Overview of Securities Market

Comprised by: Dayananda Huded, Teaching Assistant, RCU, PG Centre, Jamkhandi Page 1
Unit – I
Overview of Securities Market
Organisational Structure of Financial System
Functions of Securities Market
1. Role of an Economic Barometer: Stock exchange serves as an economic barometer that is
indicative of the state of the economy. It records all the major and minor changes in the share prices.
It is rightly said to be the pulse of the economy which reflects the state of the economy.
2. Valuation of Securities or Pricing of securities: Share prices on a stock exchange are determined
by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through
which the prices of securities are determined. Such a valuation provides important instant
information to both buyers and sellers in the market. Stock market helps in the valuation of securities
based on the factors of supply and demand. The securities offered by companies that are profitable
and growth-oriented tend to be valued higher. Valuation of securities helps creditors, investors and
government in performing their respective functions.
3. Transactional Safety: The membership of a stock exchange is well-regulated and its dealings are
well defined according to the existing legal framework. This ensures that the investing public gets a
safe and fair deal on the market. Transactional safety is ensured as the securities that are traded in the
stock exchange are listed, and the listing of securities is done after verifying the company’s position.
All companies listed have to adhere to the rules and regulations as laid out by the governing body.
4. Contributor to Economic Growth: Stock exchange offers a platform for trading of securities of the
various companies. This process of trading involves continuous disinvestment and reinvestment,
which offers opportunities for capital formation and subsequently, growth of the economy. A stock
exchange is a market in which existing securities are resold or traded. Through this process of

disinvestment and reinvestment savings get channelised into their most productive investment
avenues. This leads to capital formation and economic growth.
5. Making the public aware of equity investment: Stock exchange helps in providing information
about investing in equity markets and by rolling out new issues to encourage people to invest in
securities.
6. Offers scope for speculation: By permitting healthy speculation of the traded securities, the stock
exchange ensures demand and supply of securities and liquidity. The stock exchange provides
sufficient scope within the provisions of law for speculative activity in a restricted and controlled
manner. It is generally accepted that a certain degree of healthy speculation is necessary to ensure
liquidity and price continuity in the stock market.
7. Providing Liquidity and Marketability to Existing Securities: The basic function of a stock
exchange is the creation of a continuous market where securities are bought and sold. It gives
investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to
already existing securities in the market.
8. Better Capital Allocation: Profit-making companies will have their shares traded actively, and so
such companies are able to raise fresh capital from the equity market. Stock market helps in better
allocation of capital for the investors so that maximum profit can be earned.
9. Encourages investment and savings: Stock market serves as an important source of investment in
various securities which offer greater returns. Investing in the stock market makes for a better
investment option than gold and silver.
10. Continuous market for securities: The Investors are able to invest in good securities and in case of
any risk, it enables people to switch over from one security to another. So stock markets provides a
ready and continuous opportunities for securities.
11. Stock exchange Protect investors: As only genuine companies are listed and the activities of the
stock exchange are controlled, the funds of the investors are very much protected.
12. Attracts foreign capital: Due to its dynamism and higher return on capital, the stock exchange is
capable of attracting more foreign funds. Due to this, the exchange rate of the currency will improve
when there is more trade undertaken by the government.
Securities Market and Economic Growth
 Stock markets enable companies to be traded publicly and raise capital. The transfer of capital and
ownership is traded in a regulated, secure environment.
 Stock markets promote investment. The raising of capital allows companies to grow their businesses,
expand operations and create jobs in the economy. This investment is a key driver for economic trade,
growth and prosperity.
 For investors, stock markets provide a way to invest money in order to potentially earn a share of the
company’s profits (knowing that the risk of losses exists too). Active investors and traders can easily
buy and sell their securities due to the abundant liquidity in most major stock markets.
Further
1. It provides opportunity for the public to invest their savings in attractive securities which
provide a higher return.
2. A well developed capital market is capable of attracting funds even from foreign country.
Thus, foreign capital flows into the country through foreign investments.
3. It enables the country to achieve economic growth as capital formation is promoted
through the capital market.

4. Capital market is the barometer of the economy by which you are able to study the
economic conditions of the country and it enables the government to take suitable action.
5. Capital market provides opportunities for different institutions such as commercial banks,
mutual funds, investment trust; etc., to earn a good return on the investing funds. They
employ financial experts who are able to predict the changes in the market and accordingly
undertake suitable portfolio investments.
6. Through the Press and different media, the public are informed about the prices of different
securities. This enables the public to take necessary investment decisions.
7. Capital market provides an opportunity for the investing public to know the trend of
different securities and the conditions prevailing in the economy.
8. Existing companies, because of their performance will be able to expand their industries and
also go in for diversification of business due to the capital market.
9. Creating a Bridge Between Suppliers of Capital and Users: The contact between agents
with a monetary deficit and the ones with monetary surplus can take place directly through
direct financing, but also through a financial intermediary in form of indirect financing,
which is a situation whereby specific operators facilitate the connection between the real
economy and the financial market. In this case, the financial intermediaries could be banks,
investment funds, pension funds, insurance companies, or other non-bank financial
institutions.
10. Facilitating Efficient Allocation of Scarce Financial Resources: The capital markets
facilitate the efficient allocation of scarce financial resources by offering a large variety of
financial instruments with different risk and return characteristics. This competitive pricing of
securities and large range of financial instruments allows investors to better allocate their
funds according to their respective risk and return appetites, thereby supporting economic
growth.
11. Financing Private Public Partnerships, “PPPs”: Capital markets promote PPPs, thereby
encouraging participation of private sector in productive investments. The need to shift
economic development from public to private sector to enhance economic productivity has
become inevitable as resources continue to diminish. It assists the public sector to close the
resource gap, and complement its effort in financing essential socio-economic development,
through raising long-term project-based capital. It also attracts foreign portfolio investors
who are critical in supplementing the domestic savings levels and who facilitate inflows of
foreign financial resources into the domestic economy, thereby supporting economic growth.

Profile of Indian Securities Market

National Stock Exchange of India Limited (NSE) is the leading stock exchange of India, located
in Mumbai, Maharashtra. NSE was established in 1992 as the first dematerialized electronic exchange in the
country. NSE was the first exchange in the country to provide a modern, fully automated screen-based
electronic trading system which offered easy trading facilities to investors spread across the length and
breadth of the country. Vikram Limaye is Managing Director & Chief Executive Officer of NSE.
History:
National Stock Exchange was incorporated in the year 1992 to bring about transparency in the Indian equity
markets. Instead of trading memberships being confined to a group of brokers, NSE ensured that anyone
who was qualified, experienced and met the minimum financial requirements was allowed to trade. In this
context, NSE was ahead of its time when it separated ownership and management of the exchange
under SEBI's supervision. Stock price information which could earlier be accessed only by a handful of
people could now be seen by a client in a remote location with the same ease. The paper-based settlement
was replaced by electronic depository-based accounts and settlement of trades was always done on time.
One of the most critical changes involved a robust risk management system that was set in place, to ensure
that settlement guarantees would protect investors against broker defaults.
NSE was set up by a group of leading Indian financial institutions at the behest of the Government of
India to bring transparency to the Indian capital market. Based on the recommendations laid out by the
Pherwani committee, NSE was established with a diversified shareholding comprising domestic and global
investors. The key domestic investors include Life Insurance Corporation, State Bank of India, IFCI
Limited , IDFC Limited and Stock Holding Corporation of India Limited. Key global investors include
Gagil FDI Limited, GS Strategic Investments Limited, SAIF II SE Investments Mauritius Limited, Aranda
Investments (Mauritius) Pte Limited and PI Opportunities Fund
Profile of Securities Market:
Public and Rights Issues
During 2015-16 till January 2016, 71 companies have accessed the capital market and raised
Rs. 51,612 crore compared to Rs. 11,562 crore raised through 61 issues during the
corresponding period of 2014-15. There were 62 public issues which raised Rs. 42,981 crore

and nine rights issues which raised Rs. 8,631 crore during Apr- Dec 2015. Among the public
issues, there were 50 IPOs and 12 public debt issues.
Preferential Allotments Listed at BSE and NSE
Preferential allotment also serves as an alternative mechanism of resource mobilization
wherein a listed issuer issues shares or convertible securities, to a select group of persons.
Resource Mobilisation by Mutual Funds
During April-December 2015, the total amount raised by all mutual funds was Rs.1,61,696
crore, of which, the share of private sector was 73 percent and public sector mutual funds
was 27 percent. Of the total amount mobilized in 2015-16 till January 2016, debt funds
accounted for 43.6 percent, followed growth/equity funds 43.3 percent and 11.0 percent by
balanced schemes. Further, the FoF schemes and GETFs have registered net outflows during
April-December 2015 period.
Depository Accounts
The total number of investor accounts was 143.0 lakh at NSDL and 104.2 lakh at CDSL at
the end of December 2015. In December 2015, the number of investor accounts at NSDL
and CDSL increased by 0.6 percent and 1.2 percent, respectively, over the previous month.
Investment by Mutual Funds
The total net investment in the secondary market by mutual funds was Rs. 43,707 crore in
December 2015. They invested Rs. 4,544 crore in equity and in the debt segment, mutual
funds invested Rs. 39,163 crore in December 2015. During 2015-16 (April-December), the
total net investment by mutual funds was Rs. 3,23,165 crore of which Rs. 2,60,097 crore was
in debt and Rs. 63,069 crore in equity.
Investment by Foreign Portfolio Investors (FPIs)
In December 2015, FPIs recorded net outflows amounting to Rs. 8,304 crore. There was a
net outflow in equity segment of Rs. 2,817 crore while debt segment witnessed a net outflow
of Rs. 5,488 crore. During 2015-16 (April-December 2015), the total net outflows by FPIs in
the Indian stock market was Rs. 15,313 crore, comprising of a net outflow of Rs. 18,666
crore in the equity segment and inflow of Rs. 3,354 crore from the debt segment.

SEBI Act, 1992

Functions of Board.
11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of
investors in securities and to promote the development of, and to regulate the securities market, by such
measures as it thinks fit.
(2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may
provide for - (a) regulating the business in stock exchanges and any other securities markets;
(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an
issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers,
investment advisers and such other intermediaries who may be associated with securities markets in any
manner; [(ba) registering and regulating the working of the depositories,[participants,] custodians of
securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board
may, by notification, specify in this behalf;]
(c) registering and regulating the working of [venture capital funds and collective investment
schemes],including mutual funds;
(d) promoting and regulating self-regulatory organisations;
(e) prohibiting fraudulent and unfair trade practices relating to securities markets;
(f) promoting investors' education and training of intermediaries of securities markets;
(g) prohibiting insider trading in securities;
(h) regulating substantial acquisition of shares and take-over of companies;

(i) calling for information from, undertaking inspection, conducting inquiries and audits of the [ stock
exchanges, mutual funds, other persons associated with the securities market] intermediaries and self-
regulatory organisations in the securities market;
(j) performing such functions and exercising such powers under the provisions of [...]the Securities
Contracts (Regulation) Act, 1956(42 of 1956), as may be delegated to it by the Central Government;
(k) levying fees or other charges for carrying out the purposes of this section;
(l) conducting research for the above purposes;

SECURITIES CONTRACTS (REGULATION) ACT, 1956

An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by
providing for certain other matters connected therewith.
Definitions.
In this Act, unless the context otherwise requires,—
(a) “contract” means a contract for or relating to the purchase or sale of securities;
[(aa) “corporatisation” means the succession of a recognised stock exchange, being a body of individuals
or a society registered under the Societies Registration Act, 1860 (21 of 1860), by another stock exchange,
being a company incorporated for the purpose of assisting, regulating or controlling the business of buying,
selling or dealing in securities carried on by such individuals or society;
(ab) “demutualisation” means the segregation of ownership and management from the trading rights of the
members of a recognised stock exchange in accordance with a scheme approved by the Securities and
Exchange Board of India;]
“derivative” includes—
(A) a security derived from a debt instrument, share, loan, whether secured or unsecured, risk instrument or
contract for differences or any other form of security;
(B) a contract which derives its value from the prices, or index of prices, of underlying securities;]
(b) “Government security” means a security created and issued, whether before or after the commencement
of this Act, by the Central Government or a State Government for the purpose of raising a public loan and
having one of the forms specified in clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944);
(c) “member” means a member of a recognised stock exchange;
(d) “option in securities” means a contract for the purchase or sale of a right to buy or sell, or a right to buy
and sell, securities in future, and includes a teji, a mandi, a teji mandi, a galli, a put, a call or a put and call
in securities;
(e) “prescribed” means prescribed by rules made under this Act;
(f) “recognised stock exchange” means a stock exchange which is for the time being recognised by the
Central Government under section 4;
(g) “rules”, with reference to the rules relating in general to the constitution and management of a stock
exchange, includes, in the case of a stock exchange which is an incorporated association, its memorandum
and articles of association;
[(ga) “scheme” means a scheme for corporatisation or demutualisation of a recognized stock
exchange which may provide for—
(i) the issue of shares for a lawful consideration and provision of trading rights in lieu of
membership cards of members of a recognised stock exchange;
(ii) the restrictions on voting rights;
(iii) the transfer of property, business, assets, rights, liabilities, recognitions, contracts of the
recognised stock exchange, legal proceedings by, or against, the recognised stock exchange, whether in the
name of the recognised stock exchange or any trustee or otherwise and any permission given to, or by, the
recognised stock exchange;
(iv) the transfer of employees of a recognised stock exchange to another recognised stock exchange;
(v) any other matter required for the purpose of, or in connection with, the corporatisation or
demutualisation, as the case may be, of the recognized stock exchange;]
[(gb)] “Securities Appellate Tribunal” means a Securities Appellate Tribunal established under sub-
section (1) of section 15K of the Securities and Exchange Board of India Act, 1992 (15 of 1992);]
(h) “securities” include—

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;
[(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the investors in such
schemes;]
[(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002;]
[(id) units or any other such instrument issued to the investors under any mutual fund scheme;]
(ii) Government securities;
(iia) such other instruments as may be declared by the Central Government to be securities; and
(iii) rights or interest in securities;
[(i) “spot delivery contract” means a contract which provides for,—
(a) actual delivery of securities and the payment of a price therefore either on the same day as the date of the
contract or on the next day, the actual period taken for the despatch of the securities or the remittance of
money therefore through the post being excluded from the computation of the period aforesaid if the parties
to the contract do not reside in the same town or locality;
(b) transfer of the securities by the depository from the account of a beneficial owner to the account of
another beneficial owner when such securities are dealt with by a depository;]
[(j) “stock exchange” means—
(a) any body of individuals, whether incorporated or not, constituted before corporatisation and
demutualisation under sections 4A and 4B, or
(b) a body corporate incorporated under the Companies Act, 1956 (1 of 1956) whether under a
scheme of corporatisation and demutualisation or otherwise, for the purpose of assisting, regulating or
controlling the business of buying, selling or dealing in securities.]
Reforms to Promote Investor Confidence
SEBI has come a long way since its inception as an institution regulating the Indian Capital Markets. It
has initiated a lot of reforms to make the market more safer for investors. The following are the major policy
initiatives taken by SEBI since its inception.
1. Control over the Issue of Capital:- A noteworthy activity of progression was the annulment of the
Capital Issues (Control) Act, 1947 in May 1992. In light of a legitimate concern for speculators, SEBI
issued Disclosure and Investor Protection (DIP) rules. The rules permit backers, consenting to the
qualification criteria, to issue securities the securities at advertise decided rates. The market moved from
merit based to disclosure based regulation.
2. Establishment of Regulator: A major initiative of regulation was, establishment of a statutory
autonomous agency, called SEBI, to provide reassurance that it is safe to undertake transactions in
securities.
3. Screen Based Trading: A major developmental initiative was a nation-wide on-line fully-
automated screen based trading system (SBTS) where a member can punch into the computer quantities
of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds
a matching sale or buy order from a counter party.
4. Risk management: A number of measures were taken to manage the risks in the market so that
the participants are safe and market integrity is protected. The trading cycle varied from 14 days for
specified securities to 30 days for others and settlement took another fortnight. Rolling settlement on

T+5 basis was introduced in phases. All scrips moved to rolling settlement from December 2001. T+5
gave way to T+3 from April 2002 and T+2 from April 2003.
5. Depositories Act: The earlier settlement system gave rise to settlement risk. This was due to the time
taken for settlement and due to the physical movement of paper. Further, the transfer of shares in favour
of the purchaser by the company also consumed considerable amount of time. To obviate these
problems, the Depositories Act, 1996 was passed to provide for the establishment of depositories in
securities.
6. Settlement Guarantee: A variety of measures were taken to address the risk in the market.
Clearing corporations emerged to assume counter party risk. Trade and settlement guarantee funds were
set upto guarantee settlement of trades irrespective of default by brokers. These funds provide full
novation and work as central counter party. The Exchanges /clearing corporations monitor the positions
of the brokers on real time basis. The securities market moved from T+3 settlement period to T+2
rolling settlement with effect from April 1, 2003. Further, straight through processing has been made
mandatory for all institutional trades executed on the stock exchange.
7. Securities Market Awareness: In January 2003, SEBI launched a nation-wide Securities
Market Awareness Campaign that aims at educating investors about the risks associated with the market
as well as the rights and obligations of investors.
8. Green Shoe Option- A greenshoe option is an over-allotment option. In the context of an initial public
offering (IPO), it is a provision in an underwriting agreement that grants the underwriter the right to sell
investors more shares than initially planned by the issuer if the demand for a security issue proves higher
than expected. As a stabilization tool for post listing price of newly issued shares, SEBI has introduced
the green shoe option facility in IPOs.
9. Securities Lending and Borrowing:- A clearing enterprise/clearing house, after enlistment with SEBI,
under the SEBI plot for Securities Lending and Borrowing, as an endorsed middle person, may acquire
securities for meeting deficits in the settlement, for the benefit of the individuals. under the SEBI scheme
for Securities Lending and Borrowing, as an approved intermediary, may borrow securities for meeting
shortfalls in settlement, on behalf of the members.
10. Corporate Governance – To improve the standards of corporate governance, SEBI amended Clause 49 of
the Listing Agreement. The major changes in the new Clause 49 include amendments/additions
to provisions relating to definition of independent directors, strengthening the responsibilities of
audit committees, improving quality of financial disclosures, including those pertaining to related
party transactions and proceeds from public/rights/preferential issues, requiring Boards to adopt formal
code of conduct, requiring CEO/CFO certification of financial statements and improving disclosures
to shareholders. Certain non-mandatory clauses like whistle blower policy and restriction of the term
of independent directors have also been included.
11. Debt Listing Agreement- In order to further develop the corporate debt market, SEBI prescribed a model
debenture listing agreement for all debenture securities issued by an issuer irrespective of the mode of
issuance.
12. Gold Exchange Traded Funds in India- Pursuant to the announcement made by the Honourable Finance
Minister in his Budget Speech for 2005-06, SEBI appointed a Committee for the introduction of Gold
Exchange Traded Fund (GETF) in India. Based on the recommendations of the said Committee, the
SEBI (Mutual Funds) Regulations, 1996 were amended and notification was issued on January 12, 2006
permitting mutual funds to introduce GETFs in India subject to certain investment restrictions.
Gold ETF, or Exchange Traded Fund, is a commodity-based Mutual Fund that invests in assets like
gold. These exchange-traded funds perform like individual stocks and are traded similarly on the
stock exchange.

Exchange-traded funds represent assets, in this case, physical gold, both in dematerialised and paper
form. An investor invests in stocks instead of the actual metal, and once it is traded, they are credited
with the unit’s equivalent in cash instead of actual gold.
One unit of gold ETF is equal to one gram of gold at the price that you purchased it. These units are
bought and sold on the cash market of stock exchanges, just like a company stock.
13. Guidelines for Issue of Indian Depository Receipts (IDRs)- SEBI issued Guidelines on disclosures and
related requirements for companies desirous of issuing IDRs in India. SEBI also prescribed the listing
agreement for entities issuing IDRs.
14. Grading of Initial Public offerings (IPOs)- Grading of all IPOs was made mandatory. The grading would
be done by credit rating agencies, registered with SEBI. It would be mandatory to obtain grading from at
least one credit rating agency. The grading would be disclosed in the prospectus, abridged prospectus
and in every advertisement for IPOs.
15. Introduction of Fast Track Issuances- To enable compliant listed companies to access Indian
primary market in a time effective manner through follow-on public offerings and rights issues, SEBI
introduced fast track issue mechanism. To make the issuance process fast, the earlier requirement of
filing draft offer documents was amended and the need to file draft offer documents with SEBI and the
stock exchanges was done away with.
16. Mandatory Requirement of Permanent Account Number (PAN) for All Transactions in the
Securities Market- SEBI stipulated that PAN would be the sole identification number for all participants
in the securities market, irrespective of the amount of transaction with effect from July 02, 2007. The
objective was to strengthen the ‘Know Your Client’ (KYC) norms through a single identification number
for all participants in the securities market for facilitating sound audit trail.
17. Corporate Debt Market- In order to develop a sound corporate debt market in India, SEBI took a number
of policy initiatives with respect to the following areas: (i) setting up of reporting platforms for corporate
bonds, (ii) setting up of trading platform for corporate bonds, (iii) issues pertaining to trading in
corporate bonds, (iv) making amendments to the listing agreement for debentures, (v) issuing securitised
debt instruments regulations, (vi) evolving policy guidelines on debenture trustees, (vii) introducing
Repos in corporate bonds, (viii) facilitating setting up of quote dissemination platforms, (ix) simplifying
corporate bond issuance norms and (x) framing of draft issue and listing regulations for corporate bonds.
Etc.

Role of IOSCO - International Organisation of Securities Commissions.
The International Organization of Securities Commissions (IOSCO) is a globally acknowledged body that
develops international standards which are considered the best practices in securities markets regulation.
IOSCO was established in 1983 and it is based in Madrid, Spain. Currently, It has 224 (as of January 2019)
members which include authorities and organizations that regulate the securities markets. Its role is to
develop, implement, and promote adherence to internationally recognized standards for securities regulation
in order to enhance securities markets’ transparency and protect its investors. In addition, IOSCO plays a
role in promoting cooperation among its member concerning fighting financial crimes. Indeed, IOSCO
played an integral role in responding to the financial crises that affected the global financial markets. IOSCO
defines the following as the objectives it intends to achieve through its members.
 To cooperate in developing, implementing and promoting adherence to internationally recognized
and consistent standards of regulation, oversight and enforcement in order to protect investors,
maintain fair, efficient and transparent markets, and seek to address systemic risks
 To enhance investor protection and promote investor confidence in the integrity of securities
markets, through strengthened information exchange and cooperation in enforcement against
misconduct and in supervision of markets and market intermediaries; and
 To exchange information at both global and regional levels on their respective experiences in order
to assist the development of markets, strengthen market infrastructure and implement appropriate
regulation.
Principles Relating to the Regulator
1 The responsibilities of the Regulator should be clear and objectively stated.
2 The Regulator should be operationally independent and accountable in the exercise of its functions
and powers.
3 The Regulator should have adequate powers, proper resources and the capacity to perform its
functions and exercise its powers.
4 The Regulator should adopt clear and consistent regulatory processes.
5 The staff of the Regulator should observe the highest professional standards, including appropriate
standards of confidentiality.
6 The Regulator should have or contribute to a process to monitor, mitigate and manage systemic
risk, appropriate to its mandate – new principle.
7 The Regulator should have or contribute to a process to review the perimeter of regulation regularly
– new principle.
Principles for Cooperation in Regulation
13 The Regulator should have authority to share both public and non-public information with
domestic and foreign counterparts.
14 Regulators should establish information sharing mechanisms that set out when and how they will
share both public and non-public information with their domestic and foreign counterparts.
15 The regulatory system should allow for assistance to be provided to foreign Regulators who need
to make inquiries in the discharge of their functions and exercise of their powers.
Principles for Issuers
16 There should be full, accurate and timely disclosure of financial results, risk and other information
that is material to investors’ decisions.

17 Holders of securities in a company should be treated in a fair and equitable manner.
18 Accounting [and auditing] standards used by issuers to prepare financial statements should be of a
high and internationally acceptable quality.
Principles for Auditors, Credit Ratings Agencies, and Other Information Service Providers
19 Auditors should be subject to adequate levels of oversight – new principle.
20 Auditors should be independent of the issuing entity that they audit – new principle.
21 Audit standards should be of a high and internationally acceptable quality.
22 Credit rating agencies should be subject to adequate levels of oversight. The regulatory system
should ensure that credit rating agencies whose ratings are used for regulatory purposes are subject
to registration and ongoing supervision – new principle.
Principles for Market Intermediaries
29 Regulation should provide for minimum entry standards for market intermediaries.
30 There should be initial and ongoing capital and other prudential requirements for market
intermediaries that reflect the risks that the intermediaries undertake.
31 Market intermediaries should be required to establish an internal function that delivers compliance
with standards for internal organization and operational conduct, with the aim of protecting the
interests of clients and their assets and ensuring proper management of risk, through which
management of the intermediary accepts primary responsibility for these matters.
32 There should be procedures for dealing with the failure of a market intermediary in order to
minimize damage and loss to investors and to contain systemic risk.
Principles for Secondary Markets
33 The establishment of trading systems including securities exchanges should be subject to
regulatory authorization and oversight.
34 There should be initial and ongoing capital and other prudential requirements for market
intermediaries that reflect the risks that the intermediaries undertake.
35 There should be ongoing regulatory supervision of exchanges and trading systems which should
aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike
an appropriate balance between the demands of different market participants.
36 Regulation should be designed to detect and deter manipulation and other unfair trading practices.
37 Regulation should aim to ensure the proper management of large exposures, default risk and
market disruption.

Overview of Securities Market

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie Overview of Securities Market

Ähnlich wie Overview of Securities Market (20)

Mehr von Dayanand Huded

Mehr von Dayanand Huded (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Overview of Securities Market