SEBI

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SEBI:

SEBI Reason for establishment Lack of different financial instruments Speculative trading Poor liquidity Lack of control MBA Lecture - 7 1

SEBI:

SEBI Securities and Exchange Board of India Act, 1992 was enacted to establish SEBI with statutory powers for : Protecting the interests of investors in securities, Promoting the development of the securities market, and Regulating the securities market . MBA Lecture - 7 2

OBJECTIVES OF SEBI:

OBJECTIVES OF SEBI To protect the interest of investors To regulate the security market To ensure fair practices in issue To promote efficient services by brokers, merchant bankers and other intermediaries. To issue guidelines to public issue. To issue guidelines, every aspect connected with capital market. MBA Lecture - 7 3

CONSTITUTION OF SEBI:

CONSTITUTION OF SEBI A Chairman; Two members from amongst the officials of the Ministry of the Central Government dealing with Finance and administration of Companies Act, 1956; One member from amongst the officials of the Reserve Bank of India; Five other members of whom at least three shall be whole time members to be appointed by the Central Government MBA Lecture - 7 4

FUNCTIONS OF SEBI:

FUNCTIONS OF SEBI Regulating the business in stock exchanges and any other securities markets; Registering and regulating the working of stock brokers and all intermediaries Registering and regulating the working of the DPs, FIIs, CRAs and Custodians Registering and regulating the working of venture capital funds & mutual funds MBA Lecture - 7 5

FUNCTIONS OF SEBI:

FUNCTIONS OF SEBI Promoting and regulating self-regulatory organizations; Prohibiting fraudulent and unfair trade practices relating to securities markets; Promoting investors’ education and training of intermediaries of securities markets; Prohibiting insider trading in securities; Regulating substantial acquisition of shares and take-over of companies; MBA Lecture - 7 6

FUNCTIONS OF SEBI:

FUNCTIONS OF SEBI calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons calling for information and record from any bank or any other authority or board or corporation Performing such functions and exercising according to Securities Contracts (Regulation) Act, 1956, as may be delegated to it by the Central Government; MBA Lecture - 7 7

FUNCTIONS OF SEBI:

FUNCTIONS OF SEBI Levying fees or other charges for carrying out the purpose of this section; Conducting research for the above purposes; Calling from or furnishing to any such agencies, as may be specified by SEBI, such information as may be considered necessary by it for the efficient discharge of its functions; Performing such other functions as may be prescribed MBA Lecture - 7 8

NATIONAL STOCK EXCHANGE:

NATIONAL STOCK EXCHANGE On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others. MBA Lecture - 7 9

NATIONAL STOCK EXCHANGE:

NATIONAL STOCK EXCHANGE It provides a range of products for various markets, including equity shares, exchange traded funds, mutual funds, debt instruments, index futures and options, stock futures and options, and currency futures The National Stock Exchange of India Limited (NSE) is a Mumbai-based stock Exchange. When we look in terms of volume of transaction, NSE is the largest stock exchange in India and the third largest in the world. MBA Lecture - 7 10

NATIONAL STOCK EXCHANGE:

NATIONAL STOCK EXCHANGE In November 1992 it was as a tax paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956. It started the first clearing corporation “ National Securities Clearing Corporation Ltd ” in India and the first depository in India called the “ National Securities Depository Limited ”. S&P CNX Nifty is the main index to NSE MBA Lecture - 7 11

NSE - Trading:

NSE - Trading Fully automated screen-based trading mechanism Strictly follows the principle of an order-driven market Trading members are linked through a communication network This network allows them to execute trade from their offices The prices at which the buyer and seller are willing to transact will appear on the screen When the prices match the transaction will be completed A confirmation slip will be printed at the office of the trading member MBA Lecture - 7 12

NSE – Trading Advantages:

NSE – Trading Advantages Integrated network for trading in stock market of India Fully automated screen based system that provides higher degree of transparency Investors can transact from any part of the country at uniform prices Greater functional efficiency supported by totally computerized network MBA Lecture - 7 13

BOMBAY STOCK EXCHANGE:

BOMBAY STOCK EXCHANGE In 1875, 22 men sat under a Banyan tree. Between them they transacted the business of buying and selling of securities on behalf their clients. Between them they established “The Native Share and Stock Brokers Association” [ Bombay Stock Exchange ( BSE )] and the Indian securities market was born . The Bombay Stock Exchange (formerly, The Stock Exchange, Bombay) is a stock exchange located on Dalal Street, Mumbai, and is the oldest stock exchange in Asia. The equity market capitalization of the companies listed on the BSE was 1.63 trillion as of December 2010, making it the 4 th largest stock exchange in Asia and 8 th largest in the world. MBA Lecture - 7 14

BSE vs. NSE:

BSE vs. NSE Main Index – SENSEX Trading Platform – BOLT Companies Listed – Nearly 8000 Location – Dalal Street Status – Company Started by – Brokers Depository – CDSL MBA Lecture - 7 15 Main Index – Nifty Trading Platform – NEAT Companies Listed – Nearly 3000 Location – … Status – Company Started by – Professionals Depository - NSDL

OVER THE COUNTER EXCHANGE OF INDIA:

OVER THE COUNTER EXCHANGE OF INDIA It is an electronic stock exchange based in India that is comprised of small- and medium-sized firms looking to gain access to the capital markets. Like electronic exchanges in the U.S. such as the NASDAQ, there is no central place of exchange and all trading is done through electronic networks. The first electronic OTC stock exchange in India was established in 1990 as a Section 25 company under the Company’s Act 1956 and got recognized by the SC(R) Act , 1956 as a stock exchange to provide investors and companies with an additional way to trade and issue securities. MBA Lecture - 7 16

OTCEI – Landmark in Capital Market:

OTCEI – Landmark in Capital Market Screen based nationwide trading [ OTCEI Automated Securities Integrated System ( OASIS)] 2) Market Making 3) Sponsorship of companies 4) Trading done in share certificates 5) Weekly Settlement Cycle 6) Short Selling 7) Demat trading through NSDL for convenient paperless trading 8) Tie-up with National Securities Clearing Corporation Ltd for Clearing MBA Lecture - 7 17

Inter-connected Stock Exchange:

Inter-connected Stock Exchange ISE has floated ISE Securities & Services Limited (ISS) as a wholly-owned subsidiary under the policy formulated by the Securities and Exchange Board of India (SEBI) for “Revival of Small Stock Exchanges”. Trading Members of ISE can access NSE and BSE by registering themselves as Sub-brokers of ISS. MBA Lecture - 7 18

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