1. Volume 4 / Issue 22
February-April 2013
2nd Annual Convocation

2. The 2nd Annual Convocation was held on April 29, 2013, to felicitate the successful
students of the School for Securities Education, NISM. These candidates were from the
Batch of 2011-12 of two programmes: the One-Year Full-time Post Graduate Programme
in Securities Markets (PGPSM) and the One-Year Part-time Certificate in Financial
Engineering&RiskManagement(CFERM).Abriefofthisisgiveninside.
School for Regulatory Studies & Supervision of NISM conducted two programmes -
“Securities Market Regulations - Anti Money Laundering Perspective” and “Financial
Market Regulations” during Feb-Mar 2013. Forty two officers from SEBI and
Enforcement Directorate and 115 officers from Indian Revenue Service attended the
programmes,respectively.Abriefofthisisgiveninside.
After successful launch of the NISM-Series-V-B: Mutual Fund Foundation Certification
Examination and NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund)
Certification Examination during January, 2013, NISM has launched four new
certification examinations during the period Feb-Apr, 2013. Details of these are given
inside.
NISM has carried out a study on 'Trends in the Performance of the Corporate Sector'. A
briefofthisstudyisgiveninthisissue.
Asalways,suggestionsforimprovementsofthepublicationarewelcome.
Withbestwishes
ShriSandipGhose
Director,NISM
Foreword
01

3. The 2nd Annual Convocation to felicitate the successful students of the School for Securities Education (SSE) was held
on April 29, 2013. These candidates were from the Batch of 2011-12 of two programmes: One-Year Full-time Post
Graduate Programme in Securities Markets (PGPSM) and the One-Year Part-time Certificate in Financial Engineering &
Risk Management (CFERM). The event saw 180 attendees including students, their family, alumni, officers from key
institutions,corporates,facultyandstaffofNISM.ItwascoveredbyBloomberg.
Shri Uday Kotak, Executive Vice Chairman and Managing Director-Kotak Mahindra Bank Ltd. was the Chief Guest. In his
convocation address, he stressed on the dangers of over-leverage, the need for simplicity as opposed to over-
engineering, humility and following one's dharma. He also appreciated NISM's passion for education in the field of
securitiesmarkets.
Shri P K Nagpal, Executive Director-SEBI and immediate-past Director of NISM, was the Presiding Officer on the
occasion. Both Shri Kotak as well as Shri Nagpal are also Members of the Board of Governors of NISM. Accompanying
themonthedais,ontheoccasion,wereShriSandipGhose,Director-NISMandShriGPGarg,Registrar-NISM.
Shri Ghose provided an activity report of NISM during the year gone by. He also made a mention about the strength of
SSE in terms of faculty capabilities in curriculum and research. Shri Nagpal, advised the budding professionals to enjoy
theirworkinordertobringintherequiredpassion. Whileemphasizingtheimportanceofregulationinfinancialmarkets,
he praised NISM's unique educational process and encouraged inculcation of managerial skills among students. He
distributedthecertificatestothesuccessfulstudentsofPGPSMandCFERM.
ShriGargproposedthevoteofthanksandtheceremonyconcludedwiththesingingoftheNationalAnthem
2nd
Annual
Convocation
02

4. Redress of investor grievances through SEBI Compliances Redress System (SCORES)
CorporateBondsandGovernmentSecuritiesascollateral
ProductLabelinginMutualFunds
▪
▪
▪
▪
(CIR/OIAE/1/2013 dated 17-04-2013)
Pursuant to the provisions of Section 15C SEBI Act, 1992, all listed companies are hereby called upon to redress the
grievances of investors and inform them within 30 days of the complaints. The details of investor grievances
relating to the respective companies can be accessed through the respective SCORES user ID and password of
each company.
Failure by companies to file Action Taken Reports under SCORES within 30days of date of receipt of the grievance may
alsoattracttheprovisionsofSection15A(a)oftheSEBIAct,1992.
TheHon'bleFinanceMinister,inhisannouncementintheUnionBudgetfortheyear2013-14,hasproposed,inter-alia,to
permit FIIs to use their investment in corporate bonds and Government securities as collateral to meet their margin
requirementstowardstheirtransactionsontherecognizedStockExchangesinIndia.
ReserveBankofIndiavideRBI/2012-13/439A.P.(DIRSeries)CircularNo.90datedMarch14,2013haspermittedFIIsto
use, in addition to already permitted collaterals, their investments in corporate bonds as collateral in the cash segment
andgovernmentsecuritiesandcorporatebondsascollateralsintheF&Osegment.
In light of the above, henceforth FIIs are permitted to offer the following collaterals - government securities, corporate
bonds,cashandforeignsovereignsecuritieswithAAAratings,fortheirtransactionsinbothcashandF&Osegments.
(CIR/IMD/DF/5/2013dated18-03-2013)
In order to address the issue of mis-selling, and to provide investors an easy understanding of the kind of product/
scheme they are investing in and its suitability to them, SEBI has decided that all the mutual funds shall 'Label' their
schemesontheparametersasmentionedunder:
Nature of scheme such as to create wealth or provide regular income in an indicative time horizon (short/ medium/long
term).
A brief about the investment objective (in a single line sentence) followed by kind of product in which investor is
investing(Equity/Debt).
Levelofrisk,depictedbycolourcodeboxesasunder:
• Blue-principalatlowrisk.
•Yellow-principalatmediumrisk.
•Brown-principalathighrisk.
Thecolourcodesshallalsobedescribedintextbesidethecolourcodebox.
A disclaimer that investors should consult their financial advisers if they are not clear about the suitability of the
product.
(CIR/MRD/DRMNP/9/2013dated20-03-2013)
INITIATED BY SEBI
Regulatory Changes
03

5. InconsultationwithStockExchangesandtheassociationsofstockbrokers,SEBIhasdecided:
The Stock Exchange or the Clearing Corporation, as the case may be, shall, in consultation with SEBI, formulate a
policy for annual inspection of their members in various segments and follow up action thereon. The policy shall also
cover various kinds of risks posed to the investors and market at large on account of the activities/business conduct of
theirmembers.
The Stock Exchange or the Clearing Corporation, as the case may be, shall conduct inspection of their members in
various segments in terms of the above policy and in case of members who hold multiple memberships of the
exchanges, the Stock Exchanges shall establish an information sharing mechanism with one another on the important
outcomeofinspectioninordertoimprovetheeffectivenessofsupervision.
(CIR/IMD/DF/04/2013dated15-02-2013)
SEBI has decided to designate GDS of Banks as gold related instrument. Investment in GDS of Banks by Gold ETFs of
mutualfundsissubjecttofollowingconditions:
ThetotalinvestmentinGDSwillnotexceed20%oftotalassetundermanagementofsuchschemes.
Before investing in GDS of banks, mutual funds shall put in place a written policy with regard to investment in GDS with
due approval from the Board of the Asset Management Company and the Trustees. The policy should have provision to
make it necessary for the mutual funds to obtain prior approval of their trustees for each investment proposal in GDS of
anyBank.Thepolicyshallbereviewedbymutualfunds,atleastonceayear.
Gold certificates issued by Banks in respect of investments made by Gold ETFs in GDS shall be held by the mutual
fundsonlyindematerializedform.
(CIR/MRD/DP/05/2013 dated 08-02-2013)
SEBI has decided to permit stock exchanges to introduce Liquidity Enhancement Schemes (LES) to enhance liquidity of
illiquidsecuritiesintheirEquityCashMarket.
LESmaybeintroducedinanyofthefollowingsecurities:
• Securitieshavingameanimpactcostgreaterthanorequalto2%foranordersizeof`1lakh,wheremeanimpactcost
ofthesecurityonthestockexchangeiscalculatedoverthepast60tradingdays.
• Securitiesintroducedfortradinginthe“permittedtotrade”category.
LES may be continued till such time as the security achieves mean impact cost of less than 2% for an order size of ` 1
lakhonthestockexchangeduringthelast60tradingdays.
DiscontinuationofLESshallbedoneafteradvancenoticeof15days.
(CIR/IMD/FIIC/3/2013dated08-02-2013)
The Reserve Bank of India vide circular RBI/2012-13/391, dated January 24, 2013, had enhanced the limit for
investment by FIIs in the Government Debt Long Term category by US$ 5 billion to US$ 15 billion and the Corporate non-
infrastructuredebtcategorybyUS$5billion.
▪
▪
Gold Exchange Traded Fund Scheme (Gold ETFs) investment in Gold Deposit Scheme
(GDS)inBanks
▪
▪
▪
Liquidity Enhancement Schemes for Illiquid Securities in Equity Cash Market
IncreaseinFIIdebtlimitforGovernmentandCorporateDebtcategory
04

6. Core Investment Companies (CICs) - Guidelines on Investment in Insurance
Foreign investment in India by SEBI registered FIIs in Government Securities and
Corporate
Standardization and Enhancement of Security Features in Cheque Forms/Migrating to
CTS2010standards
▪
▪
(RBI/2012-2013/466 dated 01-04-2013)
RBI has decided to permit CICs to set up a joint venture company for undertaking insurance business with risk
participation, subject to safeguards. In view of the unique business model of CICs, RBI has issued a separate set of
guidelinesfortheirentryintoinsurancebusiness.
While the eligibility criteria, in general, are similar to that for other NBFCs, no ceiling is being stipulated for CICs in their
investmentinaninsurancejointventure.FurtheritisclarifiedthatCICscannotundertakeinsuranceagencybusiness.
CICs exempted from registration with RBI do not require prior approval provided they fulfill all the necessary conditions
of exemption as provided under/ in CC No.206 dated January 05, 2011. Their investment in insurance joint venture
wouldbeguidedbyIRDAnorms.
(RBI/2012-2013/465dated01-04-2013)
RBI has decided to merge the existing debt limits for investments by FIIs and long term investors in Government
securities and non-convertible debentures (NCDs) / bonds issued by an Indian company, into two broad categories as
under:
▪ Government Debt limit: Government securities of USD 25 billion by merging the existing sub-limits under Government
securities [(a)USD 10 billion for investment by FIIs in Government securities including Treasury Bills and (b) USD 15
billionforinvestmentInGovernmentdatedsecuritiesbyFIIsandlongterminvestors];and
▪ Corporate Debt Limit: Corporate debt of USD 51 billion by merging the existing sub-limits of corporate debt [(a) USD 1
billion for Qualified Foreign Investors (QFIs), (b) USD 25 billon for investment by FIIs and long term investors in non-
infrastructuresectorand(c)USD25billionforinvestmentbyFIIs/QFIs/longterminvestorsininfrastructuresector].
(RBI/2012-2013/44dated18-03-2013)
On a review of the progress made by banks so far in migration to CTS-2010 standard cheques and in
consultation with a few banks and Indian Banks Association, RBI has decided to put in place the following
arrangements for clearing of residual non-CTS-2010 standard cheques beyond the cutoff date of March 31,
2013.
All cheques issued by banks (including DDs / POs issued by banks) with effect from the date of this circular
shallnecessarilyconformtoCTS-2010standard.
Banks shall not charge their savings bank account customers for issuance of CTS-2010 standard cheques
whentheyareissuedforthefirsttime.However,banksmaycontinuetofollowtheirexistingpolicyregarding
cheque book issuance for additional issuance of cheques, in adherence to their accepted Fair Practices
Code.
INITIATED BY RBI
05

7. PermissionofInsurerstoinvestinCategoryIAlternativeInvestment
▪
▪
▪
▪
▪
(IRDA/F&I/INV/CIR/054/03/2013dated18-03-2013
In light of SEBI Alternative Investment Fund Regulations, 2012, IRDA permits Insurers to invest in Alternative
InvestmentFundssubjecttothefollowing:
The investments in Category I Alternative Investment Funds are permitted under the Head “Other Investments”.
Further, such Investments should be restricted to Infrastructure Funds and SME Funds as defined in the Alternative
FundRegulations.
Insurers should ensure that such Category I Funds should not invest in securities of companies incorporated outside
IndiaasInsurersareprohibitedforinvestmentoffundsoutsideIndiavidesec.27CoftheInsuranceAct,1938.
ThesponsorofsuchAlternativeInvestmentFundshouldnotbeinthepromotergroupoftheInsurer.
The Fund shall not be managed by an Investment Manager who is either directly or indirectly controlled or managed by
theInsureroritspromoters.
The Investments in Alternative Investment Funds should be clubbed with the investments in Venture Funds and
reportedtotheAuthorityinthequarterlyInvestmentreturnsunderthecategorycode'OVNF'.
INITIATED BY IRDA
▪
▪
All residual non-CTS-2010 cheques with customers will continue to be valid and accepted in all clearing
houses[includingtheChequeTruncationSystem(CTS)centers]foranotherfourmonthsuptoJuly31,2013,
subjecttoareviewinJune2013.
Cheque issuing banks shall make all efforts to withdraw the non-CTS-2010 Standard cheques in circulation
before the extended timeline of July 31, 2013 by creating awareness among customers through SMS alerts,
letters, display boards in branches/ATMs, log-on message in internet banking, notification on the web-site
etc.
Circular on replacing the existing facility of 'Phased Withdrawal' with 'Deferred
Withdrawal’
(PFRDAI2013/6/PDEX/5dated11-03-2013)
PFRDA has decided to replace the “Phased Withdrawal” option currently available with a “Deferred withdrawal” option
whereby the subscriber can time the lump sum withdrawal allowed under NPS at the time of exit, with immediate
effect.
Under the Deferred withdrawal facility, the subscribers at the time of exit from National Pension System (NPS) can
exercise an option to defer the withdrawal of eligible lump sum withdrawal and stay invested in the NPS. However, it
may be noted that no fresh contributions are accepted and also no partial withdrawals are allowed during such a period
of deferment. The subscriber can withdraw the deferred lump sum amount at any time before attaining the age of 70
years by giving a withdrawal application or notice. If no such notice is given, the accumulated pension wealth would be
automaticallymonetizedandcreditedtohisbankaccountuponattainingtheageof70years.
INITIATED BY PFRDA
06

8. Activities at Nism
SEBI Financial Education Resource Persons Programme
SCHOOL FOR INVESTOR EDUCATION AND FINANCIAL LITERACY (SIEFL)
No. of Resource Persons
empanelled and trained
DatesVenue
Patna
Ahmedabad
Lucknow
Bhubaneshwar
Chandigarh
Guwahati
42
68
51
53
48
46
Dec 26-30, 2012
Jan 13-16, 2013
Jan 28-31, 2013
Feb 9-13, 2013
Feb 23-27, 2013
March 17-20, 2013
Ahmedabad 13-16th Jan 2013
NISM organised new empanelment of SEBI Financial Education Resource Persons at Patna, Ahmedabad, Lucknow,
Bhubaneshwar,Chandigarh and Guwahati from December 2012 to March 2013. A total of 308 new Resource Persons
wereempanelledandtrainedatthesecentresasdetailedbelow.
ShriGyanBhushan,ChiefGenManager,SEBIdistributing
certificates to one of the newly empanelled Resource
Persons.
FinancialLiteracyProgramsinSchools
From December 2012 to March 2013, Teachers’ Training Programs were conducted in 18 locations covering 893
teachers of schools in Kerala, Karnataka, Tamilnadu, Andhra Pradesh, Mumbai, and Navi Mumbai. They were trained in
basic financial literacy concepts viz. financial planning, banking, stock market, insurance and so on. This in turn would
bepassedontothestudentsintheirrespectiveschools.
07

9. SCHOOL FOR REGULATORY STUDIES & SUPERVISION
SecuritiesMarketRegulations-AntiMoneyLaunderingPerspective
The School for Regulatory Studies & Supervision organised a program on “Securities Market Regulations – Anti Money
Laundering Perspective” in February, 2013 that was attended by 42 officers from SEBI and Enforcement Directorate. It
was inaugurated by Shri Sunil Sawhney, Special Director, Enforcement Directoratein a function attended by Shri P K
Nagpal, then Director, NISM, Shri Samir Bajaj, Joint Director, Enforcement Directorate and Shri K Sukumaran, Dean,
SIEFL & SRSS, NISM. Some of the important topics covered in the program were, Regulatory Environment in Securities
Market, Regulations under FEMA as relevant to securities market, Foreign Investments by FIIs/QFIs, AML and KYC
Issues,etc.TheprogrammecametoanendwithvaledictorysessionattendedbyShriGPGarg,Registrar,NISM.
Participants of the programme SECURITIES MARKET REGULATIONS - ANTI MONEY LAUNDERING PERSPECTIVE
FinancialMarketRegulations
The program on “Financial Market Regulations” was organised by NISM for the Indian Revenue Service (IRS) Officers on
the request from National Academy of Direct Taxes (NADT), Nagpur. The program, a workshop cum exposure visit, was
attended by 115 officers from IRS between March 18-22, 2013 at Navi Mumbai. The program started with a session on
'Securities Markets' followed by sessions on 'Regulatory Environment in Securities Market', 'Role of Intermediaries in
Securities Markets', 'Regulatory Environment in Banking Market', 'Risk Management in Securities Market', 'Banking
Operations – An Overview', and many more. The participants visited SEBI, RBI, BSE, NSE and NSDL wherein they got an
exposuretothefunctioningofeachorganisation.
08

10. SCHOOL FOR CERTIFICATION OF INTERMEDIARIES (SCI)
Examination Update
NISM Certification Examinations are available through all NISM, NSE, MCX-SX and BSE Test Centers. For further
details please visit www.nism.ac.in.
1. Launch of NISM-Series-XI: Equity Sales Certification Examination
NISM has launched the NISM-Series-XI: Equity Sales Certification Examination on March 7, 2013. This
examination seeks to create a common minimum knowledge benchmark for all persons involved in equity sales
in order to enable a better understanding of equity markets, better quality investor service, operational process
efficiency and risk controls.
2.LaunchofNISM-Series-XII:SecuritiesMarketsFoundationCertificationExamination
NISM has launched the NISM-Series-XII: Securities Markets Foundation Certification Examination on March 21,
2013. This examination aims to impart basic knowledge about the Indian Securities Markets and different rules and
regulations governing the securities markets. This examination is a voluntary examination for entry level
professionals,whowishtomakeacareerinthesecuritiesmarkets.
3.LaunchofNISM-Series-IX:MerchantBankingCertificationExamination
NISM has launched the NISM-Series-IX: Merchant Banking Certification Examination on March 21, 2013. The
examination seeks to create a common minimum knowledge benchmark for employees working with SEBI
registered Merchant Bankers and performing various SEBI regulated functions such as those relating to IPO, FPO,
OpenOffer,Buy-Back,Delistingetc.
4.LaunchofNISM-Series-V-C:MutualFundDistributors(Level2)CertificationExamination
NISM has launched the NISM-Series-V-C: Mutual Fund Distributors (Level 2) Certification Examination on April 16,
2013. This is a voluntary higher level examination, for those candidates who wish to assess themselves against
higherstandardsofoverallexpertiserelatedtomutualfundssales,distributionandadvisoryfunctions.
5.SEBI'sNotificationforNISMCertificationExaminations
SEBI has notified the following certification examinations of NISM under regulation 3 of SEBI (CAPSM) Regulations,
2007:
(a) NISM-Series-VIII: Equity Derivatives Certification Examination [vide notification LAD-NRO/GN/2012-13/30/5474
datedJanuary11,2013]
(b) NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination [vide notification
LAD-NRO/GN/202-13/33/1103datedMarch11,2013]
09

11. Consolidated Status Report ( Period: As on April 28, 2013)
NISM Certification Examination
Sr
No.
NISM EXAMINATION
Total Candidates
Enrolled
Total Candidates
Appeared
Mutual Fund Distributors
(Launched on 01/06/2010)
RTA - Mutual Fund
(Launched on 03/08/2009)
Currency Derivatives
(Launched on 15/05/2009)
Currency Derivatives - Gujarati
(Launched on 01/11/2012)
Securities Intermediaries Compliance
(Non-Fund)
(Launched on 28/01/2013)
Interest Rate Derivatives
(Launched on 17/05/2010)
Mutual Fund Distributors - Gujarati
(Launched on 01/06/2010)
Mutual Fund Distributors - Hindi
(Launched on 01/06/2010)
Currency Derivatives - Hindi
(Launched on 01/11/2012)
RTA - Corporate
(Launched on 03/08/2009)
Mutual Fund Foundation
(Launched on 14/01/2013)
Depositories Operations
(Launched on 21/02/2011)
Securities Operations and Risk Management
(Launched on 22/11/2010)
Equity Derivatives
(Launched on 08/10/2012)
Merchant Banking
(Launched on 21/03/2013)
Equity Sales Certification Examination
(Launched on 07/03/2013)
Securities Markets Foundation
(Launched on 21/03/2013)
01
02
03
04
05
06
07
08
09
10
11
13
14
15
16
17
18
Pass
Percentage
Pass
Percentage
Mutual Fund Distributors (Level 2)
(Launched on 16/04/2013)
12
42%
25%
8%
71%
60%
85%
18%
42%
17%
16%
91%
53%
77%
56%
100%
88%
100%
0%
Total
120112
5819
54104
8
27
2218
53
657
654
961
94
27886
14904
7258
8
11
11
2
244787
120116
5413
49858
8
26
2019
34
471
549
794
66
25433
14015
6775
3
8
4
0
225592
50282
3261
2
2
1442
29
84
91
127
60
13452
10768
3827
3
7
4
20762
0
104203
10

12. SCHOOL FOR SECURITIES EDUCATION (SSE)
Segments of the financial sector such as banking & insurance are training intensive. In the capital markets, however,
there is no single mode of training or education. Professionals in the securities markets come from diverse backgrounds
likelaw,charteredaccountancy,MBA(Finance)&soon.
The Indian investor has witnessed a wide range of investment avenues ranging from bank deposits, post office savings,
gold, real estate and provident funds. The trust towards equity investment came from the equity dilution by
multinational companies in India under FERA (1973). The mutual fund route gained momentum in the 1990s, and the
DepositoriesAct,1996pavedthewayforfurtherinvestmentinequity.
NISM Continuing Professional Education
Sr
No. NISM Continuing Professional Education
01
02
03
04
05
06
07
08
09
Total Candidates Appeared
through NISM & CPE Providers
NISM Mutual Fund Distributors CPE (1 Day Programme)
(Launched on 01/06/2010 and upto 31/05/2012)
NISM Mutual Fund Distributors CPE (Day 1)
(Launched on 01/06/2012)
NISM Mutual Fund Distributors CPE (Day 2)
(Launched on 01/06/2012)
NISM RTA Corporate CPE (Day 1)
(Launched on 02/05/2012)
NISM RTA Corporate CPE (Day 2)
(Launched on 02/05/2012)
NISM Currency Derivatives CPE (Day 1)
(Launched on 05/05/2012)
NISM Currency Derivatives CPE (Day 2)
(Launched on 05/05/2012)
NISM RTA Mutual Fund CPE (Day 1)
(Launched on 02/05/2012)
NISM RTA Mutual Fund CPE (Day 2)
(Launched on 02/05/2012)
10
11
12
NISM Depository Operations Certification Examination CPE (Day 1)
(Launched on 13/07/2012)
NISM Depository Operations Certification Examination CPE (Day 2)
(Launched on 13/07/2012)
NISM Mutual Fund Foundation CPE (Day 1)
(Launched on 14/01/2013)
16039
12503
12496
137
137
2623
2617
21
21
230
230
964
11

13. TrendsinthePerformanceoftheCorporateSector
Quarterly Corporate Results are one of the indicators of economic activity in the country. A study on Quarterly
Earnings of 100 companies (Nifty 50 companies and Nifty Junior 50 companies) is carried out with a view to obtain
broad trends in the performance of companies and various sectors for Quarter October-December 2012 as
compared to October-December 2011. As on February 15, 2013, all the 99 companies reported earnings except
MphasisLimited,whichfollowsadifferentyear/quarterending.
Across All 99 companies, PAT (Profit after Tax) has grown 24% over the corresponding Quarter in the previous year.
This is achieved with the help of 10% growth in Sales, 9% growth in Operating Profit and 14% growth in Other
Income. These 99 companies are classified into 13 sectors. Out of 13 sectors, 9 sectors have reported an increase
in PAT, significant observations are Pharma (257%), Engery (45%) and FMCG (20%). Out of 13 sectors, 4 sectors
havereportedadeclineinPAT,i.e.Realty(-92%),PSE(-18%),Auto(-13%)andMetal(-8%).
Nifty P/E ratio increased to 18.68 from 16.85 a year back, in-spite of increase in PAT by 24%. This could imply that
Nifty companies attracted more investments on a perception of improved earnings prospects. As against the Nifty
P/Eof18.68,theP/EofPharmawasthehighest(44.74)andtheP/EofPSUBankswasthelowest(8.07).
Research at NISM
Over the last three decades, the securities markets have been institutionalized through several structures. The School
for Securities Education has a team of dedicated academicians that impart knowledge based on in-depth research and
constant interaction with industry and policy-makers at the highest level. This experience is interwoven with skills and
experiential learning. The curriculum is carefully designed and delivered by academicians, policy-makers and
practitionersbasedonglobalbenchmarks.
ThefollowingarethethreeprogrammesconductedbySSE:
For full details, please visit www.nism.ac.in
Post Graduate Programme in
Securities Markets (PGPSM)
One-year full time programme or fresh graduates or experienced graduates.
Certificate in Financial
Engineering and Risk
Management (CFERM)
One-year part time programme for working executives. Format A is held on
Saturday evenings and Sundays. Format B is held in 10-day modules
fourtimesinayear.
Certificate in Securities
Law (CSL)
A six-month programme for working executives across 26 Saturdays
12

14. TaxationandSecuritiesMarkets
Prof.SunderRamKorivi,Dean-SSEandSSIR,NISM
The Tobin Tax (a type of tax proposed by Nobel Laureate James Tobin) has increasingly become a tool being applied by
policy-makers. It is based on the principle of 'polluter pays'. Those who contribute to pollution (volatility, in this case)
ought to pay for it. In the financial markets, speculators and traders have a higher churn rate than, say, a life-insurance
company, pension fund or a Warren Buffet-like investor. Hence, a transaction tax would hurt speculators and traders
more. Furthermore, since retail investors generally do not trade in derivatives, a transaction tax on derivatives falls on
institutional and rich investors. For this reason, a transaction tax is also termed as a Robin Hood tax - taxing the rich to
finance the poor. In recent times, Brazil, an export-oriented economy, introduced an anti-volatility transaction tax
aimedtokeepFIIflowsatbayandpreventanunduestrengtheningofitscurrency.
In the 1980s and thereafter, countries made serious attempts to enhance trade relations. There are over 2000 Double
Tax Avoidance Treaties (DTAT) of a bilateral nature (India has entered into 85 treaties). There are agreements between
countries such as Developed-Developed, Developed-Developing and Developing-Developing. Tax arbitrage becomes
rich with opportunity where the tax differences are the highest. This raises the popularity to tax havens, where the
rates of taxation are zero to low. Following the rise of terrorism and its financing in the 2000s, the Financial Action Task
Force (FATF) was initiated. FATF was mandated to eradicate the scourge of terror financing and brought several tax
havens to question. Government action has now shifted to the unfair use of tax havens for purely economic offences.
TheseveralbilateralTaxInformationExchangeAgreements(TIEA)thatprevailaretobeviewedinsuchlight.
Gita Gopinath of Harvard has been advising the French government on fiscal measures to improve their finances.
BeingamemberoftheEuro-zone,France(likeothermembersoftheEuro-zone)suffersfromcurrencyandinterest-rate
rigidities. The only way to gain financial strength is to raise new taxes. This provides the backdrop against which
FranceandtenothercountriesintheEuro-zonehaveraisedaFinancialTransactionTax.
Tax havens are likely to come under increasing focus, especially owing to the moderation in the effective tax rates
from 32% to 24% over the past decade in non tax haven countries. Under such a situation, tax havens play spoil-sport
to the tax-mobilization efforts of other nations. Thus, Robin Hood-style taxes seek to mobilize funds from the haves for
thebenefitofthehave-nots.
The low tolerance to tax havens views them in fresh light: the doctrine of 'tax minimization' questions the doctrine of
'tax avoidance' on ethical-technical grounds. Investments are international, but taxes are domestic, leaving loopholes
in the hands of clever lawyers from British Virgin Islands to Samoa. This view has increasingly dominated OECD
thinking, G20 thinking, and the thinking among tax authorities in India. It is now contextually clearer as to why the
Transaction Taxes, a super-rich tax (albeit as a surcharge), GAAR and the aggressive posturing of the Indian tax
authorities.
According to William Poole of Cato Institute, tax-deductibility of interest has led to the leverage boom and the bust of
the financial system. It is time for tax authorities to have a close re-look at the deductibility of not only interest, but also
other items such as royalty and fees for technical services, especially those routed through tax havens. As Andrew
Sheng(formerlyoftheHongKongMonetaryAuthority)mentions,financeisagoodservantbutabadmaster.Cyprusis
anexampleofanoutsizedfinancialsector,inrelationtoitsrealsector.
Articles
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15. On the whole, the world seems to have come around to the principle (known as the Ramsay Principle) that a device
whose sole intention is to avoid tax, without commercial substance, is questionable, and must be pursued to bear its
fair share to the exchequer. History tells us that players in the financial sector may lie low until public outrage subsides
andmakefreshattemptsforaretentionofthestatusquo.
Mr.NareshShabbani,Manager,F&A,NISM
Kautilya's Arthashastra, an ancient and revered Indian literature on statesmanship, detailed the four duties of the king
towards his subjects viz Raksha (Protection), Vriddhi (Enhancement), Palana (Maintenance) and Yogakshema
(Safeguard). In the context of corporates where the Board of Directors dons the role of king and the shareholders form
thesubjects,thedutiesarebeingreorientedtorepresenttheobjectivesofcorporategovernance:
1.Protectionofshareholder'swealthfromdevaluation
2.Enhancementoftheshareholder'swealthbyprudentinvestments
3.Maintenanceoftheshareholder'swealthbyoptimumutilisationofresources
4.Safeguardoftheinterestsoftheshareholdersbyactingasatrustee
Ccorporate governance also deals with rights of minority shareholders vis-à-vis majority shareholders as well as
duties towards other stakeholders such as customers, employees, environment, regulators, creditors, suppliers and
thesocietyatlarge.
There is an ever growing realization among policy-makers in India about the importance of corporate governance in
improving the investment climate and also in promoting development of vibrant and transparent capital markets.
Scams and other frauds have adversely affected the confidence of common investors in a country where less than 3%
ofthepopulationinvesttheirsavingsintostockmarkets.
It has also dawned upon the corporate sector that sincere efforts have to be made to address concerns of all
stakeholders in order to achieve sustainable development in a country where growing disparity between the haves
and the have-nots threaten to disrupt the very ecosystem in which they operate. Additionally, there is increasing
research pointing to a direct relation between the levels of corporate governance in a company to its stock
performance.
Indiancorporatesectorpresentsasalientcharacteristicthatmaycallforauniquecorporategovernancecodeinterms
of dealing with the high concentration of ownership by family-owned groups or the government. However, the basic
principles that any governance code addresses remains separation of governance from management, fairness,
transparency,accountability,riskmanagement,probityandsustainablegrowthoverlong-term.
The main regulators of corporate governance in India are the Ministry of Corporate Affairs (MCA) and the SEBI.
Although the Companies Act, 1956 provided a basic framework for regulation of all companies, the MCA vide
Companies Bill, 2012 has inserted detailed provisions to strengthen corporate governance in India. Additionally, the
ministry has issued Corporate Governance Voluntary Guidelines, 2009 to encourage highest standards of corporate
governancethroughvoluntaryadoption.
On the other hand, SEBI addresses corporate governance in all listed companies through clause 49 of the listing
agreement that contains 1) mandatory provisions - those standards which are absolutely essential and do not require
legislative amendments and 2) non mandatory provisions – those standards which are desirable but require changes
inlaw.
However, implementation of rules and regulations in letter and in spirit is the need of the hour for India to shine as an
epitomeofcorporategovernancehaven.
CorporateGovernanceinIndia:Around-up
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16. CertificateinSecuritiesLaw(CSL):
Top-notchfacultycomprisingofpractitioners,regulators, academicians
Innovativeteachingmethodsincludingcases,fieldvisits,exposuretopolicy-makers
Goodinfrastructureandspecializedlibrary
High-qualityclassmix
Convenientformat:26Saturdays(10:00amto5:00pm),deliveredatNarimanPoint,Mumbai
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Contemporarycurriculum,fromthefusionbetweenLawandEconomics
Eligibility:Graduation.BackgroundinLaworFinancewillbepreferable.
SelectionProcess: InterviewandEssay
Become a specialist in securities market laws and make career in compliance, reporting, investment banking, securities
marketoperations,consulting,legalprocessanalytics,etc.
Six-month part-time programme for working executives
NISM Bhavan, Plot No. 82, Sector 17, Vashi, Navi Mumbai - 400 703
Phone: 022 66735100-05 | Fax: 022 66735110
www.nism.ac.in
National Institute of Securities Markets
(An Educational Initiative by SEBI)
Last date for application: June 26, 2013