Sebi Ppt 10301j

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Y „ The Securities and Exchange Board of India was

established by the government of India on 12 April 1988 as an interim istrative body to promote orderly and healthy growth of the securities market and for investor protection. „ It was to function under the overall istrative control of the Ministry of Finance of the GOI.

Y „ The SEBI was given a statutory status on 30 Jan

1992 through an ordinance. „ The ordinance was later replaced by an Act of Parliament known as the Securities and Exchange Board of India Act 1992.

½ m „ The capital market had witnessed a tremendous

growth during the 1980·s characterized by the increasing participation of the public. „ This ever expanding investor population and market capitalization led to a variety of malpractices on the part of companies, brokers, merchant bankers, investment consultants and others involved in the securities market.

„ The glaring examples of these malpractices include

existence of self styled merchant bankers, unofficial private placements, rigging of prices, unofficial on new issues, non adherence of provisions of The Companies Act , violation of rules and regulations of stock exchanges and listing requirements, delay in delivering shares etc. „ These malpractices and unfair trade practices have eroded investor confidence and multiplied investor grievances

„ The government and the stock exchanges were rather

helpless in redressing the investors problems because of lack of proper penal provisions in the existing legislation. „ Therefore the GOI decided to set up SEBI a separate regulatory body

¦ ½¦m ½ m „ To the issuers it aims to provide a market place in

which they can confidently look forward to raising finances they need in an easy fair and efficient manner. „ To the investors it provides protection of their rights and interests through adequate accurate and authentic information and disclosure of information on a continuous basis.

„ To the intermediaries it offers a competitive ,

professionalized and expanding market with adequate and efficient infrastructure so as to render better service to investors and issuers.

„ To regulate stock exchanges and the securities

industry and to promote their orderly functioning. „ To guide , educate and protect the rights and interests of individual investors. „ To prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.

„ To regulate and develop a code of conduct and fair

practices by brokers , merchant bankers with a view to make them competitive and proffesional.

m „ ½ ½ m ½egistration of brokers and sub brokers and other players in the market ½egistration of collective investment schemes and Mutual Funds

½ Prohibition of fraudulent and unfair trade practices Controlling insider trading and takeover bids and imposing penalties for such practices

ÿ „ Investor education „ Training of intermediaries „ Promotion of fair practices and code of conduct of all

S½Os „ Conducting research and publishing information

useful to all market participg

„ The activities of SEBI have been divided into 5

operational departments. „ Each department is headed by an Executive Director „ apart from its head office at Mumbai SEBI has regional offices in Kolkata, Chennai, Delhi to attend to investor complaints and liaise with the issuers, intermediaries and stock exchanges in the concerned region

„ SEBI has formed 2 advisory committees ²

Primary market advisory committee Secondary market advisory committee „ These committees are non statutory in nature and SEBI

is not bound by the advice of the committees. These committees are a part of SEBIs constant endeavour to obtain from the market playerson issues relating to the regulations and development of the market

¦ „ SEBI has the right to search and seizure where just

cause can be given. In matters of security trading, SEBI has the power to restrict and allow trading in a given scrip without any external (i.e. judicial or executive) intervention. „ Mutual funds cannot invest more than 10 per cent of the total net assets of a scheme in the short-term deposits of a single bank, said the Securities and Exchange Board of India.

Î Announcing guidelines for parking of funds in short-term deposits of scheduled commercial banks (SCBs) by mutual funds, the regulator said that investment cap would also take into the deposit schemes of the bank's subsidiaries. Î The SEBI has also defined 'short term' for funds' investment purposes as a period not exceeding 91 days.

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ÿ ½m „ They will only be open for 15 days. (ELSS funds

though will continue to stay open for up to 90 days) It will save investors from a prolonged NFO period and being harangued by advisors and ments. The motivation behind the rule seems to be simple ² if you can invest anytime, why keep NFO period long?

„ Earlier, Mutual funds would keep an NFO open for

30 days, and the minute they received their first cheque, the money would be directly invested in the market; creating a skewed ing for those that entered later since they get a fixed NFO price. The market regulator has corrected this by extending Application ed by Blocked Amount (ASBA) to mutual funds.

By the ASBA process one can continue to earn interest in the bank until the NFO closes ( there is usually no rejection or ´oversubscriptionµ in a mutual fund NFO) which means that the cheque goes for clearing after the NFO has closed irrespective of when it was sent. The fund manager will be able to invest once the NFO closes.

ÿ „ It will reduce both the quantum of dividends

announced, and the measures used by MFs to garner investor money using dividend as a carrot to entice new investors.

„ This will help mutual funds become more active and

not just that, they must reveal, in their annual reports from next year, what they did in each ´voteµ. „ SEBI has now made it mandatory for funds to disclose whether they voted for or against moves (suggested by companies in which they have invested) such as mergers, demergers, corporate governance issues, appointment and removal of directors. MFs have to disclose it on their website as well as annual reports.

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„ Equity Funds were allowed to charge 1% more as

management fees if the funds were ´no-loadµ; but since SEBI has banned entry loads, this extra 1% has also been removed.

½ „ The market regulator states that information documents

that Asset Management Companies (AMCs) have been entering into revenue sharing arrangements with offshore funds in respect of investments made on behalf of Fund of Fund schemes create conflict of interest. Henceforth, AMCs shall not enter into any revenue sharing arrangement with the underlying funds in any manner and shall not receive any revenue by whatever means from the underlying fund. „ These guidelines set by the SEBI will lead to greater transparency for the common investor.

m „ Mutual funds were allowed to participate in

securities lending subject to certain disclosures and reporting requirements. The guidelines issued lay down the disclosure requirements in the offer documents which include intention to lend the securities belonging to the scheme, the exposure limit regarding securities lending both for the scheme as well as for a single intermediary and the risks associated with stock-lending transactions.

ÎThe specifications regarding the valuation of the collateral have been prescribed in the guidelines to minimize the risk involved in securities lending transactions. To ensure adequate checks and balances regarding the securities lending transactions, the requirement of reporting to trustees and SEBI have been stipulated.

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