IM MODULE V

WELCOME BACK DEAR IM
LEARNERS……..
INSTITUTIONAL
INVESTMENTS
MODULE-V
WHAT ARE IN MODULUE 5?
ABOUT SECURITIES EXCHANGE
BOARD OF INDIA (SEBI)
• The Securities and Exchange Board of India
(SEBI) is the regulatory authority in India
established under Section 3 of SEBI Act, 1992
under an act of Parliament.
• Head Quarter in Mumbai
• 4 offices, Delhi, Calcutta, Ahmedabad, Chennai
• Controller of Capital Market
• 20 Departments
ROLE OF SECURITIES EXCHANGE
BOARD OF INDIA (SEBI)
• The Preamble of the Securities and Exchange
Board of India describes the basic functions of
the Securities and Exchange Board of India as
“...to 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”
WHY DO SEBI EXISTS?
• Protecting the interests of investors in

securities
• Promoting the development of the
securities market
• Regulating the business in stock
exchanges and any other securities
markets.
GUESS WHO IS THIS?????
BOARD OF MEMBERS
• The chairman who is nominated by the Union

Government of India.
• Two members, i.e., Officers from Union Finance
Ministry.
• One member from the Reserve Bank of India.
• The remaining five members are nominated by
the Union Government of India, out of them at
least three shall be whole-time members.
MAIN FUNCTIONS
• Regulating business in stock exchange

• Working of sub brokers, share transfer agents,
bankers to the issue etc..,
• Promoting and regulating working self regulatory
organisations
• Prohibiting fraudulent and unfair trade practices
• Promoting investors education
• Prohibiting insider training
SEBI’S ROLE IN THE PRIMARY
MARKET:-
• Entry Norms
• Promoters’ Contribution
• Disclosure
• Book building
• Allocation of shares
• Market Intermediaries
SEBI’S ROLE IN THE
SECONDARY MARKET:-
• Governing Body
• Infrastructure
• Settlement and Clearing
• Debt Market segment
• Price stabilisation
• Delisting
• Brokers and SEBI
• Insider Training
IMPORTANT REGULATION OF INDIAN SECURITIES MARKETS:
•
• SEBI (Stock Broker and Sub-Brokers) Regulation,

1992
• SEBI (Prevention of Insider Trading)
Regulations, 1992
• The Prevention of Money laundering Act, 2002
IMPORTANT REGULATION OF INDIAN
SECURITIES MARKETS
• SEBI (Prohibition of Fraudulent and Unfair Trade

Practices relating to the Securities
Market) Regulations 2003.
• SEBI (Custodian of Securities) Regulation, 1996
• SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997
SEBI ACT, 1992
• The SEBI Act, 1992 was enacted to empower

SEBI with statutory powers for
• (a) protecting the interests of investors in
securities,
• (b) promoting the development of the securities
market, and
• (c) regulating the securities market.
SECURITIES CONTRACTS
(REGULATION) ACT, 1956
• It gives Central Government regulatory
jurisdiction over
• (a) stock exchanges through a process of
recognition and continued supervision,
• (b) contracts in securities, and
• (c) listing of securities on stock exchange
DEPOSITORIES ACT, 1996
• The Depositories Act passed by Parliament

received the President's assent on August 10,
1996.
• It was notified in a Gazette on August 12 of the
same year.
• The Act enables the set-ting up of multiple

depositories in the country. This was to ensure that
there is competition in the service and more than
one depository in operation.
• The Depositories Act facilitated the establishment of
the two depositories in India viz., NSDL and CDSL.
Only a company registered under the Companies
Act, 1956 and sponsored by the specified category
of institutions can set up a depository in India.
• A depository established under the Depositories

Act can provide any service connected with
recording of allotment of securities or transfer
of ownership of Securi-ties in the record of a
depository.
• A depository however, cannot directly open

accounts and provide services to clients. Any
person willing to avail of the services of the
depository can do so by entering into an
agreement with the depository through any of
its Depository Participants.
• The rights and obligations of depositories,
depository participants, issuers and beneficial
owners are spelt out clearly in this Act.
COMPANIES ACT, 1956
• The Companies Act of 1956 deals with issue,

allotment and transfer of securities and various
aspects relating to company management.
COMPANIES ACT, 1956
• It provides for standard of disclosure in

public issues of capital, particularly in the
fields of company management and projects,
information about other listed companies
under the same management, and
management perception of risk factors.
COMPANIES ACT, 1956
• It also regulates underwriting, the use of

premium and discounts on issues, rights and
bonus issues, payment of interest and
dividends, providing annual reports and other
information.
INSIDER TRADING
• SEBI (Prohibition of Insider Trading) Regulations, 1992
• Insider Trading is considered as an offence and is hence
prohibited as per the SEBI (Prohibition of Insider Trading)
Regulations, 1992. The same was amended in the year
2003.
• The act prohibits an insider from dealing (on his behalf or on
behalf of any other person) in securities of a company listed
on any stock exchange, when in possession of any
unpublished price sensitive information.
INSIDER TRADING
• Price sensitive information means any

information which is related directly or
indirectly to a company and which if published
is likely to materially affect the price of
securities of a company.
INSIDER TRADING
• It includes information like periodical financial

results of the company, intended declaration of
dividends (both interim and final), issue of
securities or buy-back of securities, any major
expansion plans or execution of new projects,
amalgamation, merger or takeovers, disposal of
the whole or substantial part of the undertaking
and significant changes in policies, plans or
operations of the company
------------ INVESTMENTS ARE
SUBJECT TO MARKET RISKS.
PLEASE READ THE OFFER DOCUMENT
CAREFULLY BEFORE INVESTING.
MUTUAL FUNDS
• Mutual Fund (MF) is a fund established in the

form of a Trust, to raise monies through sale of
units to the public or a section of the public
under one or more schemes for investing in
Securities, including Money Market Instruments.
• [Trust Deed should be duly registered under the
Indian Registration Act, 1908.]
MUTUAL FUND-DEFINITION
• The SEBI (Mutual Funds) Regulations 1993

define a mutual fund (MF) as a fund
established in the form of a trust by a sponsor
to raise monies by the Trustees through the
sale of units to the public under one or more
schemes for investing in securities in
accordance with these regulations.
TERMS UNDER MUTUAL FUND
• AMC
• NAV
• FUND MANAGER
• ASSET ALLOCATION
• SIP
• AUM
• LOAD:- Entry Load & Exit Load
MUTUAL FUNDS
Activities involved:
(i) Formulation of Scheme: A Mutual Fund
formulates a scheme with a specified objective to
meet the investment needs of various investors i.e.
High Return Scheme, Fixed Return Scheme etc.
The Scheme should be approved by the Trustees
and filed with SEBI.
(ii) Sale of Units: Units under the scheme are sold
to the investors to collect funds from them.
MUTUAL FUNDS
(iii) Investment by AMC:

An AMC can invest in any of the schemes of a
MF only if full disclosure of its intention to
invest has been made in the offer documents.
An AMC shall not be entitled to charge any fees
on its investment in that scheme.
MUTUAL FUNDS
• (iv) Portfolio Creation:

Resources so received from investors are pooled
to create a diversified portfolio of securities by
investing the money in instruments, which are in
line with the objectives of respective schemes.
ROLE OF MUTUAL FUND IN FINANCIAL
MARKET
• Organized Investments
• Evolution of Stock Markets
• Household Savings
THE ADVANTAGES OF INVESTING IN
MUTUAL FUNDS
• Professional Management
• Diversification
• Convenient Administration
• Return Potential
• Low Costs
• Liquidity
• Transparency
RISK AND RETURN LEVEL IN
MFS
RISK AND RETURN LEVEL IN
MFS
MERCHANT BANKERS
Meaning:
As per SEBI , Merchant Banker may be defined as any
person who is engaged in the business of issue management
either by making arrangements regarding selling, buying or
subscribing to the securities as manager, consultant, advisor
or rendering corporate advisory service in relation to such
issue
management.
MERCHANT BANK
• Merchant bank may be defined as a kind of financial
institution that provides a variety of services such as:
(i) New issue management
(ii) Investment banking
(iii) Management of customer security,
(iv) Project promotion & project finance
MERCHANT BANKERS
DEPOSITORIES & DEPOSITORY
PARTICIPANTS
Meaning:
A depository can be defined as an institution where the
clients / investors can keep their financial assets such as
equities, bonds, mutual fund units etc in the dematerialized
form and transactions could be effected on it.
FUNCTIONS OF DP
• There are two Depositories in India, Central Depository

Services Limited (CDSL) and National Securities Depository
Limited (NSDL).
• Established under the Depositories Act, for the purpose of
facilitating dematerialization of securities and assisting in
trading of securities in the demat form.
• The Depository provides its services to clients through its
agents called depository participants (DPs).
FUNCTIONS…
• Besides providing custodial facilities and

dematerialization, depositories are offering various
transactional services to its clients to effect buying,
selling, transfer of shares etc.
Through a system of paperless securities, depositories
have made the going easier to other institutions as
well such as Stock Exchanges and its clearing houses,
stock broking firms, equity issuing companies, share
transfer agents etc.
FUNCTIONS CONT…..
• These agents are appointed by the depository

with the approval of SEBI.
• According to SEBI regulations, amongst others,
three categories of entities, i.e. Banks, Financial
Institutions and SEBI registered trading
members can become DPs.
NSDL (NATIONAL SECURITIES
DEPOSITORY LIMITED)
• Established in 1996
• Head Quartered in Mumbai
• Promoted by IDBI, UTI and NSE
• Currently 276 business partners with31,205
service centres
• Main functions are Dematerialisation,
Rematerialisation, account maintenance etc..,
CDSL CENTRAL DEPOSITORY
SERVICES (INDIA) LIMITED.
• Established in 1999.
• Promoted by BSE
• Head quartered in Mumbai
• With 601 participants with19,492 locations

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WELCOME BACK DEAR IM

• Protecting the interests of investors in

• The chairman who is nominated by the Union

• Regulating business in stock exchange

• SEBI (Stock Broker and Sub-Brokers) Regulation,

• SEBI (Prohibition of Fraudulent and Unfair Trade

• The SEBI Act, 1992 was enacted to empower

• The Depositories Act passed by Parliament

• The Act enables the set-ting up of multiple

• A depository established under the Depositories

• A depository however, cannot directly open

• The Companies Act of 1956 deals with issue,

• It provides for standard of disclosure in

• It also regulates underwriting, the use of

• Price sensitive information means any

• It includes information like periodical financial

• Mutual Fund (MF) is a fund established in the

• The SEBI (Mutual Funds) Regulations 1993

(iii) Investment by AMC:

• (iv) Portfolio Creation:

• There are two Depositories in India, Central Depository

• Besides providing custodial facilities and

• These agents are appointed by the depository

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