regulate the working of mutual funds and oversee the working of stock exchanges in
India To introduce improved practices and greater transparency in the capital
markets in the interest of the investing public and the healthy development of the
capital markets.
KALYANI

3
Role of SEBI: Primary Market Reforms in India

KALYANI
Role of SEBI: Primary Market Reforms in India

# # # #

Companies issuing capital in the primary markets are now required to disclose all
material facts and specific risk factors with their projects They should also give
information regarding the basis of calculation of premium leaving the companies
free to fix the premium. It also introduced a code of advertisement for public
issues for ensuring fair and truthful disclosures. To encourage IPO SEBI has
permitted companies to determine the par value of shares issued by them ( now it is
Rs. 10 and Rs.100) SEBI has allowed issues of IPOs to go for BOOK BUILDING ie.,
reserve and allot shares to individual investor. But the issuer will have to
disclose the price, the issue size and the number of securities offer to the public
KALYANI

5
Role of SEBI: Primary Market Reforms in India Private Placement :
±

A private placement is a direct private offering of securities to a limited number

of sophisticated investors. It is the opposite of a public offering

Underwriting of issue optional, subject to the condition that if an issue was not
underwritten and was not able to collect 90% of the amount offered to the public;
the entire amount collected would be refunded to the investors.

KALYANI
Role of SEBI: Primary Market Reforms in India

The merchant bankers are now to be authorized by SEBI. They have to adopt the
stipulated capital adequacy norms, abide by a code of conduct which specifies a
high degree of responsibility towards investors in respect of pricing and premium
fixation of issues and disclosures in the prospectus or offer letters .
KALYANI

7
Role of SEBI: Primary Market Reforms in India

SEBI advised stock exchanges to amend the listing agreement to ensure that a listed
company furnishes annual statement showing variations between financial projections
and projected utilization of funds in the offer document and the actual utilisation

KALYANI
Role of SEBI: Primary Market Reforms in India

UTI has now been brought under the regulatory jurisdiction of SEBI SEBI has relaxed
the guidelines for investment in money market instruments.

KALYANI
Role of SEBI: Secondary Market Reforms in India

10

KALYANI
Role of SEBI: Secondary Market Reforms in India
#

# #

It has started process of registration of intermediaries such as the stock brokers

and subbrokers under the provisions of the Securities and Stock Exchange Board Act,
1992. The registration on the basis of certin eligibility norms such as capital
adequacy, infrastructure etc. SEBI also made rules for making client/broker
relationships more transparent, in particular, segregating client and broker
accounts.

11

KALYANI
Role of SEBI: Secondary Market Reforms in India

Insider Trading:
±

An illegal activity in which persons in a company having confidential information,

such as expansion plans, financial results, takeover bids, etc., take advantage of
such information to make a profit on the stock exchange by buying or selling
shares.

12

KALYANI
Role of SEBI: Secondary Market Reforms in India
# #

SEBI has notified regulations on insider trading under the provisions of SEBI Act.
Since 1992, SEBI has constantly reviewed the traditional trading systems in Indian
Stock Exchanges. IT is simplifying procedures and achieving transparency in cost
and prices at which consumers¶ orders are executed, speeding up clearing and
settlement, and, finally transfer of shares in the names of buyers
KALYANI

13
Role of SEBI: Secondary Market Reforms in India The GOI has allowed FII such as
Pension Funds, Mutual Funds, Investment Trusts, Asset or Portfolio Management
companies etc. to invest in the Indian Capital Markets provided they are registered
with SEBI To prevent Excessive speculation and volatility in the stock market, SEBI
has introduced Rolling Settlements from July, 2001 under which settlement has to
made every day.
KALYANI

14
#

THANK U

15

KALYANI