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INDIAN CAPITAL MARKET
Problems in Indian Capital Markets before 1992
Multiplicity of administration
Poor disclosure in prospectus
Investors faced problems of delays (Refund, Transfers etc.)
No concept of capital adequacy
No inspections of stock exchanges undertaken
Problems in Indian Capital Markets before 1992
Stock Exchanges management dominated by brokers
Poor disclosures by Mutual Funds (NAV not published, No valuation Norms)
No prohibition of insider trading, or fraudulent and unfair trade practices.
Primary markets not in the main stream of the financial systems
REFORMS IN INDIAN CAPITAL MARKET
Reforms in Indian Capital MarketCompanies free to raise funds from securities markets after filing prospectus with SEBI
SEBI introduces regulation for primary & other secondary market intermediaries
Listed Cos to furnish annual statement to the exchanges
Book Building introduced for institutional investors
SEBI introduces regulations governing substantial acquisition of shares and takeovers.
Reforms in Indian Capital Market NSE establishment as a stock exchange with national wide electronic trading
BSE introduces screen based trading
Capital adequacy requirement for brokers
System of mark to market margins introduced
Stock Lending schemes introduced
NSCCL setup by NSE
Reforms in Indian Capital MarketSEBI strengthen surveillance mechanisms and have a separate surveillance departments with all stock exchanges
Depositories act introduces for Electronic transfer of shares.
Permission to access in international capital markets by Indian companies through Euro issues
FDI allowed in stock broking ,AMCs, Merchant Bankers , NBFCs.
FIIs allowed to access Indian capital markets on registration with SEBI
Regulatory Framework of Indian Capital Markets
SEBI
Setup in 1992 , as a statutory bodyRegistering & regulating intermediariesInvestor protection through regulating Indian capital marketsBoost up the development of Indian Capital Markets Registering & regulating service providers, Mutual funds, collective investment schemes, venture capital funds, takeovers etc.Power to inspect book, records, suspend registered entities and cancel registration
RBI
Regulatory involvement in Indian Capital MarketsLimited to the Debt ManagementForeign Exchange ControlLiquidity support to market participantsRegulate primary dealers in the Government securities marketsSecurities transactions that involve foreign exchange transaction need prior permission of RBIImportant role in NSE debt Markets
DCA(Dept of Company Affairs)
Administered by Controller of capital issue(CCI)
Part of Ministry of Finance
In 1992 ,Liberalize capital issuance and pricing
Public & Private Companies were governed by companies act 1956, which continued to be administered by DCA.
Specify certain aspects concerning capital issuance and securities trading.
Stock Exchanges
Two major exchanges (NSE,BSE) in India.
Automated Trading System developed for fast & transparent execution of trades
Listing of securities in exchanges
Introduced risk management systems
Committees of stock exchange set up to handle matters of discipline , default and investor-broker disputes
Major crash in Indian Capital Markets
Major Rallies in Indian Capital Markets