Introduction

Barter System

Buyer Items to trade Seller

Rules that regulate the exchange

What is a Financial System?

Q What is a financial system?

It is an organized and regulated structure

where exchange of funds take place
between the lenders and borrowers.
Components of a Financial System
A Financial System is a system that brings together Financial Participants,
Markets, Products, and Services.

PARTICIPANTS MARKETS PRODUCTS SERVICES

FINANCIAL SYSTEM
Goal of Financial System

GOAL
The primary goal of a financial system is
accelerated growth of an economy.
Objectives of Financial System

Saving Mobilization Investments National Growth

Prices in a Financial Market

MARKET
External Socio-
SUPPLY
MARKET Political Factors
DEMAND

Prices
Functions of Financial System

Functions of a Financial System

Play the role of

Facilitate the flow of Monitor and regulate
intermediaries to
funds to finance the participants in the
determine the flow of
investments financial system
funds
How Financial System Works?

Indirect Finance

Financial
Funds Intermediaries Funds

Funds

Lenders Borrowers
Savers Spenders
Households Financial Households
Funds Funds
Business markets Business firms
Governments Governments
Foreigners Foreigners
Direct Finance
Individual Wealth In India
Trend of Wealth over the last 5 Years
Classification Within Financial Assets
Classification Within Physical Assets
Classification in Key Asset Classes
Global Individual Wealth
Structure of the Modern Financial System

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services
Structure of Financial Market

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services

Derivatives
Capital Market Money Market FX Market
Market

Primary Secondary Treasury Certificate Call/Notice Commercial

Market Market Bills of Deposit Money Papers

Debt Equity
Market Market
 Financial markets
• A financial market is a market where financial
instruments are exchanged or traded.
• Financial assets, often called financial instruments,
are intangible assets, which are expected to provide
future benefits in the form of a claim to future cash.
Some financial instruments are called securities and
generally include stocks and bonds.
• Financial markets provide the following three
major economic functions:
• 1) Price discovery
• 2) Liquidity
• 3) Reduction of transaction costs
 Price discovery function

• It means that transactions between buyers and sellers of

financial instruments in a financial market determine the
price of the traded asset.
• The motivation for those seeking funds (deficit units)
depends on the required return that investors demand.
• It is these functions of financial markets that signal how the
funds available from those who want to lend or invest funds
will be allocated among those needing funds and raise
those funds by issuing financial instruments.
 Liquidity function
• Liquidity function provides an opportunity for investors to
sell a financial instrument, since it is referred to as a measure
of the ability to sell an asset at its fair market value at any
time. Without liquidity, an investor would be forced to hold a
financial instrument until conditions arise to sell it or the
issuer is contractually obligated to pay it off.

• All financial markets provide some form of liquidity. However,

different financial markets are characterized by the degree of
liquidity.
 Reduction of transaction costs
• The function of reduction of transaction costs is
performed, when financial market participants are
charged and/or bear the costs of trading a financial
instrument. In market economies the economic
rationale for the existence of institutions and
instruments is related to transaction costs, thus the
surviving institutions and instruments are those that
have the lowest transaction costs.
 Primary Markets Secondary Markets
When companies need financial resources The place where such securities are traded
for its expansion, they borrow money from by these investors is known as the secondary
investors through issue of securities. market.

Securities issued Securities like Preference Shares and

a) Preference Shares Debentures cannot be traded in the
b) Equity Shares secondary market.
c) Debentures
Equity shares is issued by the under writers Equity shares are tradable through a private
and merchant bankers on behalf of the broker or a brokerage house.
company.
People who apply for these securities are: Securities that are traded are traded by the
a) High networth individual retail investors.
b) Retail investors
c) Employees
d) Financial Institutions
e) Mutual Fund Houses
f) Banks

One time activity by the company. Helps in mobilising the funds for the
investors in the short run.
• The resources in the primary market can be raised either through the private
placement route or through the public issue route by way of Initial Public Offer
(IPO) or Follow on Public Offer (FPO). It is a public issue, if anybody and everybody
can subscribe for it, whereas, if the issue is made to select group of people then it
is termed as private placement.
• The secondary market on the other hand operates through two mediums, namely,
the Over-The-Counter (OTC) market and the Exchange Traded Market. OTC
markets are the informal type of markets where trades are negotiated.

• The other option of trading is through the stock exchange route, where trading
and settlement is done through the stock exchanges and the buyers and sellers
don’t know each other. The settlements of trades are done as per a fixed time
schedule. The trades executed on the exchange are settled through the clearing
corporation, who acts as a counterparty and guarantees settlement.
Neeraj Gupta
 List of IPOs….
Amount Raised
Year No. of IPOs (In Rs Cr) Issue Succeeded Issue Failed
2007 108 33,946.22 104 4
2008 39 18,339.92 36 3
2009 22 19,306.58 21 1
2010 66 36,362.18 64 2
2011 40 5,977.47 37 3
2012 13 6,834.17 11 2
2013 5 1,283.95 3 2
2014 7 1,200.94 5 2
2015 21 13,513.17 21 0
2016 27 26,500.82 26 1
2017 38 75,278.57 38 0
2018 25 31,731.28 24 1
2019 * 13 11,027.64 13 0
 Rights Issue
• A rights issue is directly offered to all existing
shareholders of the Company in proportion to
their current holding.
• The company also sets a time limit for the
shareholder to buy the shares.
• Companies pursue Rights Issue as an avenue to
raise funds for various reasons, ranging from
expansion or acquisitions to paying down debts.
 Bonus
• Bonus issue refers to a further issue of shares made by a
company having share capital to its existing share holders
without receipt of any consideration from the shareholders
for issuance of the shares.
• It is an offer of free additional shares to existing shareholders
in proportion to their holdings.
• For example, the company may give one bonus share for
every five shares held.
• These are company’s accumulated earnings which are not
given out in the form of dividends, but are converted into free
shares for which the shareholders need not pay anything.
 Money Market
 Main Function
 To channelize savings into short term productive
investments like working capital .

 Instruments in Money Market

 Call money market
 Treasury bills market
 Markets for commercial paper
 Certificate of deposits
 Bills of Exchange
 Money market mutual funds
 Promissory Note
 Call Money Market
 Part of the national money market

 Day-to day surplus funds mainly of banks are traded

 Short term in nature

 Maturity of these loans vary from 1 to 15 days

 Lent for 1 day: Call money

 Lent for more than 1 day but less than 15 days: Notice money

 Lent for more than 14 day but less than 364 days: Term money

 Highly liquid loan repayable on demand

 Commercial Papers
 Unsecured Promissory note.

 Issued by well known companies with strong and high credit rating.

Sold directly by the issuers to investors or through agents like merchant banks
and security houses.

 Flexible Maturity

 Low interest rates with compared to banks.

All eligible participants shall obtain the credit rating for issuance of Commercial
Paper either from Credit Rating Information Services of India Ltd. (CRISIL) or the
Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit
Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd. or such other
credit rating agency (CRA) as may be specified by the Reserve Bank of India from
time to time, for the purpose.
The minimum credit rating shall be A-2 [As per rating symbol and definition
prescribed by Securities and Exchange Board of India (SEBI)]
•  A corporate would be eligible to issue CP provided –
– a. the tangible net worth of the company, as per the latest audited balance
sheet, is not less than Rs. 4 crore
– b. company has been sanctioned working capital limit by bank/s or all-India
financial institution/s; and
– c. the borrowal account of the company is classified as a Standard Asset by the
financing bank/s/ institution/s.
• CP can be issued for maturities between a minimum of 7 days
and a maximum of up to one year from the date of issue.
• CP can be issued in denominations of Rs.5 lakh or multiples
thereof.
• CP will be issued at a discount to face value as may be
determined by the issue
 TREASURY BILL MARKET

· Treasury bills are short-term debt instruments of the

central government.
· Treasury bills are sold through an auction process
according to a calendar announced by RBI.
· Treasury bills are issued at a discount and redeemed
at par.
· Most buyers of treasury bills hold them till maturity
and
hence the secondary market activity is limited
• Treasury bills are available for a minimum amount of
Rs.25,000 and in multiples of Rs. 25,000. Treasury
bills are issued at a discount and are redeemed at
par.
• Treasury bills are also issued under the Market
Stabilization Scheme (MSS).
• While 91-day T-bills are auctioned every week on
Wednesdays, 182-day and 364-day T-bills are
auctioned every alternate week on Wednesdays.
 Certificate of Deposits
• Certificate of Deposit (CD) is a negotiable money market instrument and issued
in dematerialised form or as a Usance Promissory Note against funds deposited
at a bank or other eligible financial institution for a specified time period.
• CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural
Banks and Local Area Banks}; and (ii) select All-India Financial Institutions (FIs)
that have been permitted by RBI to raise short-term resources .
• Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum deposit that
could be accepted from a single subscriber should not be less than Rs.1 lakh,
and in multiples of Rs. 1 lakh thereafter.
• `The maturity period of CDs issued by banks should not be less than 7 days and
not more than one year, from the date of issue.
• The FIs can issue CDs for a period not less than 1 year and not exceeding 3
years from the date of issue.
 CP and CD Data
• CDTradedData-Nov2019.xls
• CPTradedData-Nov2019.xls
Instruments Offered in Financial Markets

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services

Foreign Money Market

Stocks Bonds Derivatives Commodities
Exchange Instruments

Mutual Fund Warrants IDR ETFs

 IDR
• These instruments will be redeemable into
underlying equity shares only after a year of their
listing.
• All IDR issuing companies have to offer fungibility of
their IDRs at least once in a quarter and the window
to do so will remain open for at least seven days.
• At least 20% of the IDRs on redemption or
conversion in the fungibility window will be for
retail investors
 EXCHANGE TRADED FUNDS
• An exchange-traded fund, or ETF, is a type of Investment
Company whose investment objective is to achieve the same
return as a particular market index. An ETF is similar to an
index fund in that it will primarily invest in the securities of
companies that are included in a selected market index.
• An ETF will invest in either all of the securities or a
representative sample of the securities included in the index.
For example, one type of ETF, known as Spiders or SPDRs,
invests in all of the stocks contained in the S&P 500
Composite Stock Price Index.
• Exchange traded fund has qualities of an Index fund viz. Constructed to
track the Index, Open ended Mutual fund, Low Expense ratio, Low
Turnover and also those of a stock viz.
• Trading flexibility intraday on the exchange, Real time price. Units of
exchange traded fund can be bought and sold with cash through trading
members on respective stock exchange.
• The role of stock exchange in case of launch of any ETF is Index Licensor.
Some of the ETF's traded on BSE SENSEX are SPICE, Kotak MF, etc. Value of
one unit of exchange traded fund SPICE (ETF on SENSEX) is typically
1/100th of SENSEX. SPICE was sponsored by Pru ICICIAMC Ltd. Value of
one unit of exchange traded fund launched by Kotak MF (ETF on SENSEX)
is typically 1/100th of SENSEX.
Growth of ETFs
 Derivatives Market
• Derivative is a product whose value is derived from the value
of one or more basic variables, called bases (underlying asset,
index, or reference rate), in a contractual manner.

• The underlying asset can be equity, forex, commodity or any

other asset. For example, wheat farmers may wish to sell their
harvest at a future date to eliminate the risk of a change in
prices by that date. Such a transaction is an example of a
derivative. The price of this derivative is driven by the spot
price of wheat which is the “underlying”.
 Types of Derivatives
• Forwards: A forward contract is a customized
contract between two entities, where settlement
takes place on a specific date in the future at today’s
pre-agreed price.
Futures: A futures contract is an agreement between
two parties to buy or sell an asset at a certain time in
the future at a certain price.
• Options: Options give the buyer of the option
the right but not the obligation to buy or sell a
given quantity of the underlying asset, at a
given price on or before a given future date.
• Swaps: Swaps are private agreements
between two parties to exchange cash flows in
the future according to a prearranged formula
 Foreign Exchange Market

• Used for International trade in the different Currencies.

• The foreign exchange market deepened with the opening up of the
economy and the institution of a market-based exchange rate regime in
the early 1990s.
• Although there are occasional episodes of volatility in the foreign
exchange market, these were swiftly controlled by appropriate policy
measures.
• Largest Asset Class market in the world
• Not limited by geographical boundaries and operates 24 hours 7 days a
week.
• In India they operated under Central govt.FEMA regulates foreign
exchange market in India
 Currency Derivatives
• Currency Derivatives trading was introduced in the Indian
financial markets with the launch of currency futures trading
in the USD-INR pair at the National Stock Exchange of India
Limited on August 29, 2008.
• Few more currency pairs have also been introduced the-
reafter. It was subsequently introduced in the BSE on October
1, 2008, and MSE, On Octo-ber 7, 2008.
• Currency options are only there on USD.
 Derivatives on Foreign Stock Indices

• S&P 500
• DJIA
• FTSE 100
 Commodity Markets
• Markets where raw or primary products are
exchanged.
• This is done in standardized contracts.
• NCDEX,MCX and NMCE
• Regulated by FMC now by SEBI
 Interest Rate Futures
• An Interest Rate Futures contract is "an agreement to buy or sell
a debt instrument at a specified future date at a price that is
fixed today."
• The underlying security for Interest Rate Futures is either
Government Bond or T-Bill. Exchange traded Interest Rate
Futures on NSE are standardized contracts based on 6 year, 10
year and 13 year Government of India Security (NBF II) and 91-
day Government of India Treasury Bill (91DTB).
• All futures contracts available for trading on NSE are cash
settled.
• 1 lot is equal to 2000 bonds with notional bonds of FV Rs.0.2
Million or 2 Lakhs.
 ADR
• Investors willing to invest in American Depositary Receipts can purchase
them from brokers or dealers. The brokers and dealers obtain ADRs by
buying already-issued ADR in the US financial markets or by creating a
new ADR. Already-issued ADR can be obtained from the NASDAQ or NYSE.
• Creating a new ADR involves buying the stocks of the foreign company in
the issuer’s home market and depositing the acquired shares in a
depository bank in the overseas market.
• The bank then issues ADRs that are equal to the value of the shares
deposited with the bank, and the dealer/broker takes the ADR to US
financial markets to sell them. The decision to create an ADR depends on
the pricing, availability, and demand.
• Investors who purchase the ADRs are paid dividends in US dollars.
 Types of American Depositary Receipts

• Sponsored ADR
• For a sponsored ADR, the foreign company issuing
shares to the public enters into an agreement with a
US depositary bank to sell its shares in US markets.
• The US bank is responsible for recordkeeping, sale,
and distribution of shares to the public, distribution
of dividends, etc.
• Sponsored ADRs can be listed on the US stock
exchanges.
• Non-Sponsored ADR
• A non-sponsored ADR is created by
brokers/dealers without the cooperation of
the foreign company issuing the shares. Non-
sponsored ADRs are traded in US over-the-
counter markets without requiring registration
with the Securities and Exchange Commission
(SEC).
 Levels of American Depositary Receipts

• Sponsored Level I
• Level I is the lowest level at which sponsored ADRs can be issued. It is the
most common level for foreign companies that do not qualify for other
levels or that do not want their securities listed on US exchanges.
• Level I ADRs are subject to the least reporting requirements with the
Securities and Exchange Commission, and they are only traded over the
counter.
• The companies are not required to issue quarterly or annual reports like
other publicly-traded companies.
• However, Level I issuers must have their stock listed on one or more
exchanges in the country of origination. Level I can be upgraded to Level II
when the company is ready to sell through US exchanges.
• Sponsored Level II ADRs
• Level II ADRs have more requirements from the SEC than
Level I, and the company gets an opportunity to establish a
higher trading presence on the US stock markets.
• The company must file a registration statement with the
SEC. Also, the company must file Form-20-F in accordance
with the GAAP or IFRS standards.
• Form 20-F is the equivalent of Form-10-K which is
submitted by US publicly-traded companies. If the issuer
fails to comply with these requirements, it may be delisted
or downgraded to Level I.
• Sponsored Level III ADRs
• Level III is the highest and most prestigious level that a foreign
company can sponsor. A foreign company at this level can
float a public offering of ADRs to raise capital from American
investors through US exchanges.
• Level III ADRs also attract stricter regulations from the SEC.
• The company must file Form F-1 (prospectus) and Form 20-F
(annual reports) in accordance with GAAP or IFRS standards.
• Any materials distributed to shareholders in the issuer’s home
country must be submitted to the SEC as Form 6-K. Examples
of foreign companies that have managed to enter this ADR
level include Vodafone, Petrobras, and China Information
Technology.
ADR
1 Dr. Reddy's RDY NYSE Pharma. &
Laboratories Biotech.
2 HDFC Bank HDB NYSE Banks
3 ICICI Bank IBN NYSE Banks
4 Infosys INFY NYSE Software&Comp
uterSvc
5 SIFY SIFY NASDAQ Software&Comp
Technologies uterSvc
6 Tata Motors TTM NYSE Industrial
Engineer.
6 Tata Motors TTM NYSE Industrial
Engineer.
7 Vedanta VEDL NYSE Construct.&Ma
terials
8 Videocon d2h VDTH NASDAQ Media
9 Wipro WIT NYSE Software&Com
puterSvc
10 WNS Holdings WNS NYSE Support
Services
11 Azure Power AZRE NYSE Solar Power
Global Limited Utility
12 MakeMyTrip MMYT NASDAQ Travel
Limited
13 Yatra Online, YTRA NASDAQ Travel
Inc
 GDR
• List of GDRs.xlsm
ECBs
• ECB and FCCB Data.xlsx
 InvITs
• Infrastructure Investment Trusts (InvIT) are trusts
registered with SEBI that invest in the infrastructure
sector. The InvIT will raise funds from the public
through an initial offer of units.
• The offer shall be for not less than Rs. 250 crores and
the value of the proposed assets of the InvIT shall
not be less than Rs. 500 crores.
• The minimum subscription size will be Rs. 10 lakh.
• The units will be listed on a stock exchange.
 Parties Involved in InvITs
• Four important parties to an InvIT — sponsors, investment managers,
project managers and the trustee.
• InvITs are formed by complying with the Sebi Infrastructure Investment
Trust Regulation, 2014.
• The infrastructure company interested in getting funds from the public
will, therefore, form this trust, and then appoint an investment manager
who will be responsible for how the assets and investments of the InvIT
are managed.
There is also a project manager which actually executes the projects. It is
overseen by the investment manager.
• Lastly, since the instrument is essentially a trust, the company will also
appoint a trustee, who has to ensure that the functions of the InvIT,
investment manager and project manager comply with Sebi rules.
 Benefits to Investors
• First, the sponsor has to hold a minimum 15 per cent of the InvIT units
with a lock-in period of three years.
• Second, InvITs have to distribute 90 per cent of their net cash flows to
investors.
• And last, the trust is required to invest a minimum of 80 per cent in
revenue generating infra assets. Only the rest can be used for under-
construction assets.
• Dividends from the trust will be distributed to the investor depending on
its cash flow and there is no dividend distribution tax on InvIT units.

If an investor exits an InvIT before three years, a short-term capital gains

tax of 15 per cent is applicable. There are no long-term capital gains
taxes on them.
 REITs
• Real Estate Investment Trusts (REIT) are trusts registered
with SEBI that invest in commercial real estate assets.
• The REIT will raise funds through an initial offer and
subsequently through follow-on offers, rights issue and
institutional placements.
• The value of the assets owned or proposed to be owned by a
REIT coming out with an initial offer will not be less than Rs.
500 crore and the minimum offer size will not be less than
Rs.250 crore.
• The minimum subscription amount in an initial offer shall be
Rs. 2 lakh. The units will be listed on the stock exchange.
• At least 80% of the value of REIT assets to be invested in completed and
rent and/or income-generating real estate, with a lock-in period of three
years from the purchase date
• A maximum of 20% of the total value of REITs can be from:
– Under construction properties with a lock-in period of three years
after completion and completed but non-rent generating
properties with a lock-in period of three years from the date of
purchase
– Listed or unlisted debt of real estate companies (other than
investment in debt of Hold Co/SPV)
– Mortgage-backed securities – Equity shares of listed companies in
India, generating at least 75% of their operating income from real
estate activities
– Government securities
– Cash or money market instruments
Minimum of 90% of the net distributable cash flow of a REIT to be distributed to
unitholders
Financial Participants

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services

Brokers
Issuers Investors and Depositories Custodians Registrars
Dealers

Lead Depository
Managers Participants
 PARTICIPANTS IN THE SECURITIES MARKET
· Regulators
CLB, RBI, SEBI,
DEA, DCA
· Stock Exchanges
· Listed Securities
· Depositories
· Brokers
· FIIs
· Merchant Bankers or Investment Bankers
· Mutual Funds
· Custodians
· Registrars
· Underwriters
· Bankers to an issue
· Debenture trustees
· Venture capital funds.
· Credit rating agencies
 Investors
• Retail Investors are individual investors who buy and sell
securities for their personal account, and not for another
company or organization. This category also includes High
Networth Individuals (HNI) which comprise of people who
invest above rupees two lakh in a single transaction.
• Institutional Investors comprise domestic Financial
Institutions, Banks, Insurance Companies, Mutual Funds and
FIIs (A Foreign Institutional investor is an entity established or
incorporated outside India that proposes to make investments
in India).
 Issuers
• Both the public sector undertakings (PSUs) and private
companies tap the securities market to finance capital
expansion activity and growth plans.
• Even banks and other financial institutions raise resources
from securities market. Other important issuers are the
mutual funds (MFs) which are important investment
intermediaries which mobilize the savings of the small
investors.
• Global Depository Receipts (GDRs)/American Depository
Receipts (ADRs), Foreign Currency Convertible bonds (FCCBs)
and External Commercial Borrowings (ECBs).
• GDRs are essentially equity instruments issued abroad by authorized
overseas corporate bodies against the shares/bonds of Indian companies
held with nominated domestic custodian banks.
• ADRs are negotiable instruments, denominated in dollars and issued by
the US Depository Bank.
• FCCBs are bonds issued by Indian companies and subscribed to by a non-
resident in foreign currency. They carry a fixed interest or coupon rate
and are convertible into a certain number of ordinary shares at a
preferred price.
• ECBs are commercial loans (in the form of bank loans, buyers, credit,
suppliers credit, securitised instruments, floating rate notes and fixed rate
bonds) availed from any internationally recognised source such as bank,
export credit agencies, suppliers of equipment, foreign collaborators,
foreign equity holders and international capital market
 Intermediaries
• The intermediaries in the market play a very
important role in the securities market; they
put together the demands of the buyers with
the offers of the security sellers.
• A large variety and number of intermediaries
provide intermediation services in the Indian
securities markets
 Intermediaries
• Stock Exchanges
• Clearing Corporation
• Trading Member/Clearing member
• DP
• Custodian
 Stock Exchanges
• The stock exchanges provide a trading platform
where the buyers and sellers (investors) can meet to
transact in securities.
• In the olden days it (meeting of investors) used to
happen in the trading hall or the “Ring” of the Stock
Exchanges where the Stock Brokers used to meet and
transact whereas, in the modern world the trading
takes place online through computer connected
through VSATs & Internet.
 Clearing Corporation/Agency
• A Clearing Corporation / Agency is a part of an exchange or it can also be a
separate entity, which performs three main functions, namely, clearing
and settling all transactions executed in the stock market, i.e. completes
the process of receiving and delivering shares/funds to the buyers and
sellers in the market, providing financial guarantee for all transactions
executed on the exchange and providing risk management functions.
• This process is called novation.
• The clearing agency determines fund/security obligations and arranges for
pay-in of the same.
• It collects and maintains margins, processes for shortages in funds and
securities.
• In this process of settling the trades, the clearing corporation is helped by
the clearing members, clearing banks, custodians and depositories.
 Trading member /Clearing Member
• Trading member means a member of a Stock Exchange and
Sub-broker means any person not being a member of Stock
Exchange who acts on behalf of a trading member as an agent
or otherwise for assisting the investors in buying, selling or
dealing in securities through such trading members.
• Trading members can be individuals (sole proprietor),
Partnership Firms, Corporates and Banks.
• Clearing Members are those who help in clearing of the
trades.
• There are Professional Clearing Members (PCM), Trading
Cum Clearing Member (TCM) and Self Clearing Member
(SCM).
 Professional Clearing Members (PCM) and Trading
cum Clearing Members (TCM)

• PCM has the right only to clear trades. The PCM

does not have any trading rights. These types of
members can clear trades of all members.
• The TCM has both trading and clearing rights. He
can clear his own trades as well as the trades of
others.
• Any member of the equity segment of the Exchange
is eligible to become trading cum clearing member of
the Derivatives Segment also.
 Custodians
• Custodians are also clearing members like PCMs but not trading members.
• They settle trades on behalf of the clients of the trading members, when
a particular trade is assigned to them for settlement. The custodian is
required to confirm whether he is going to settle that trade or not.
• A Custodian is an entity that helps register and safeguard the securities of
its clients. Besides safeguarding securities, a custodian also keeps track of
corporate actions on behalf of its clients. It also helps in:
– Maintaining a client’s securities account
– Collecting the benefits or rights accruing to the client in respect of
securities
– Keeping the client informed of the actions taken or to be taken by the
issue of securities, having a bearing on the benefits or rights accruing
to the client.
• In short, custodians are mainly into trade
settlement, safekeeping, benefit collection,
reporting and accounting. One point of distinction is
that a Depository has the right to effect transfer of
beneficial ownership while a custodian does not.
• The SEBI (Custodian of Securities) Regulation 1996,
states that for the purpose of grant of a certificate for
activities of a custodian of securities, the entity
should have a net worth of a minimum fifty crores.
• Every custodian of securities shall enter into an agreement with
each client on whose behalf it is acting as custodian of securities
and every such agreement shall provide for the circumstances
under which the custodian of securities will accept or release
securities from the custody account, will accept or release
monies from the custody account; time circumstances under
which the custodian of securities will receive rights or
entitlements on the securities of the client.
• Every custodian of securities shall have adequate internal
controls to prevent any manipulation of records and documents
including audits for securities and rights or entitlements arising
from the securities held by it on behalf of its client.
 Self Clearing Members (SCM)
• As the name implies, self clearing members can clear the
trades done by him.
• The only difference between SCM and TCM is that SCM does
not have the rights to clear the trades of other members; he
can only clear his own trades, whereas TCM can clear the
trades of any other member.
• Any member of the cash segment of the Exchange is eligible
to become Self-Clearing member of the Derivatives Segment.
Eligibility Criteria of a Trading Member

• The admission as a trading member on the

stock exchanges is based on the various
criteria like age, capital adequacy, financial
track record, education, experience and
fulfillment of criteria of “fit & proper person”
as laid down in the SEBI (Intermediaries)
Regulations, 2008.
 Capital Adequacy Requirements
• Base Minimum Capital and the Additional or Optional capital related to the
volume of business.
• An absolute minimum of Rs. 5 lakh as a deposit is required to be kept with the
Exchange, which is irrespective of the volume of the business of the trading
member. SEBI regulation also prescribes the form in which the base minimum
capital is to be maintained.
• 25% of the base minimum capital is to be maintained in cash with the exchange;
another 25% in the form of long term (3years or more) fixed deposit with the
bank with which the stock exchange has given complete lien; the remaining shall
be in form of securities with 30% margin (the securities should be in the name of
members).
• The additional capital required at any point of time shall be such that the base
minimum capital is not less than 8% of the gross outstanding business in the
Exchange.
 Eligibility Criteria For individual
• Fit and Proper person
• For the purpose of determining whether an applicant or the
stock broker, sub-broker, trading member and clearing
member is a fit and proper person, the SEBI Board may take
into account the following eligibility criteria but not limit itself
to
– (a) Integrity, reputation and character,
– (b) Absence of convictions and restraints order,
– (c) Competence including financial solvency and net worth of the
applicant.
 The Depositories Act, 1996
• The paper-based ownership and transfer of securities was a
major drawback of the Indian securities markets since it often
resulted in delay in settlement and transfer of securities,
leading to ‘bad delivery’, theft, forgery etc.
• The rapid growth in number and volume of transactions in the
securities markets further highlighted the limitations of
handling securities in the physical/paper mode.
• As a result, in line with the developments in the securities
industry worldwide the paper-based settlement and clearing
system was replaced with depository system or scripless
trading system.
• This transition was facilitated by the Depositories Act, 1996.
Neeraj Gupta
• This Act provides for the establishment of depositories in securities with
the objective of ensuring free transferability of securities with speed,
accuracy and security by:
– (a) making securities of public limited companies freely transferable
subject to certain exceptions;
– (b) dematerialising the securities in the depository mode; and
– (c) providing for maintenance of ownership records in a book entry
form. In order to streamline the settlement process, the Act envisages
transfer of ownership of securities electronically by book entry
without making the securities move from person to person.

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• The terms used in the Act are defined as under:
– (a) Beneficial owner means a person whose name is recorded as such
with a depository.
– (b) Depository means a company, formed and registered under the
Companies Act,1956 and which has been granted a certificate of
registration under sub-section (1A) of section 12 of the SEBI Act, 1992.
– (c) Issuer means any person making an issue of securities.
– (d) Participant means a person registered as such under sub-section
(1A) of section 12 of the SEBI Act, 1992. Depository Participant (DP):
is the representative or agent of the investor  in the depository system
providing the link between the Company  and investor through the
Depository
– (e) Registered owner means a depository whose name is entered as
such in the register of the issuer.
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 Functions of Depository
• Demat securities and enable their transactions
in book entry form.
• Accepting deposits of various securities for
custody
• Keeping computerized updated data of
deliveries of securities in its custody.
• Distribution of dividend and interest.
• Redemption of security on maturity

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 Who is a Depository Participant?
• A Depository Participant (DP) is an agent of the depository through which
it interfaces with the investor and provides depository services. 
• Public financial institutions, scheduled commercial banks, foreign banks
operating in India with the approval of the Reserve Bank of India, state
financial corporations, custodians, stock-brokers, clearing
corporations /clearing houses, NBFCs and Registrar to an Issue or Share
Transfer Agent complying with the requirements prescribed by SEBI can
be registered as DP. 
• Banking services can be availed through a branch whereas depository
services can be availed through a DP.

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 Eligibility Criteria for a Depository
• Who can start a depository?
• A PFI as defined in Section 4 A of companies act 1956
• A foreign bank operating in India with RBI approval
• A recognised Stock Exchange
• A custodian of securities approved by GOI.

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 Mandatory requirements

• The minimum networth stipulated by SEBI for a

depository is Rs.100 crore
• Sponsor of a depository have to hold atleast 51% of
the equity capital of the depository company.

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• Registration
• A depository can deal in securities only after
obtaining a certificate of registration.
• Commencement of Business
• A certificate of commencement of business
needs to be obtained from SEBI within 1 year
of certificate of registration.

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 Depositories in India-NSDL
• The National Securities Depository Limited (NSDL) was the
first depository in India. It was registered by SEBI on 7th June
1996, as the very first Depository to facilitate trading and
settlement of securities in Demat form. It started its
operations on 8th November 1996
• It is promoted by institutions of national stature, which are
responsible for the economic development of India and have
established an infrastructure of international standards.
• They handle most of the securities, which are held and settled
in a dematerialized form in the Indian capital market. Its main
promoters are IDBI, UTI and NSE.

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 Depositories in India-CDSL
• Central Depository Services Limited (CDSL) is the
second Indian central securities depository. It is
based in Mumbai. Its main function is the holding
securities either in certificated or un-certificated i.e.
dematerialized form; it helps to enable the book
entry transfer of securities. It began operating in
February in the year 1999. Its main promoters are
BSE, HDFC, SBI, BOI and BOB.

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Difference

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Financial Regulators

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services

India US UK

Markets:
Banks: Banks: Federal Markets: Markets: FCA
Securities & Banks: Bank
Reserve Reserve Securities / Prudential
Exchange of England /
Bank of India & Pension Co’s Exchange Regulatory
Board of FCA
Commission Authority
India
THE REGULATORS IN THE INDIAN FINANCIAL
SYSTEM
The regulators ensure that the market participants
behave in a desired manner so that the securities market
continue to be a major source of finance for Corporates
and government and the interest of investors are
protected. The responsibility for regulating the securities
market is shared by:
 Department of Economic Affairs (DEA)
 Department of Company Affairs (DCA)
 Reserve Bank of India (RBI)
 Securities and Exchange Board of India (SEBI)
 Securities Appellate Tribunal (SAT)
Government has issued notifications providing
that the contracts for sale and purchase of
government securities, gold-related securities,
money market securities and securities derived
from these securities and ready forward contracts
in debt securities shall be regulated by RBI.
Such contracts, if executed on stock exchanges,
shall, however, be regulated by SEBI in a manner
that is consistent with the guidelines issued by RBI.
• Most of the powers under the SCR (A) are exercisable by
Department of Economic Affairs (DEA), while a few others by
SEBI.
• The powers of the DEA under the SCRA are also con-currently
exercised by SEBI.
• The powers in respect of the contracts for sale and purchase
of securities, gold-related securities, money market securities
and securities derived from these securities and ready
forward contracts in debt securities are exercised
concurrently by RBI.
• The SEBI Act and the Depositories Act are mostly
administered by SEBI.
• The powers under the Companies Act relating to
issue and transfer of securities and non-payment of
dividend are administered by SEBI in case of listed
public companies and public companies proposing to
get their securities listed.
• The SROs ensure compliance with their own rules
relevant for them under the securities laws.
 RESERVE BANK OF INDIA

The RBI was established on April 1,1935 under the

Reserve Bank of India Act,1934.

The pattern of central banking in India is based on

the Bank of England .
• RBI acts as watchdog of the entire financial system.

• It is the sponsor bank for top ranking bank and financial

institutions like SBI,NABARD, NHB etc.

• It sits on board of all banks.

• It counsels the Central and State Govt. and all public sector
institutions on monetary matters.

• Regulates the quantity of money supply and availability of

credit for industry , business and trade .
 Major role of RBI is to regulate and supervise financial
intermediaries.

Rationale :
safety of public money
ensure productive use of funds
ensure sound and healthy banking system
stable monetary position
maintain value of rupee
ensure effective coordination and control among various
participants of Indian financial system
control overall credit and price level in the country
The central bank’s basic functions are :

• Issue note
• Banker’s bank;
• Government bank;
• Promote the growth of economy
• Controller of foreign exchange
 RBI
Regulates

Monetary Credit Forex Capital

Market Market Market Market

* Efficiency of *Stability of *Regulate capital

* Promote resource external value of inflow and
liquidity allocation Rupee outflow
* Supervise *Generate
* Ensure priority *Regulate
money confidence in
sector lending liquidity
market monetary and
activities
* Act as debt exchange rate position
manager for policies
govt. *Maintain foreign
exchange liquidity
*Determine foreign
exchange rates
*Regulate inter
bank
dealings
 Two Major Charters are:

• Reserve Bank of India Act , 1934

• Banking Regulation act ,1949

Important tool is the Monetary Policy.

 Monetary Policy refers to the use of instruments of control
to regulate money supply and credit with a view to
influence the level of aggregate demand for goods and
services.

The objectives of monetary policy are:

• Price stability and growth
• Maintain orderly conditions in foreign exchange market
• Curb destabilizing speculative activities
• Check undue volatility in the exchange rates
 The central bank makes use of two types of instruments :

Direct Instruments :
• Reserve Requirements : CRR ; SLR
• Administered Interest rates :changes in bank rates
• Credit control: priority sector lending

Indirect Instruments :
• Open market Operation
• Repos
 Key regulations governing the Indian
Securities Market.
• The four main acts governing the securities market
are:
– The SEBI Act, 1992
– The SC(R)A, 1956
– Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) (Second Amendment)
Regulations,2017
– The Depositories Act, 1996
– The Companies Act, 2013.
• Apart from the four Acts the following Regulations are also of
high importance in the regu-lation of Indian Securities
Markets:
• SEBI (Stock Broker and Sub-Brokers) Regulation, 1992
• SEBI (Prevention of Insider Trading) Regulations, 1992
• The Prevention of Money laundering Act, 2002
• SEBI (Prohibition of Fraudulent and Unfair Trade Practices
relating to the Securities Market) Regulations 2003
• SEBI (Custodian of Securities) Regulation, 1996
• SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011
Securities Contracts (Regulation) Act (SCRA),
1956
SCRA provides for direct and indirect control of virtually all aspects of
securities trading and the running of stock exchanges and aims to prevent
undesirable transactions in securities. It gives SEBI regulatory jurisdiction over:
(a) Stock exchanges through a process of recognition and continued
supervision,
(b) Contracts in securities, and
(c) Listing of securities on stock exchanges.

As a condition of recognition, a stock exchange complies with conditions

prescribed by SEBI. Organized trading activity in securities takes place on a
specified recognized stock exchange.
The stock exchanges determine their own listing regulations which have to
conform to the minimum listing criteria set out in the Rules like 90%
subscription is necessary for listing.
• The Securities Contracts (Regulation) Act, 1956
[SC(R)A was enacted to prevent undesirable
transactions in securities by regulating the business
of dealing therein and by providing for certain other
matters connected therewith.
• This is the principal Act, which governs the trading of
securities in India
 THE COMPANIES ACT, 2013
The Companies Act deals with issue, allotment and transfer of
securities and various aspects relating to company
management.
It provides for standard of disclosure in public issues of capital,
particularly in the fields of company management and projects,
information about other listed companies under the same
management, and management perception of risk factors.
It also regulates underwriting, the use of premium and
discounts on issues, rights and bonus issues, payment of
interest and dividends, supply of annual report and other
information.
 SECURITIES AND EXCHANGE BOARD OF INDIA
The Securities and Exchange Act of 1992, provides for the
establishment of a board to protect the interests of
investors in securities and to promote the development and
regulation of the securities market.
The Board consists of :
• A Chairman
• Two members from Government of India, Ministry of Law
and Finance
• One member from RBI and
• Two other members
The head office is at Bombay.
 FUNCTIONS of the Board

Sets regulatory policy

Enforce regulatory norms and

Impose punishments on wrong doing

regulate business in stock exchanges and any other

securities market

promoting investor’s education and training

intermediaries of securities market
• register and regulate the working of stockbrokers, sub-
brokers, share transfer agents, bankers to issue , trustees of
trust deeds , registrars to issue , merchant bankers
,underwriters, portfolio managers, investment advisors and
other intermediaries associated with securities market

• register and regulate the working of depositories,

custodians of securities ,FIIs, credit rating agencies

• register and regulate the working of venture capital funds

and collective investment schemes, including mutual funds
• prohibit fraudulent and unfair trade practices relating to
securities market

• prohibiting insider trading in securities

• regulating substantial acquisition of shares and takeover of

companies

• calling for information from the corporates,

• undertaking inspection ,

• conducting inquiries and audits of stock exchanges, mutual

funds, intermediaries and self regulatory organizations in
the securities market
 SEBI (Stock Brokers & Sub-Brokers) Rules, 1992

• The Central Government has made SEBI (Stock-brokers and Sub-brokers)

Rules, 1992 under the powers conferred by section 29 of SEBI Act, 1992.
These rules provide the definition of a Stock-broker and a Sub-broker and
specify that they shall not buy, sell, and deal in securities, unless they hold
a certificate granted by SEBI.

– “maintain high standards of integrity, promptitude and fairness in the conduct of all
his business.
– act with due skill, care and diligence in the conduct of all his business.
– not indulge in manipulative, fraudulent or deceptive transactions or schemes or
spread rumors with a view to distorting market equilibrium or making personal
gains.
– not create false market either singly or in concert with others or indulge in any act
de-trimental to the investors interest or which leads to interference with the fair
and smooth functioning of the market.
 Prevention of Money Laundering Act, 2002

 The primary object of the Act is to prevent money-laundering and to

provide for confiscation of property derived from or involved in money-
laundering.
 The term money-laundering is defined as whoever acquires, owns,
possess or transfers any proceeds of crime; or knowingly enters into any
transaction which is related to proceeds of crime either directly or
indirectly or conceals or aids in the concealment of the proceeds or gains
of crime within India or outside India commits the offence of money-
laundering.
 Besides providing punishment for the offence of money-laundering, the
Act also provides other measures for prevention of Money Laundering.
 The Act also casts an obligation on the intermediaries, banking companies
etc to furnish information, of such prescribed transactions to the Financial
Intelligence Unit-India, to appoint a principal officer, to maintain certain
records etc.
• The offences are classified under Part A, Part B and
Part C of the Schedule of the Act.
– Under Part A, offences include counterfeiting currency notes under
the Indian Penal Code (IPC) to punishment for unlawful activities
under the Unlawful Activities (Prevention) Act, 1967.
– Under Part B, offences are considered as money laundering if the total
value of such offences is Rs 30 lakh or more. Such offences include
dishonestly receiving stolen property under the Indian Penal Code to
breaching of confidentiality and privacy under the Information
Technology Act, 2000.
– Part C includes all offences under Part A and Part B (without the
threshold) that has cross-border implications.
• Section 6 of the PMLA confers powers on the Central
Government to appoint Adjudicating Authorities to exercise
jurisdiction, powers and authority conferred by or under the
Act.
• Section 12 of PMLA stipulates that every banking company,
financial institution and intermediary shall maintain a record of
all transactions, the nature and value of which may be
prescribed, whether such transactions comprise a single
transaction or a series of transactions integrally connected to
each other, and where such series of transactions take place
within a month and furnish information of transactions and
verify and maintain the records of the identity of all its clients.
• Such transactions include:
– All cash transactions of the value of more than Rs. 10 lakh
or its equivalent in foreign currency.
– All series of cash transactions integrally connected to each
other which have been valued below Rs. 10 lakh or its
equivalent in foreign currency where such series of
transactions take place within one calendar month and
the aggregate value of such transaction exceeds Rs. 10
lakh.
– All suspicious transactions whether or not made in cash.
• Sections 16 and 17 lay down the powers of the authorities to carry out
surveys, searches and seizures.
• Section 24 makes it clear that when a person is accused of having engaged
in money-laundering, the burden of proving that the proceeds of the
alleged crime are un-tainted shall be on the accused.
• Sections 25 and 26 relate to the establishment of an Appel-late Tribunal
and the procedures for filing an appeal to the same.
• Section 42 deals with ap-peals against any decision or order of the
Appellate Tribunal.
• Section 43 empowers the Central Government to designate Courts of
Session as Special Courts for the trial of the of-fence of money-laundering.
 Key Take Away….
• The offence of money laundering is punishable with
rigorous imprisonment for a term which shall not be
less than 3 years but which may extend to 7 years
and shall also be lia-ble to fine which may extend to
Rs. 5 lakh.
 SEBI (INSIDER TRADING) REGULATIONS,
2015
Insider trading is prohibited and is considered an offence vide
SEBI (Insider Trading) Regulations,2015.
The Regulations prohibits an insider from dealing (on his own
behalf or on behalf of others) in securities on the basis of
unpublished price sensitive information, communicating such
information and also from counseling any other person to
deal in securities of any company on the basis of such
information.
Unpublished price sensitive information, which if published
or known, is likely to have an impact on the market price of
the securities of that company.
• "insider" means any person who is:
– i) a connected person; or
– ii) in possession of or having access to unpublished price sensitive information;
• Such information may relate to the financial results of the company,
declaration of dividends, issue of rights issues and bonus shares,
amalgamation, mergers, takeovers, any major policy changes, etc.
• The regulations enable SEBI, on the basis of any complaint or otherwise, to
take steps to investigate an allegation of insider trading and appoint
inspectors.
• On the basis of the report of the inspectors, SEBI is empowered to prosecute
persons found prima facie guilty of insider trading in an appropriate court.
• Person(s) violating the provisions of regulations is (are) liable to be punished
with imprisonment or fine or both.
 SEBI (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE
PRACTICES RELATING TO SECURITIES MARKETS) REGULATIONS,
2003
• The SEBI (Prohibition of Fraudulent and Unfair Trade
Practices in relation to the Securities Market) Regulations,
2003 enable SEBI to investigate into cases of market
manipulation and fraudulent and unfair trade practices.
• Regulation 2(1) (c) defines fraud as inclusive of any act,
expression, omission or concealment committed to induce
another person or his agent to deal in securities.
• There may or may not be wrongful gain or avoidance of any
loss. However, that is inconsequential in determining if fraud
has been committed
• Some of the instances cited are as follows:
– a) A wilful misrepresentation of the truth or concealment
of material fact in order that another person may act, to
his detriment
– b) A suggestion as to a fact which is not true, by one who
does not believe it to be true
– c) An active concealment of a fact by a person having
knowledge or belief of the fact
– d) A promise made without any intention of performing it
– e) A representation, whether true or false, made in a
reckless and careless manner
 Example….
• Front – running can be described as an illegal act on part of
a dealer / stock broker in which the broker places his own /
firm’s order ahead of client’s order or when client’s order is
pending .
• This act of dealer / broker gives him / her unfair advantage if
price of a security is likely to be affected by client’ order. Front
running could be in the form of buying / selling ahead of
client’s purchase or sale order.
• Such act on part of dealer / broker amounts to violation of
Section 12A (a), (b) and (e) of the SEBI Act, 1992 or
Regulations 3 (a) to (d) and Regulation 4(q) of the SEBI
(Prohibition of Fraudulent and Unfair Trade Practices Relating
to Securities Market) Regulations, 2003.
 THE DEPOSITORIES ACT, 1996
 The Depositories Act, 1996 provides for the establishment of depositories
in securities with the objective of ensuring free transferability of securities
with speed, accuracy and security by:
 (a) Making securities of public limited companies freely transferable subject to
certain exceptions;
 (b) Dematerializing the securities in the depository mode; and
 (c) Providing for maintenance of ownership records in a book entry form.

 In order to streamline the settlement process, the Act envisages transfer

of ownership of securities electronically by book entry without making the
securities move from person to person.
 The Act has made the securities of all public limited companies freely
transferable, restricting the company's right to use discretion in effecting
the transfer of securities, and the transfer deed and other procedural
requirements under the Companies Act have been dispensed with.
SEBI (Custodian of Securities) Regulation,
1996
– The custodians are entities that hold securities or gold or
gold-related instruments on be-half of mainly large investors,
e.g., mutual funds and insurance companies.
– The SEBI (Custodian of Securities) Regulation 1996, states
that for the purpose of grant of a certificate for activities of a
custodian of securities, the entity should have a net worth of
a minimum fifty crores.
– Every custodian of securities shall have adequate internal
controls to prevent any manipu-lation of records and
documents including audits for securities and rights or
entitlements arising from the securities held by it on behalf
of its client.
 SAT
 The Securities Appellate Tribunal or SAT has been constituted so that the
aggrieved parties can appeal against orders of SEBI.
 This is an independent tribunal or the presiding officer of SAT will be a
sitting or a retired judge of the Supreme Court or the Chief Justice of the
High Court. SAT will have a presiding officer and two other members
appointed by the Central Government.
 Once an appeal is received by SAT, it will notify SEBI and aggrieved person
and conduct a hearing. SAT also has powers to summon documents for
evidence and examining witnesses and documents. SAT can uphold the
decision of SEBI or reverse it or modify it. The Securities Appellate
Tribunal shall have, for the purpose of discharging their functions under
the SEBI Act, the same powers as are vested in a civil court.
 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
(IRDA) ACT, 1999

The IRDA Act was enacted in 1999 , to provide for the

establishment of the IRDA :
 to protect the interests of policy holders,
 to regulate ,promote and
 ensure orderly growth of the industry and for matters
connected therewith/incidental thereto and also to
 amend the Insurance Act 1938, the LIC Act 1956
and the GIC Act 1972.
 The IRDA consists of :
• A chairperson
• Five full time members , to be appointed by the
government from amongst persons of ability, integrity and
standing who have knowledge/experience of life
insurance/general insurance/actuarial service,
finance/economics/law/accountancy/administration/
any other discipline which in the opinion of the government
would be useful to it.
• Four members to act between the chairperson and the five
full time directors .
 Powers and Functions :

These powers and functions would enable the IRDA to

perform the role of an effective watchdog and regulator for
the insurance sector in India:

• Issue certificate of registration; review; modify; withdraw;

suspend or cancel such registration.

• Protection of interest of the policy holders in matters

concerning terms and conditions of contract of
insurance ; settlement of insurance claim ; insurable
interest etc
• Specifying requisite qualifications and practical training for
insurance intermediaries and agents.

• Specifying code of conduct for insurance agents , surveyors

and loss assessors, actuary etc

• Promoting efficiency in conduct of insurance business

• Control and regulation of the rates ,terms and conditions

that may be offered by insurer.
• Regulating investment of funds by insurance companies;
regulating maintenance of margin of solvency

• Adjudication of disputes between insurers and

intermediaries
 Pension Fund Regulatory and Development
Authority  
•  PFRDA was established by Government of
India o 23rd August, 2003.  
• The Government has, through an executive
order dated 10th October 2003, mandated
PFRDA to act as a regulator for the pension
sector.
• The mandate of PFRDA is development and
regulation of pension sector in India.
 Association of Mutual Funds in India

• Dedicating to developing the Indian Mutual

Fund Industry on professional, healthy and
ethical lines and promoting the interests of
mutual funds and their unit holders
Financial Stability and Development Council

• Super regulatory body includes the heads of

securities, banking, insurance and pension
regulators among others.
• FSDC was set up to strengthen and
institutionalize the mechanism of financial
stability and development.
• FM is the chairman of the council
• Solves the tussle between various regulatory
bodies.
Financial Services Offered

Financial System

Financial Financial Financial Financial Financial

Market Instruments Participants Regulator Services

Mergers & Research & Sales & Market

Acquisition Advise Underwriting Trading Making

Specialized
Asset
Financial
Management
Solutions
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