1. SEBI & STOCK
EXCHANGES

2.  In 1988 the securities and exchange board of india
was established by government of india through an
executive resolution and was subsequently upgraded
as a fully autonomous body (a statutory body) in the
year 1992 with the passing of securities and
exchange board of india act (SEBI act) on 30th janury
1992
ESTABLISMENT

3. SEBI head quatered
in popular business
district of bandra-
kurla complex in
mumbai

4.  Shall be a body corporate with perpetual succession an
common seal with power to acquire hold and dispose of
property.
 HQ will be in Mumbai and may establish offices at other
places in India.
 Chairman and members of board will be appointed by the
central government.
 Government can prescribe terms of offices and other
conditions of service of the board and chairman.
 Primary duties of the board is to protect the interest of the
investors.
Salient features of SEBI act 1992

5.  Can undertake inspection of any books.
 Issue commission for the examinations of witness of
documents.
 Power to regulate or prohibit issue of prospectus.
 Power to prohibit manipulative and deceptive devices.
 Penalties levied under the act have been enhanced.
Amendments

6. The primary objective of SEBI is to promote healthy and orderly
growth of the securities market and secure investor protection.
The objective of SEBI are as follows:-
 To protect the interest of investors, so that , there is a steady
flow of savings into to the capital market.
 To regulate the securities market and ensure fair practices.
 To promote efficient services by brokers , merchant bankers
and financial intermediaries, so that, they become competitive
and professional.
Objectives of SEBI

7. The SEBI act 1992 has entrusted with two functions they
are
1. Regulatory functions and
2. Developmental functions
Functions of SEBI

8.  Regulation of stock exchanges and self regulatory organizations.
 registration and regulation of stock brokers , sub-brokers ,
registrars of all issues, merchant bankers, underwriters, portfolio
managers..etc
 Registration and regulation of the working of collective investment
schemes including mutual funds.
 Prohibition of fraudulent and unfair trade practices relating to
securities market.
 Prohibiting of insider trading.
 Regulating substantial acquisition of shares and takeovers of the
company.
Regulatory functions

9.  Promoting investors education.
 Training of intermediaries.
 Conducting research and publishing information useful to all
market participants.
 Promoting of fair practices.
 Promotion of self regulatory organisations.
Developmental functions

10.  Power to call periodical returns from recognized stock
exchanges .
 Power to compel listing of securities by public companies.
 Power to levy fees or other changes for carrying out the
purposes of regulation.
 Power to call information or explanation from recognized
stock exchanges or their members.
 Power to grant approval to bye-laws of recognized stock
exchanges.
 Power to control and regulate stock exchanges.
Powers of SEBI

11.  Power to direct enquiries to be made in relation to affairs of
stock exchanges or their members.
 Power to make or amend bye-laws of recognized stock
exchanges.
 Power to grant registration to market intermediaries
 Power to declare applicability of section 17 of the securities
contract (regulation) act 1956 in any state or area to grant
licenses to dealers

12.  the board shall consists of following members:-
1. Chairman
2. Two members, one from amongst the officials of the central
government dealing with finance and another from the
administration of companies act of 1956.
3. One members from amongst the officials of the reserve bank
of india.
4. five other members of whom atleast three shall be the
whole-time members to be appointed by the central
government.
Structure of SEBI

13.  code of conduct:- the code of conduct has to be strictly
observed and those employees, officers, or directors of the
company who violate the code of conduct will be subject to
disciplinary action by SEBI or by the company.
 Duty of officers:- every listed company has to employ a
compliance officer who as to report to MD or CEO of the
company.
 Security;- confidential files should be protected and kept
secure. these pertain to all files but especially computer files
and passwords, which are likely to have sensitive price
information.
Model code of conduct

14.  Closed trading window:- every company should have a closed
trading window period when no trade take places. It should be
closed period when the annual P&L and b/s have been
declared, when dividends have to be declared and amalgamations
have to made.
 Open trading window:- SEBI has also provided that trading
windows would open only after 24 hours of making sensitive price
available to the public.
 Information;- to avoid insider trading practices each listed company
has to provide sensitive information on a continous basis to the
stock exchange.
 Problems:- SEBI deals with the problems faced by the investors.
These are dealt with the investor grievance cell.

15.  Investor grievance are usually due to delays in dispatch of
allotment letters, refund orders, misleading statements in
advertisements or in the prospectus, delay in transfer of
securities, non-payment of interest or dividend.
 These grievance are dealt with either SEBI or department of
company affairs.
Investor grievance

16.  SEBI issued ombudsman regulation in 2003 to provide fair and
transperent system of redressal of grievance.
 These regulation empower an investor to get redressal against both
the company and the intermediaries.
 Complaints dealt by ombudsman act are
1. Delays in receiving refund orders, allotment letters, dividend or
interest.
2. Non-receipt of dividend, certificates, bonus shares, annual reports,
refunds in allotment or redemption of mutual fund unit.
3. Non-receipt of letter of offers in respect of buy back of shares or
incase of delisting.
4. Complaints against grievance against intermediaries or listed
companies.
Ombudsman

17.  To participate and to vote in annual general meetings and right to
receive a notice for them or their proxy to attend the meeting.
 To receive dividend, right shares , bonus offers , from the company
,after there approval of the board.
 To receive and inspect minutes of the meeting.
 To receive balance sheet , P&L account , auditors report , and
directors report.
 To receive allotment letters and share certificates.
 To requisition an extra ordinary general meeting.
 To apply for winding up of the company.
 To proceed in civil or criminal proceedings against the company.
Rights of investor

18. The expression 'stock market' refers to the market that
enables the trading of company stocks (collective
shares), other securities, and derivatives. Bonds are still
traditionally traded in an informal, over-the-counter market
known as the bond market. Commodities are traded in
commodities markets, and derivatives are traded in a variety
of markets (but, like bonds, mostly 'over-the-counter').
Stock Exchange Market

19.  Acts as sources for companies to raise money.
 Clearinghouse for each transaction
 Facilitates economic growth
 Indicator of share prices and other assets of a
company
Importance of Stock Market

20.  Established for the purpose of assisting, regulating and controlling
business of buying, selling and dealing in securities
 Provides a market for the trading of securities to individuals and
organizations seeking to invest their saving or excess funds through
the purchase of securities
 Provides a physical location for buying and selling securities that
have been listed for trading on that exchange
 Establishes rules for fair trading practices and regulates the trading
activities of its members according to those rules
 Ensure transparency by providing information to the investor and
helps in intelligent decision making about the particular stock
based on information
Role and Functions Of Stock
Market

21. • Visibility
• Market support
• Investors confidence
• Increased demand for products and services
• Overall increase in profitability
Benefits of Listing

22. Stock exchange can delist companies for a number of
reasons including :-
• Merger with another company
• Solvency problems
• Failure to comply with exchange rules
Delisting

23.  Availability of information Market efficiency
 Prices react quickly to new information
 Liquidity
 Small price fluctuations
Desirable Characteristics of a
stock market

24. • Transaction fees paid by members for each order executed
• Fees paid by firms when their securities are originally listed
• Annual fees by firms
• Entrance fees from new members
• Sale of historic trading and market information
Financing the exchange

25. • Cross border trading
• Issuers and investors are expanding their horizons beyond their home
markets
• Investors becoming much more demanding
Major Challenges for stock
exchanges