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Presentation On SEBI, Capital Market and Depository System

Presented by: Azaan Pranshu Kishore Kumar

Capital Issue control- 1943

(Under the Defense of India Act- 1939)

Controller of Capital Issue

(Capital Issue Control Act -1947)

Security and Exchange Board of India

(SEBI Act- 1992) protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto

Chairman: U.K Sinha

Two members from amongst the officials of the ministry of the central Govt. dealing with finance and administration of the Companies Act 1956.
Raje Kumar (Joint Secretary, Min. of Finance ) Naved Masood (Secretary, Min. of Corp. Affaires)

One member from amongst the officials of RBI

Anand Sinha (Deputy Gov. RBI)

Five other members of whom at least 3 shall be the whole time members to be appointed by the central Govt.
Prashant Saran Rajeev Kumar Agarwal S Raman Whole time member Whole time member Whole time member

V. K. Jairath Magya
Prakash Chandra

Member appointed
Part time member

The term of office and conditions of services Removal of member from office


The SEBI Act, 1992 has entrusted with two functions, they are

Regulatory Function
Development Function

Regulation of stock exchange and self regulatory organizations. Registration and regulation of stock brokers, subbrokers, Registrars to 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.
Prohibition of insider trading

Promoting investors education Training of intermediaries Conducting research and publishing information useful to all market participants. Promotion of fair practices Promotion of self regulatory organizations

Power of inspection Power of court Powers in the interests of securities market Powers regarding protection of investors Power to issue directions

Powers of investigation Power to cease and desist proceedings Registration of stock brokers, sub-brokers, share transfer agents etc. Prohibition of manipulative and deceptive devices

Failure to furnish information Failure to enter into agreement to clients Failure to redress investors grievances Defaults in case of mutual funds Failure to observe rules and regulations by an asset management company

Default in case of stock brokers Insider trading Non-disclosure of acquisition of shares and takeovers Fraudulent and unfair trade practices


Insider trading

Rakesh Agarwal Vs. SEBI

Companies must buy back at least 50 per cent under new SEBI rules

Angel Funds Must Not Invest in Cos Older than 3 Years

Easier entry norms and streamlining the categories for foreign investors

SEBI issues guidelines for change in category of AIF

Approval for rules and regulations Approval for filing criminal complaints No autonomy

Capital Market

Capital Market

The market where investment instruments like bonds, equities and mortgages are traded is known as the capital market. The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit. The capital market offers both long term and overnight funds.

Capital market instruments


Ownership securities

Creditorship securities

Equity shares

Preference shares

Deferred shares



Importance of Capital Market

Help firms and governments raise cash by selling securities

Allow investors with excess funds to invest and earn a return Channel funds from savers to borrowers Allocate resources optimally Secondary markets, where investors trade existing securities, assures investors that they can quickly sell their securities if the need arises.

Types of Capital Market

Features of Primary Market

It Is Related With New Issues Following are the methods of raising capital in the primary market: i) Public Issue

ii) Offer For Sale iii) Private Placement

iv) Right Issue

Secondary Market

The secondary market is that market in which the buying and selling of the previously issued securities is done.

The transactions of the secondary market are generally done through the medium of stock exchange.
The chief purpose of the secondary market is to create liquidity in securities.

Features of Secondary Market

It creates liquidity It comes after primary market It encourage new investments Aids in financing the industry Ensures safe & fair dealing.

Functions of Secondary Market

Provides regular information about the value of security. Helps to observe prices of bonds and their interest rates. Offers to investors for their assets. Secondary markets bring together many interested parties. It keeps the cost of transactions low.

Depository System


The term Depository means a place where a deposit of money, securities, property etc. is deposited for safekeeping under the terms of depository agreement. A depository is an organization, which assists in the allotment and transfer of securities and securities lending. The shares here are held in the form of electronic accounts i.e. dematerialized form and the depository system revolves around the concept of paper-less or scripless trading.


It holds the securities of the investors in the form of electronic book entries avoiding risks associated with paper

It is not mandatory and is left to the investor to decide

Depositories carry out its operations through various functionaries called business partners


A depository system is governed by the following Acts

Securities & Exchange Board of India Act 1992 The SEBI(Depositories and Participants) Regulations, 1996 Bye laws of depository

Business rules of depository

The Companies Act 1956

Depositories in India
Presently there are two Depositories working in India:

National Securities Depository Limited (NSDL)

It was registered by the SEBI on June 7 1996 as Indias first Depository to facilitate trading and settlement of securities in the demat form. It is promoted by IDBI, UTI, NSE

Central Depository Services (India) Limited (CSDL)

It commenced its operations during Feb. 1999 and was promoted by Stock Exchange Mumbai in association with Bank of Baroda, Bank of India, SBI and HDFC Bank

At present 10 Stock Exchanges are connected to the Depositories

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

NSE The BSE , Mumbai

Calcutta Stock Exchange

Delhi SE Ludhiana SE Bangalore SE Over the counter exchange of India Madras SE Inter connected SE Ahmedabad SE

Constituents of a Depository System

Depository Depository Participant (DP) Securities, Issuers and Registrars and Share Transfer Agents Stock Exchanges and Stock Brokers Clearing Corporation/ Clearing House and Clearing Members

Banking system

Facilities offered by Depository System

Dematerialization Rematerialization Settlement of trades in dematerialized securities Account transfer Pledge and hypothecation Stock lending and borrowing Account freezing Nomination

The Economic Times

Business Standard

Official website of SEBI

Financial Institutions and Markets by Shashi K. Gupta, Neeti Gupta and Nisha Agarwal