(Annual Report) Rules, 1994, ЧШ

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This Report is in conformity with the format as per the Securities and Exchange Board of India (Annual Report) Rules, 1994, ęȱȱĜȱ £ĴȱȱȱŝǰȱŗşşŚǯ

1 2 3 4 MEMBERS OF THE BOARD (As on March 31, 2013)

Appointed under Section 4(1) (a) of the SEBI Act, 1992 (15 of 1992)

U. K. SINHA CHAIRMAN

Appointed under Section 4(1) (d) of the SEBI Act, 1992 (15 of 1992)

PRASHANT SARAN WHOLE TIME MEMBER

RAJEEV K. AGARWAL WHOLE TIME MEMBER

S. RAMAN WHOLE TIME MEMBER

V. K. JAIRATH PART TIME MEMBER

P. C. CHHOTARAY PART TIME MEMBER

Nominated under Section 4(1) (b) of the SEBI Act, 1992 (15 of 1992)

DR. ARVIND MAYARAM Secretary Ministry of Finance ȱȱȱě Government of India

NAVED MASOOD Secretary ¢ȱȱȱě Government of India

Nominated under Section 4(1) (c) of the SEBI Act, 1992 (15 of 1992)

ANAND SINHA Deputy Governor ȱȱȱ ȳ

5 6 MEMBERS OF THE SEBI BOARD (As on March 31, 2013)

U. K. SINHA Chairman

PRASHANT SARAN RAJEEV K. AGARWAL S. RAMAN V. K. JAIRATH Whole Time Member Whole Time Member Whole Time Member Part Time Member

P. C. CHHOTARAY DR. ARVIND MAYARAM NAVED MASOOD ANAND SINHA Part Time Member Secretary Secretary Deputy Governor Ministry of Finance Ministry of Corporate Reserve Bank of India Department of Economic ě ě Government of India Government of India 7 8 CHAIRMAN, WHOLE TIME MEMBERS AND EXECUTIVE DIRECTORS

Left to Right : Ĵ : Shri S. Raman, Whole Time Member; Shri Prashant Saran, Whole Time Member; Shri U. K. Sinha, Chairman; Shri Rajeev K. Agarwal, Whole Time Member. Standing : Shri S. Raman, Executive Director; Shri R. K. Padmanabhan, Executive Director; Shri SVMD Rao, Executive Director; Shri Ananta Barua, Executive Director; Shri S. Ravindran, Executive Director; Shri J Ranganayakulu, Executive Director; Shri P K Nagpal, Executive Director.

9 CONTENTS

Page No.

10 CONTENTS

Page No. List of Boxes ...... vii List of Tables...... viii List of Charts ...... xiii List of Abbreviations...... xiv

PART ONE: POLICIES AND PROGRAMMES 1. GENERAL MACRO-ECONOMIC ENVIRONMENT...... 1 2. REVIEW OF POLICIES AND PROGRAMMES...... 11 I. Primary Securities Market...... 11 II. Secondary Securities Market...... 18 III. Corporate Debt Market...... 33 IV. Mutual Funds ...... 34 V. Alternative Investment Funds ...... 41 VI. Investment Advisers ...... 41 VII. Foreign Institutional Investors ...... 41 VIII. Takeovers...... 44 IX. Investor Assistance and Education...... 45 X. Legal Framework...... 45 XI. Retrospect and Prospects...... 46

PART TWO: TRENDS AND OPERATIONS IN SECURITIES MARKETS

1. PRIMARY SECURITIES MARKET ...... 51 I. Resource Mobilisation through Public and Rights Issues ...... 51 II. Resource Mobilisation through QIP and IPP...... 57 III. Resource Mobilisation through Preferential Allotment ...... 58 IV. Resource Mobilisation through Private Placement in Corporate Debt ...... 59

2. SECONDARY SECURITIES MARKET...... 60 I. Equity Market in India ...... 60 II. Performance of Major Stock Indices and Sectoral Indices...... 64 III. Turnover in the Indian Stock Market...... 66 IV. Market Capitalisation...... 68 V. Stock Market Indicators...... 70

i CONTENTS

Page No. VI. Volatility in Stock Markets...... 73 VII. Trading Frequency ...... 75 VIII. Activities of Stock Exchanges ...... 76 IX. Dematerialisation...... 77 X. Derivatives Segment...... 80

3. TRENDS IN THE BOND MARKET...... 89 I. Corporate Bond Market...... 89 II. Wholesale Debt Market ...... 91

4. MUTUAL FUNDS...... 92

5. PORTFOLIO MANAGEMENT...... 98

6. FOREIGN INSTITUTIONAL INVESTMENT...... 99

7. ALTERNATIVE INVESTMENT FUNDS...... 104

8. CORPORATE RESTRUCTURING...... 105

PART THREE: REGULATION OF SECURITIES MARKET

1. INTERMEDIARIES ...... 107 I. Streamlining of Registration Process of Intermediaries...... 107 II. Registered Intermediaries Other than Stock Brokers and Sub-brokers...... 107 III. Registration of Stock Brokers...... 108 IV. Registration of Sub-brokers...... 112 V. Recognition of Stock Exchanges...... 112 VI. Memorandum of Understanding (MoU) between Stock Exchanges ...... 113 VII. Registration of Foreign Institutional Investors and Custodians of Securities...... 113 VIII. Registration of Collective Investment Schemes...... 114 IX. Registration of Mutual Funds...... 114 X. Registration of Venture Capital Funds...... 115 XI. Fees and Other Charges ...... 115

2. CORPORATE RESTRUCTURING...... 117 I. Substantial Acquisition of Shares and Takeovers...... 117 II. Buy-back...... 117

ii CONTENTS

Page No. 3. SUPERVISION ...... 118 I. Promotion and Regulation of Self Regulatory Organisations...... 118 II. Inspection of Market Intermediaries ...... 119 III. Inspection of Depositories...... 120 IV. Inspection of Stock Exchanges...... 121 V. Prevention of Money Laundering...... 121

4. SURVEILLANCE...... 124 I. Market Surveillance Mechanism...... 124 II. Integrated Market Surveillance System ...... 125 III. Data Warehousing and Business Intelligence System...... 125 ȱ ǯȱ ęȱȱȱȱŘŖŗŘȬŗř ...... 125 V. Surveillance Actions ...... 125 VI. Surveillance Measures...... 126 VII. Enforcement Actions ...... 127

5. INVESTIGATION...... 130 I. Initiation of Investigation ...... 130 II. Process of Investigation ...... 131 III. Trends in Investigation Cases...... 131 IV. Regulatory Action...... 132 V. Follow-up of Investigations ...... 136

6. ENFORCEMENT OF REGULATIONS...... 136 I. Enforcement Mechanisms ...... 136 II. Enquiry and Adjudication ...... 139 III. Regulatory Actions against CISs...... 140

7. PROSECUTION ...... 143 I. Trends in Prosecution ...... 143 II. Nature of Prosecution...... 146 III. Disposal of Prosecution Cases...... 146

8. LITIGATIONS, APPEALS AND COURT PRONOUNCEMENTS...... 146

iii CONTENTS

Page No. 9. CONSENT AND COMPOUNDING ...... 148

10. INVESTOR ASSISTANCE AND EDUCATION ...... 148 I. Redressal of Investor Grievances ...... 148 II. SEBI Complaints Redress System ...... 150 III. Regulatory action against companies and their directors for Non-redressal of investor grievances...... 150 ȱ ǯȱ ȱȱȬȱę ...... 151 V. SEBI Toll Free Helpline ...... 152 VI. Investor Assistance ...... 153 VII. Investor Education – Multimedia Campaign...... 153 VIII. Investor Awareness Programs/ Workshops ...... 153 IX. Visit to SEBI ...... 156

11. RESEARCH ACTIVITIES ...... 156 I. Research Inputs...... 157 II. Market Interactions...... 157 III. Risk Management ...... 158

PART FOUR: REGULATORY CHANGES 1. REGULATORY DEVELOPMENTS ...... 159 I. New Regulations...... 159 II. Amendments to Existing Rules/ Regulations ...... 163

2. SIGNIFICANT COURT PRONOUNCEMENTS...... 168 I. Supreme Court ...... 168 II. High Court...... 170 III. Securities Appellate Tribunal ...... 173

PART FIVE: ORGANISATIONAL MATTERS 1. SEBI BOARD ...... 178

2. AUDIT COMMITTEE...... 178

3. ORGANISATION RESTRUCTURING CELL ...... 179

iv CONTENTS

Page No. ȱ ǯȱ ȱĜ ...... 179 II. Redesigning SEBI's Role ...... 180

4. HUMAN RESOURCES...... 180 ȱ ǯȱ ěȱǰȱȱȱ...... 181 ȱ ǯȱ ę ...... 181 III. Promotions ...... 181 ȱ ǯȱ ȱȱȱĜ ...... 181 V. Job Rotation ...... 181 ȱ ǯȱ ¢ȱĴ...... 182 VII. Training and Development ...... 182 VIII. Internship...... 183 IX. Extracurricular activities within SEBI ...... 183 X. Prizes won...... 183 XI. Initiatives in the realm of corporate social responsibility...... 183 XII. Scheme for recognizing and rewarding academic excellence of children of employees...... 183

5. NATIONAL INSTITUTE OF SECURITIES MARKETS ...... 183 I. School for Securities Education and School for Securities Information and Research ...... 183 II. School for Investor Education and Financial Literacy ...... 185 III. School for Regulatory Studies and Supervision...... 186 ȱ ǯȱ ȱȱęȱȱ ...... 186 ȱ ǯȱ ȱȱ ȱȱȱ¢ȱĴ ...... 188

6. VIGILANCE CELL...... 189

7. PROMOTION OF OFFICIAL LANGUAGE ...... 189 I. Bilingualisation ...... 189 II. Rajbhasha Competitions and Functions Correspondence in Hindi...... 189

III. Aaj Ka Shabd...... 189 IV. Hindi Noting and Hindi Quotes...... 189 V. Rajbhasha Meetings and Seminars...... 190

v CONTENTS

Page No. VI. Hindi Magazine ...... 190 VII. Information Technology and Hindi...... 190 VIII. Investor Website and SCORES ...... 190 ȱ ǯȱ ȱĜ ...... 190

8. INFORMATION TECHNOLOGY...... 190 I. Strengthening IT Security...... 190 II. Implementation of New Web-Mail...... 190 III. Implementation of two factor authentication for secured access to SEBI Web applications...... 191 IV. Internet Connectivity to Disaster Recovery Site Chennai ...... 191 ȱ ǯȱ ȱĴȱȱȱ ȱ ȱ ȱȱ ȱȱĜ ...... 191 VI. Enterprise Wide Portal ...... 191

9. INTERNATIONAL CO-OPERATION...... 191 I. Association with IOSCO...... 192 II. Association with G20/FSB ...... 196 III. Joint Forum...... 196 IV. Bilateral Engagements ...... 167 V. Ministry References- Contribution to various International Treaties and Dialogues ...... 197 VI. Participation in the International Programs...... 197 VII. MMoU and MoU Requests ...... 198 VIII. Foreign Delegations/Dignitaries to SEBI ...... 198 IX. Study Tours for Overseas Regulators ...... 198

10. PARLIAMENT QUESTIONS ...... 198

11. RIGHT TO INFORMATION ACT...... 199

CHRONOLOGY OF MAJOR POLICY INITIATIVES BY SEBI...... 202

vi LIST OF BOXES

Box No. Name Page No. Page No. 1.1 Business Responsibility Report...... 13

1.2 Public issues in electronic form and use of nationwide broker ȱ ȱ ȱȱȱ¡ȱȱĴȱȱ ...... 15

1.3 Single One Time KYC...... 19

1.4 Dedicated Debt segment on stock exchanges...... 28

1.5 Pre-trade Risk Controls ...... 30

1.6 Periodic Call Auction for Illiquid scrips and Extension of Pre-Open Call Auction Session ...... 31

2.1 Impact Analysis of policy measures introduced in Primary Market ...... 56

ȱ řǯŗȱ ȱȱ ęȱȱęȱ ...... 123

vii LIST OF TABLES

Table No. Name Page No. Page No.

1.1 National Income (at 2004-05 prices) ...... 2 1.2 GDP (at Factor Cost) by Economic Activity (at 2004-05 prices)...... 3 1.3 Index of Industrial Production...... 4 1.4 Gross Domestic Savings and Investment ...... 6 1.5a Demat Statistics...... 10 1.5b No. of Listed Companies...... 10 1.6 Growth of Turnover in Various Segments in Indian Stock Markets ...... 10 1.7 Assets under the Custody of Custodians...... 11 2.1 Resource Mobilisation through Public and Rights Issues ...... 51 2.2 SME Platform ...... 52 2.3 Sector-wise Resource Mobilisation ...... 53 2.4 Size-wise Resource Mobilisation...... 54 2.5 Mega Issues in 2012-13 ...... 55 2.6 Industry-wise Resource Mobilisation...... 57 2.7 Resource Mobilisation through QIP and Conforming to MPS through IPP...... 58 ȱ ŘǯŞȱ ěȱȱȱȱȱ¡ȱȱȱȱȱ...... 58 2.9 Resource Mobilisation through Preferential Allotment ...... 59 2.10 Private Placement of Corporate Bonds Reported to BSE and NSE...... 59 2.11 Major Indicators of Indian Stock Markets...... 62 2.12 Major Stock Indices and their Percentage Variation...... 64 2.13 Sectoral Stock Indices and their Returns...... 65 2.14 Exchange-wise Cash Segment Turnover ...... 66 2.15 Turnover at BSE and NSE: Cash Segment...... 67 2.16 City-wise Turnover of Top 20 Cities in Cash Segment during 2012-13 ...... 68 2.17 Market Capitalisation at BSE...... 69 2.18 Market Capitalisation at NSE...... 70 2.19 Select Ratios Relating to Stock Market ...... 71 2.20 Price to Earnings Ratio ...... 71 2.21 Price to Book-Value Ratio...... 72 2.22 Average Daily Volatility of Benchmark Indices ...... 73 2.23 Trends in Daily Volatility of International Stock Market Indices during 2012-13 74

viii LIST OF TABLES

Table No. Name Page No. Page No.

2.24 Trading Frequency of Listed Stocks...... 75 2.25 Share of Brokers, Securities and Participants in Cash Market Turnover...... 76 2.26 Trading Statistics of Stock Exchanges...... 77 2.27 Turnover of Subsidiaries of Stock Exchanges...... 78 2.28 Depository Statistics...... 78 2.29 Depository Statistics: Debenture/Bonds and Commercial Paper ...... 79 2.30 Cities According to Number of DP Locations: Geographical Spread ...... 79 2.31 Trends in Turnover and Open Interest in Equity Derivatives Segment ...... 81 2.32 Product-wise Derivatives Turnover at NSE and BSE...... 82 2.33 Trends in Index Futures at NSE and BSE ...... 83 2.34 Trends in Single Stock Futures at NSE and BSE...... 84 2.35 Trends in Index Options at NSE and BSE...... 84 2.36 Trends in Stock Options at NSE and BSE ...... 85 2.37 Shares of Various Classes of Members in Derivatives Turnover at NSE and BSE...... 85 2.38 Trends in Currency Derivatives Segment ...... 87 2.39 Product-wise Market Share in Currency Derivatives Volume ...... 88 2.40 Trends in Interest Rate Derivatives at NSE...... 88 2.41 Secondary Market: Corporate Bond Trades...... 90 ȱ ŘǯŚŘȱ Ĵȱȱȱ ...... 90 2.43 Business Growth on the Wholesale Debt Market Segment of NSE...... 91 2.44 Instrument-wise Share of Securities Traded in Wholesale Debt Market Segment of NSE ...... 91 2.45 Share of Participants in Turnover of Wholesale Debt Market Segment of NSE ...... 92 2.46 Mobilisation of Resources by Mutual Funds...... 93 2.47 Sector-wise Resource Mobilisation by Mutual Funds during 2012-13...... 94 2.48 Scheme-wise Resource Mobilisation and Assets under Management by Mutual Funds as on March 29, 2013...... 95 2.49 Number of Schemes by Investment Objective as on March 29, 2013...... 96 2.50 Trends in Transactions on Stock Exchanges by Mutual Funds...... 97 ȱ Řǯśŗȱ ȱȱĴȱȱȱȱȱȱȱȱřŗǰȱŘŖŗř...... 98

ix LIST OF TABLES

Table No. Name Page No. Page No.

ȱ ŘǯśŘȱ ȱȱĴȱȱȱȱȱȱȱ as on March 31, 2013...... 98 2.53 Assets Managed by Portfolio Managers...... 99 2.54 Investment by Foreign Institutional lnvestors...... 100 2.55 Investments by Mutual Funds and Foreign Institutional lnvestors ...... 100 2.56 QFI Investments during 2012-13...... 101 2.57 Allocation of Debt Investment limits to FIIs and Sub-accounts during 2012-13 101 2.58 Debt Utilisation Status as on March 31, 2013 ...... 102 2.59 Notional Value of Open Interest of Foreign Institutional investors in Derivatives during 2012-13...... 103 2.60 Notional Value of Participatory Notes (PNs) Vs Assets Under Management of FIIs ...... 103 2.61 Cumulative Net Investments by VCFs and FVCIs ...... 104 2.62 Category-wise Investors in VCFs...... 105 2.63 Trends in Corporate Restructuring ...... 106 3.1 Registered Intermediaries other than Stock Brokers and Sub Brokers ...... 108 3.1a Intermediaries other than Stock Brokers & Sub-brokers in the Process of Registration ...... 108 3.2 Registered Stock Brokers...... 109 3.2a Stock Broker and Sub-Broker Applications under the Process of Registration . 109 ȱ řǯřȱ ęȱȱȱȱȱȱȱȱȱȱȱ ... 110 3.4 Number of Registered Members in Equity Derivatives Segment ...... 111 3.5 Number of Registered of Members in Currency Derivatives Segment...... 111 3.6 Registered Sub-Brokers...... 112 3.7 Stock Exchanges with Permanent Recognition...... 113 3.8 Renewal of Recognition Granted to Stock Exchanges during 2012-13...... 113 3.9 Number of Registered FIIs, Sub-accounts and Custodians...... 114 3.9a Status of Registration of FII, Sub-accounts and Custodians during 2012-13 ..... 114 3.10 Mutual Funds Registered with SEBI...... 115 3.11 Registered Venture Capital Funds...... 115 3.12 Fees and Other Charges ...... 116

x LIST OF TABLES

Table No. Name Page No. Page No.

ȱ řǯŗřȱ ȱȱȱĴȱȱěȱȱȱěȱę ...... 117 ȱ řǯŗŚȱ ȱěȱȱ¡ȱȱȱě...... 117 3.15 Buyback cases during 2012-13...... 118 3.16 Inspection of Stock Brokers/Sub-brokers/Clearing Members ...... 119 3.16a Inspection by Stock Exchange/Clearing Corporation...... 119 3.17 Inspection of other Market Intermediaries ...... 120 3.18 Actions against AML/CFT Violations/Discrepancies...... 123 3.19 Surveillance Actions during 2012-13...... 126 3.20 Investigations by SEBI ...... 132 3.21 Nature of Investigations Taken up and Completed ...... 133 3.22 Type of Regulatory Actions Taken ...... 133 3.23 Age-wise Analysis of Enforcement Actions - U/S 11, 11B and 11D of SEBI Act as on March 31, 2013...... 137 3.23a Age-wise Analysis of Enforcement Actions - Enquiry Proceedings as on March 31, 2013...... 138 3.23b Age-wise Analysis of Enforcement Actions - Adjudication Proceedings as on March 31, 2013...... 138 3.23c Age-wise Analysis of Enforcement Actions - Prosecution Proceedings as on March 31, 2013...... 139 3.23d Age-wise Analysis of Enforcement Actions – Summary Proceedings under SEBI Act as on March 31, 2013 ...... 140 3.24 Enquiry and Adjudication Proceedings Initiated during 2012-13...... 140 3.24a Enquiry and Adjudication during 2012-13...... 140 3.24b Pending Enforcement Actions as on March 31, 2013 ...... 140 3.25 Enquiry and Adjudication Proceedings Initiated against other Intermediaries during 2012-13 ...... 141 3.26 Prosecutions Launched...... 144 3.27 Region-wise Data on Prosecution Cases as on March 31, 2013...... 144 3.28 Nature of Prosecutions Launched as on March 31, 2013...... 146 3.29 Number of Prosecution Cases decided by the Courts as on March 31, 2013 .... 146 ȱ řǯřŖȱ ȱȱ ȱ ȱ ȱȱ¢ȱǻȱĴǼ ...... 147 3.30a Status of Court Cases where SEBI was a Party (Judicial Forum) ...... 147

xi LIST OF TABLES

Table No. Name Page No.

3.31 Status of Appeals before the Securities Appellate Tribunal...... 147 3.31a Disposals of Appeals by Securities Appellate Tribunal...... 147 3.32 Status of Appeals Before the Hon’ble Supreme Courts...... 148 3.32a Status of Appeals Before the Hon’ble High Courts...... 148 3.33 Receipt and Disposal of applications under Consent and Compounding Process...... 149 ȱ řǯřŚȱ ȱȱęȱ ȱ ȱȱŘŖŗŘȬŗř...... 149 ȱ řǯřśȱ ȱȱęȱ¢ȱȱȱȱȱ during 2012-13...... 149 3.36 Status of Investor Grievances Received and Redressed...... 150 3.37 Failure to Redress Investor Grievances: Order passed under section 11B ...... 151 3.38 Failure to Redress Investor Grievances: Adjudication Proceedings ...... 151 3.39 Companies Restrained From Accessing the Securities Market...... 151 3.40 Companies Penalised For Their Failure to Redress Investor Grievances ...... 151 3.41 Trends in Awareness Programs/ Workshops Conducted by SEBI ...... 153 3.42 Regional Seminars Conducted by SEBI during 2012-13 ...... 154 3.43 School Programs Conducted by SEBI during 2012-13 ...... 155 3.44 Trends in Financial Education Programs through Resource Persons ...... 155 5.1 Board Meetings during 2012-13 ...... 178 ȱ śǯŘȱ ȱȱ ȱĜ ...... 181 5.3 Parliament Queries received/ raised...... 198 5.4 Session-wise Parliament Queries received and replied by SEBI during 2012-13 199 ȱ śǯśȱ ȱȱȱȱ ȱȱȱȱĴȱ ..... 199 5.6 RTI applications and First Appeal to SEBI Appellate Authority...... 201 5.7 Appeal before Central Information Commission...... 201

xii LIST OF CHARTS

Chart No. Name Page No.

1.1 Share of Components of GDP (at Factor Cost)...... 5 2.1 Share of Broad Category of Issues in Resource Mobilisation...... 52 2.2 Sector-wise Resource Mobilisation ...... 53 2.3 Movement of Benchmark Stock Market Indices ...... 61 2.4 Value traded in Secondary Market...... 61 2.5 Year-on-Year Returns of International Indices...... 63 2.6 Movement of Sectoral Indices of BSE ...... 65 2.7 Movement of Sectoral Indices of NSE ...... 66 2.8 P/E Ratio of International Stock Market Indices ...... 72 2.9 Annualised Volatility of International Stock Market Indices ...... 2.10 Derivatives Turnover vis-à-vis Cash Market Turnover...... 80 2.11 Product-wise Share in Equity Derivatives Turnover at NSE and BSE ...... 82 2.12 Participant-wise average share in F&O equity turnover in 2012-13 ...... 86 2.13 Participant-wise share in equity derivative open interest at NSE at end of the period...... 86 2.14 Share of Corporate Issuances in Domestic Debt Securities (percent)...... 89 2.15 AUM - GDP Ratio (percent) ...... 93 3.1 Percentage Share of Stock Brokers (as on March 31, 2013) ...... 110 3.2 Percentage Share of Stock Brokers (As on March 31, 2012) ...... 111 3.3 Investigation Cases...... 131 3.4 Nature of Investigation Cases Taken Up...... 132 3.5 Investigation Completed ...... 133 3.6 Type of Regulatory Actions Taken during 2012-13 ...... 134 3.7 The trends of phone calls received in SEBI Toll Free Helpline ...... 152 3.8 The trends of feedback of call received in SEBI Toll Free Helpline ...... 152 3.9 Trends in Financial Education Programs through Resource Persons ...... 156 3.10 The trends of Educational Visit at SEBI...... 157

ȱȱȱȱȱȱȱȱȮȱĴǱȦȦ ǯǯǯ

ȱȱȱȱȱȱȱȱȮȱĴǱȦȦ ǯǯǯ Conventions used in this Report ` : Rupees Billion : Thousand million/hundred crore Lakh : Hundred thousand NA : Not Available Crore : Ten million Na : Not Applicable Million : Ten lakh p.a. : Per annum ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ¢ȱ ¢ȱ ȱ ¡¢ȱ ȱ ȱ ȱ hundred per cent. Source of Charts and Boxes where not mentioned, is SEBI.

xiii ABBREVIATIONS

AA Appellate Authority ȱ ȱĴ ADB Asian Development Bank ADR American Depositary Receipt AD(s) Authorised Dealer(s) AGM Assistant General Manager AI(s) Anchor Investor(s) AIF(s) Alternative Investment Fund(s) AMC(s) Asset Management Company/Companies AMFI Association of Mutual Funds in India AML Anti-Money Laundering ȱ Ȧęȱ AP(s) Authorised Person(s) ȱ ȱęȱȱȬ ȱ ȱęȱȱĴ ARN AMFI Registration Number ASBA Application Supported by Blocked Amount ATR(s) Action Taken Report(s) AUM Assets Under Management ȱ ȱĴȱȱȱ BCP Business Continuity Plan BMC Base Minimum Capital ȱ ęȱ BRLM(s) Book Running Lead Manager(s) BSDA Basic Services Demat Account BSE Bombay Stock Exchange Limited BTI Bankers to an Issue ȱ ȱȱę CAF(s) Composite Application Form(s) CAGR Compounded Annual Growth Rate ȱ ȱȱȱ ȱĜ CBI Central Bureau of Investigation CC Clearing Corporation CBLO Collateralized Borrowing And Lending Obligation CBSE Central Board of Secondary Education CCI Competition Commission of India ǻǼȱ ęȱȱǻǼ CDS Credit Default Swaps

xiv ABBREVIATIONS

CDSL Central Depository Services (India) Limited ȱ ȱȱĴ CETTM Centre for Excellence in Telecom Technology and Management ȱ ęȱȱȱȱȱȱ CFFEX China Financial Futures Exchange CFA Charted Financial Analyst CFT Combating Financing of Terrorism CGM Chief General Manager CIC Central Information Commission CIS Collective Investment Schemes CM Clearing Member ȱ ȱȱĴ CMIE Centre for Monitoring Indian Economy CPE Continuing Professional Education CPF Customer Protection Fund ȱ ȱȱ ȱĜ CP(s) Commercial Paper(s) CRA(s) Credit Rating Agency/Agencies(s) ȱ ĚȱȱĴ CRR Cash Reserve Ratio ȱ ęȱȱȱ ȱ Ĵȱȱ¡ CSO Central Statistical Organisation CSX Coimbatore Stock Exchange DC(s) Division Chief(s) DFIs Development Finance Institutions DGM Deputy General Manager DIP Disclosure and Investor Protection DJIA Dow Jones Industrial Average DLP Data Leakage Protection DMA Direct Market Access DMS Document Management System DP(s) Depository Participant(s) DRS Disaster Recovery DRS Disaster Recovery Site DSE Designated Stock Exchange DT(s) Debenture Trustee(s) DWBIS Data Warehousing and Business Intelligence System

xv ABBREVIATIONS

EAG Eurasian Group on Combating Money Laundering and Financing of Terrorism ȱ ¡ȱĴ ECS Electronic Clearance Services ED Executive Director/Enforcement Directorate ȱ ¢ȱȱęȱ¡ EFD Enforcement Department ELSS Equity Linked Saving Scheme ȱȱ ȱȱĴ EMDE(s) Emerging Market and Developing Economy/Economies EPFO Employee Provident Fund Organisation ȱ ȱȱĜ ESOP Employee Stock Ownership Plan ESOS Employee Stock Option Scheme ESPS Stock Purchase Scheme ETF(s) Exchange Traded Fund(s) ETN(s) Exchange Traded Note(s) EURO European EWP Enterprise Wide Portal F&O Futures and Options FAQ(s) Frequently Asked Question(s) FATF Financial Action Task Force FCCB(s) Foreign Currency Convertible Bond(s) FDI Foreign Direct Investments FEMA Foreign Exchange Management Act FIA Futures Industry Association FII(s) Foreign Institutional Investor(s) FIMMDA Fixed Income Money Market and Derivatives Association of India FINRA Financial Industry Regulatory Authority FMP(s) Fixed Maturity Plan(s) ǻǼȱȱ ȱȱěǻǼȦ Ȭȱȱě FRRB Financial Reporting Review Board FRTI Financial Regulators Training Initiative FSAP Financial Sector Assessment Programme FSB Financial Stability Board FSDC Financial Stability and Development Council FSLRC Financial Sector Legislative Reforms Commission FSR Financial Stability Report FSRB FATF-Style Regional Body

xvi ABBREVIATIONS

FSS Financial Supervisory Service, South Korea FY Financial Year FVCI(s) Foreign Venture Capital Investor(s) HFC(s) Housing Finance Company/Companies HFT High Frequency Trading HNIs High Net Worth Individuals HRD Human Resource Development G20 Group of Twenty GAAP(s) Generally Accepted Accounting Principle(s) GBP British Pound Sterling GC Global Custodian GCC Gulf Co-operation Council GDCF Gross Domestic Capital Formation GDP Gross Domestic Product GDR(s) Global Depository Receipt(s) GDS Gross Domestic Savings/Gold Deposit Scheme GETF(s) Gold Exchange Traded Fund(s) GM General Manager GNI Gross National Income GoI Government of India GIZ German Society for International Cooperation GSE Gauhati Stock Exchange G-Sec Government Securities IA Investment Advisers IAD Investor Awareness Division IAIS International Association of Insurance Supervisors IBT Internet Based Trading ICAI Institute of Chartered Accountants of India ICAI-FRRB Financial Reporting Review Board of the Institute of Chartered Accountants of India ICCL Indian Clearing Corporation Limited ICDR Issue of Capital and Disclosure Requirements ICSI The Institute of Company Secretaries of India ICWAI The Institute of Cost and Work Accountants of India IDF Infrastructure Debt Fund IDR(s) Indian Depository Receipt(s) IFCF India Focus Cardinal Fund ȱ ȱ ȱȱĴ

xvii ABBREVIATIONS

IIP Index of Industrial Production IMF International Monetary Fund IMSS Integrated Market Surveillance System IMD Investment Management Department IPF Investor Protection Fund IPP Institutional Placement Programme INR Indian Rupee IOSCO International Organisation of Securities Commissions IPEF Investor Protection and Education Fund IPF Investor Protection Fund IPC Indian Penal Code ȱ ȱȱě IPS Intrusion Detection and Prevention System ȱ Ȭȱę IRDA Insurance Regulatory and Development Authority IRM Information Rights Management IRS Indian Revenue Service ISD Integrated Surveillance Department ISE Inter-Connected Stock Exchange ȱ ȱ ȱȱ ęȱ IT Information Technology ITeS Information Technology Enabled Services ITF Implementation Task Force JF Joint Forum JPY Japanese Yen JSE Jaipur Stock Exchange KIM Key Information Memorandum KRA KYC Registration Agency KYC Know Your Client LAF Liquidity Adjustment Facility LECS Local ECS LES(s) Liquidity Enhancement Scheme(s) LLP Limited Liability Partnership ȱ ęȱȱ LSE Ludhiana Stock Exchange MAS Monetary Authority of Singapore MB(s) Merchant Banker(s) ȱ ¢ȱȱȱě

xviii ABBREVIATIONS

MCR Monthly Cumulative Report MCX-SX MCX Stock Exchange MF(s) Mutual Fund(s) MIDC Maharashtra Industrial Development Corporation MII(s) Market Infrastructure Institution(s) MIMPS Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges MMoU Multilateral Memorandum of Understanding MoF Ministry of Finance MoU Memorandum of Understanding MPS Minimum Public Shareholding MPSE Madhya Pradesh Stock Exchange Limited MQSOS Median Quarter Sigma Order Size MSE Madras Stock Exchange MWPL Minimum Market Wide Position Limit NASDAQ National Association of Securities Dealers Automated Quotations NAV Net Asset Value NCAER National Council of Applied Economic Research NCD Non Convertible Debenture NCFE National Centre for Financial Education NECS National ECS NEFT National Electronic Fund Transfer NDP Net Domestic Product NGO Non-Government Organisations NHB National Housing Bank NII(s) Non-Institutional Investor(s) NISM National Institute of Securities Markets NNI Net National Income ȱȱ ȱȱę NRI(s) Non-Resident Indian(s) ȱ ȱȱĜ NSCCL National Securities Clearing Corporation Limited NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited NSFE National Strategy for Financial Education NSMD Network for Securities Markets Data ȱ ěȱȱ ȱ ęȱȱ ȱĴ

xix ABBREVIATIONS

ȱ ęȱ¢ȱ OECD Organisation for Economic Co-operation and Development OFCD(s) Optionally Fully Convertible Debenture(s) ȱ ěȱȱ ȱ Ĝȱȱ ȱȱȱ OMO Open Market Operations OTC Over the Counter OTCEI Over the Counter Exchange of India P.A. Per Annum PAN Permanent Account Number P/B Ratio Price to Book-Value Ratio P/E Ratio Price to Earnings Ratio PCD Partly Convertible Debenture PCI Press Council of India PF(s) Provident Fund(s) PFI Public Financial Institution PFUTP Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market ȱ ȱ ȱęȱȱȱ PGPSM Post Graduate Programme in Securities Markets PIT Prohibition of Insider Trading ȱ ¢ȱȱ¢ȱĴ PFRDA Pension Fund Regulatory and Development Authority PMLA Prevention of Money Laundering Act ȱ ȱě PoS Points of Service PID Public Interest Directors PN Participatory Notes ȱ ȱȱĴ PSE Pune Stock Exchange PSUs Public Sector Undertaking(s) ǻǼȱ ěȱȱ ǻǼ ǻǼȱ ęȱȱ ǻǼ ȱ ěȱȱ ǻǼȱ ęȱ ȱ¢ǻǼ ǻǼȱ ęȱ ȂȱǻǼ RAIN Registrars Association of India RBI Reserve Bank of India ȱ ȱĴȱ RDDBFI Recovery of Debts due to Banks and Financial Institutions

xx ABBREVIATIONS

RE Revised Estimate RECS Regional ECS ȱ ȱěȱ¡ȱ RGESS Rajiv Gandhi Equity Savings Scheme RHP Red Herring Prospectus RII Retail Individual Investors ȱ ȱȱ ȱĴ RI Rigorous Imprisonment RP(s) Resource Person(s) RRD Regulatory Research Division RSE(s) Regional Stock Exchange(s) RTI/STA(s) Registrar to an Issue and Share Transfer Agent(s) RTI Right to Information SA(s) Sub Account(s) SAARC South Asian Association for Regional Co-operation SARFAESI Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act SAT Securities Appellate Tribunal SAST Substantial Acquisition of Shares and Takeovers ȱ ȱȱęȱȱ ǻǼȱ ȱęȱ¢ȱǻǼ SC(R)A Securities Contracts (Regulation) Act SCRR Securities Contracts (Regulation) Rules SCORES SEBI Complaints Redress System SCM Self Clearing Member SCN Show Cause Notice SEBI Securities and Exchange Board of India SEBON Securities Board of Nepal SEC Securities and Exchange Commission SECC Stock Exchanges and Clearing Corporations SI Simple Imprisonment ȱ ȱ ȱȱǻȬǼȱęȱ¡ SID Scheme Information Document SIEFL School for Investor Education and Financial Literacy SLB Securities Lending and Borrowing SLR Statutory Liquidity Ratio ȱ ¢ȱȱ¢ȱĴ SME Small and Medium Enterprises SOP Statement of Purpose SPV(s) Special Purpose Vehicle(s)

xxi ABBREVIATIONS

ȱȱ ȱȱĜ SRO(s) Self Regulatory Organisation(s) SRSS School for Regulatory Studies and Supervision SSE School for Securities Education SSIR School for Securities Information and Research STT Securities Transaction Tax STWT Securities Trading using Wireless Technology SWF Sovereign Wealth Funds ȱ ȱ¢ȱĴ T-Bills Treasury Bills ȱ ȱĴ TER Total Expense Ratio TM Trading Member ȱ ȱȱ¢ȱĴ T to T Trade-to-Trade UAT User Acceptance Test UCC Uniform Commercial Code ȱ ȱęȱ ȱ ȱ ęȱ¢ȱȱ UIN Unique Identity Number UK United Kingdom ȱ Ĵȱȱȱ¡ȱ USA United States of America USD United States Dollar USE United Stock Exchange USIBC US-India Business Council UTI Unit Trust of India UTI MF UTI Mutual Fund VaR Value at Risk VPN Virtual Private Network VCF(s) Venture Capital Fund(s) WDM Wholesale Debt Market WFE World Federation of Exchanges WGFI Working Group on Foreign Investment WPI Wholesale Price Index ȱȱ ȱȱĜ WTM Whole Time Member XBRL eXtensible Business Reporting Language

xxii PART ONE: POLICIES AND PROGRAMMESPart One: Policies and Programmes

The Annual Report of the Securities 1. GENERAL MACRO-ECONOMIC and Exchange Board of India (SEBI) for the ENVIRONMENT year 2012-13 encompasses the developments After the setback in 2011-12, the in capital markets in the wake of early early 2012-13 marked a more pronounced deterioration and later recovery of the global deterioration in activity across the globe. The ȱǯȱȱȱęȱȱ recovery however became imminent as credit ǰȱęȱȱȱǯȱ markets healed in US and short term risks SEBI Annual Report for 2012-13 keeps in the Euro area trimmed. While investment in view the developments in the world dipped, consumption picked up across economy while aligning them with the the globe in varied measures – slowly in stated objectives of SEBI. As per the format advanced economies and steadily in emerging prescribed by the Securities and Exchange markets. Prudent macroeconomic policies Board of India (Annual Report) Rules, 1994, have been leading the way to recovery across SEBI Annual Report for 2012-13 elaborates the economies. on the policies and programmes undertaken during the year to strengthen the Indian Financial markets have boosted the regulatory framework of Capital markets. economic activity and the broad markets SEBI continued to ensure its commitment have rallied in late 2012-13. Rate cuts have ȱ ęȱ ȱ ¢ȱ ǰȱ ¢Ǳȱ been induced to combat slowdown by many (a) protection of the interests of investors in central banking authorities. Back at home, securities, (b) promotion of the development weakening of growth in industrial and of the securities market and (c) regulation of services sector earmarked one of the lowest the securities market. growth rates in recent times. The ushering of ȱȱȱȱĴȱȱȱȱęȱ SEBI achieves its objectives through ¢ȱ ȱ ȱ ȱ ęȱ ȱ proactive supervision and policy measures. ȱȱ¢ȱȱęȱǯ The major policy issues are discussed in public domain through discussion papers. The growth rate which had declined The decisions arrived pursuant to a thorough in 2011-12 to 6.2 percent continued further examination are placed on the website along southward in 2012-13 and the provisional with the agenda papers of the Board. The estimates put it at a decadal low rate of 5.0 various quasi-judicial orders passed by the percent. Gross Domestic Product (GDP) Board are also posted on the website. estimates at factor cost at constant (2004-05) prices for FY13 is likely to be ` 55,05,437 In line with the stated objectives, this crore as against ` 52,43,582 crore for FY12 Report provides the manner in which SEBI and the growth is expected to be 5.0 percent discharged its responsibilities and exercised as compared to 6.2 in FY12. (Table1.1) its powers during the year in furtherance of the objectives enshrined in (a) the Securities While the previous year witnessed and Exchange Board of India Act, 1992, (b) Services sector supporting the growth the Securities Contracts (Regulation) Act, rate amidst the stagnation prevailing in 1956 (c) the Depositories Act, 1996 and (d) ȱ ȱ ¢ǰȱ ȱ ȱ ęȱ the relevant provisions of the Companies year saw all the three sectors losing the Act, 1956. It also takes a view of the global ǯȱ ȱ ęȱ ȱ ȱ ȱ background relevant to these developments. domestic concerns seem to have dampened

1 Annual Report 2012-13

Table 1.1: National Income (at 2004-05 prices)* (` crore)

2010-11** 2011-12 2012-13 Item (2nd Revised (1st Revised (Provisional Estimate) Estimate) Estimate) 1234

A. Estimates at Aggregate Level 1. National Product 1.1 Gross National Income (GNI) at factor cost 4,882,249 5,196,848 5,449,104 8.8% 6.4% 4.9% 1.2 Net National Income (NNI) at factor cost 4,310,195 4,572,075 4,766,754 8.7% 6.1% 4.3% 2. Domestic Product 2.1 Gross Domestic Product (GDP) at factor cost 4,937,006 5,243,582 5,505,437 9.3% 6.2% 5.0% 2.2 Net Domestic Product (NDP) at factor cost 4,364,952 4,618,809 4,823,087 9.3% 5.8% 4.4% B. Estimates at Per Capita Level 1. Population (million) 1,186 1,202 1,217 1.4% 1.35% 1.25% 2. Per Capita NNI at factor cost (`) 36,342 38,037 39,168 7.2% 4.7% 3.0% 3. Per Capita GDP at factor cost (`) 41,627 43,624 45,238 7.8% 4.8% 3.7%

Note: Figures in the parentheses are percentage change over the previous year. * As per revised CSO nomenclature of Annual GDP Estimates ** Growth rates in 2010-11 are based on growth calculated over 3rd revised estimates of 2009-10 ǱȱȱȱĜ the economic expansion much in the 2012-13 of an expected decline in production of food as compared to the previous year. Agriculture grains around by 2.8 percent this year as growth rate fell from 3.6 percent in 2011-12 compared to a growth of 5.2 percent in the to 1.9 percent in 2012-13. Industry recorded a ȱ ¢ǯȱ ȱ ęȱ ȱ ȱ ¢ȱ growth of 1.2 percent in 2012-13 as compared of monsoon has hit the production of rabi ȱȱȱȱŘǯŝȱȱȱȱȱęȱ and kharif crops alike. The agriculture sector year. Services sector recorded sluggish in India today stands at a point where the growth on account of falling export of IT/ITeS further development depends upon the and is expected to be 6.8 percent for 2012-13 reforms undertaken to improve efficiency while it stood at 7.9 percent for 2011-12. and productivity along with investments in agriculture. (Table 1.2) Agriculture The share of agriculture in the GDP is Agriculture is expected to show a further expected to reduce from 14.1 percent growth of 1.9 percent in 2012-13 as opposed in 2011-12 to 13.7 percent in 2012-13. The 11th to a growth of 3.6 percent seen in 2011-12. ęȱ¢ȱȱǻŘŖŖŝȬŗŘǼȱȱȱȱ The deceleration in the sector may be a result growth rate of 3.3 percent against the target

2 Part One: Policies and Programmes

Table 1.2: GDP (at Factor Cost) by Economic Activity (at 2004-05 prices)* (` crore) 2010-11 2011-12 2012-13 Percentage Change over Industry (2nd Revised (1st Revised (Provisional Previous Year Estimate) Estimate)Estimate) 2011-12 2012-13 1 23456 1. Agriculture, Forestry & Fishing 7,13,477 7,39,495 7,53,610 3.6 1.9 2. Mining and Quarrying 1,08,938 1,08,249 1,07,619 -0.6 -0.6 3. Manufacturing 8,01,476 8,23,023 8,31,648 2.7 1.0 4. Electricity, Gas and Water Supply 92,773 98,814 1,02,918 6.5 4.2 Industry (2+3+4) 10,03,187 10,30,086 10,42,185 2.7 1.2 5. Construction 3,90,692 4,12,412 4,30,277 5.6 4.3 6. Trade, Hotels, Transport and Communication 13,45,660 14,40,312 15,32,034 7.0 6.4 7. Financing, Insurance, Real Estate and Business Services 8,49,632 9,48,808 10,30,684 11.7 8.6 8. Community, Social and Personal Services 6,34,358 6,72,469 7,16,645 6.0 6.6 Services (5+6+7+8) 32,20,342 34,74,001 37,09,640 7.9 6.8 GDP at Factor Cost 49,37,006 52,43,582 55,05,437 6.2 5.0

Ǳȱȱȱȱ ȱęȱȱȱȱǯ * As per revised CSO nomenclature of Annual GDP Estimates ǱȱȱȱĜ

ȱŚǯŖȱǯȱ ȱȱ ŗŘȱ ęȱ¢ȱȱ mere 1.0 percent in 2012-13 when compared sets the agricultural growth at 4.0 percent, with 2.9 percent as recorded in 2011-12. The the crucial factors underpinning the same sector seems to be grappling with the dearth would be investments in farm research, rural of investments in light of tightened monetary ȱ ȱ ěȱ ȱ ǯȱ stance. (Table 1.3) The index of eight core (Chart 1.1) industries (37.9 percent weight in IIP) grew by 3.2 percent in 2012-13 as compared to 5.0 Industry percent in 2011-12. The growth rate in Industry is further Mining registered a decline of 2.5 expected to fall to 1.2 percent in 2012-13 from percent in 2012-13 as against a decline of 1.9 the 2.7 percent as witnessed in 2011-12. High percent in 2011-12 and has been largely at interest rates yielded lower investments, the root of contraction of industrial output which accompanied with the power cuts, (index for 11 out of 12 months has shown has inhibited the rise of output. Mining negative growth) on account of the domestic sector continued registering a downfall of issues of allocation, production and pricing of ŖǯŜȱ ȱ ȱ ȱ ȱ ęȱ ¢ǲȱ minerals. Reforms in the areas of auctioning, manufacturing fell from 2.7 percent in 2011-12 fuel supply agreements and grading of coal to a mere 1.0 percent growth in 2012-13. as per international standards are expected The IIP figures (Index of Industrial to usher in the much needed impetus to the Production) showed sluggish growth of a sector.

3 Annual Report 2012-13

Table 1.3: Index of Industrial Production (Base: 2004-05=100)

Mining Manufacturing Electricity General Month (141.57) (755.27) (103.16) (1000.00) 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13

Average Apr-Mar 128.5 125.3 181 183.1 149.3 155.2 170.3 172

Growth over the corresponding period of previous year Mar -1.1 -2.9 -3.6 3.2 2.7 3.5 -2.8 2.5 Apr-Mar -1.9 -2.5 3 1.2 8.2 4 2.9 1

ǱȱȱȱĜ

Manufacturing, which contributes 75 percent in 2012-13 as compared to 7.9 percent ȱȱȱ ǰȱĚȱȱȱ¢ȱ in 2011-12. and showed a growth of 1.2 percent for 2012- 13 as against 3.0 percent in 2011-12.While The Community, Social & Personal power outages have hampered the sector Services sub sector is anticipated to grow at recently, the growth in the sector is imminent 6.6 percent in the current year compared to and desired to improve the contribution of 6.0 percent of the last year. The Financing, the sector from a current 15-16 percent of the Insurance, Real Estate and Business Services, GDP to 25 percent of the GDP by 2022 as laid meanwhile, is poised to show a 8.6 percent out in the National Manufacturing Policy. growth as compared to 11.7 percent exhibited ȱ ¢ǰȱ Ěȱ ȱ ȱ ¢ǯȱ Electricity posted a lower growth of While Community, Social & Personal 4.0 percent in 2012-13 while the growth in Services contributes 13.0 percent to the GDP, 2011-12 was 8.2 percent, thus interrupting the Financing, Insurance, Real Estate and the growth trajectory of over seven years Business Services contributes 18.7 percent. displayed by the sector. The sector seems (Chart 1.1) to be affected by the supply constraints. Electricity generation along with Trade, Hotels, Transport & manufacturing leads the path for industrial Communication sub sector posted a growth expansion and the reforms in power sector of 6.4 percent in 2012-13 as opposed to 7.0 may be requisite to address the growing gaps. percent in 2011-12, while its share in the GDP remains roughly at 27 percent. The decline Services comes as a result of fall in passenger and Services sector has over a decade cargo handled in civil aviation along with remained at the forefront of India’s growth cargo handled at major sea ports. Commercial rate. Its share in the GDP has risen from 65.2 vehicles too have seen a slump in sales as a percent in 2010-11 to 66.3 percent in 2011-12 result of faltering growth. Construction sub and further to 67.4 percent in 2012-13. The sector is expected to grow at 4.3 percent in growth in the sector is expected to be 6.8 2012-13 against 5.6 percent in the previous

4 Part One: Policies and Programmes

ęȱ¢ǰȱȱȱ ȱȱ¢ȱ savings. Investors have hence chosen to invest they exhibit on global scenario. in physical assets like gold that seems to be a “safe haven” for investment by households. Savings & Investments With the share of Household Savings being The latest data of CSO points to a ȱŘŘȱȱȱŘŖŖŗȬŖŘǰȱĴȱ decrease in India’s Gross Domestic Savings of investors to physical assets always seem to as a percentage of GDP at market prices ¢ȱ ȱ ȱ ęȱ ǰȱ from 34.0 percent in 2010-11 to 30.8 percent indicating that some substitution takes place ȱ ŘŖŗŗȬŗŘȱ ǻȱŗǯŚǼǯȱ ȱ ȱ ȱ ęȱ between the two kinds of savings. (Table 1.4) assets in Household savings decreased to 8.0 While it’s not only the Household percent in the 2011-12 from 10.4 percent in Savings that have declined, the Private the previous year. This is the lowest when Corporate and Public Sector Savings have ȱ ȱȱȱęȱȱȱ also reduced in 2011-12. While the Private a decade. Financial Savings since 2000 have Corporate Savings have decreased marginally always contributed over 10 percent barring from 7.9 percent in 2010-11 to 7.2 percent in the year 2004-05, which saw a share of 9.8 2011-12, public sector savings have halved to percent. In light of the decreased share of 1.3 percent in FY12 when compared with 2.6 ęȱ ǰȱ ȱ ȱ ȱ ȱ ȱ percent in FY11. A slowdown in industrial that the share of savings in physical assets sector along with high interest payments is currently the highest since 2000 at 14.3 and high input costs impact the level of percent. The saving pattern seems to be Private Corporate Savings and consequently ȱ ¢ȱ ȱ ȱ Ěȱ ȱ ȱ its industrial revival may be a pre condition growing growth concerns that has resulted to the improvement in the rate of Private ȱȱȱȱȱȱȱȱęȱ Corporate Savings.

5 Annual Report 2012-13

Table 1.4: Gross Domestic Savings and Investment

Amount in ` crore (Percent of GDP at current S. market prices) No. Item 2008-09 2009-10 2010-11 2011-12 2008-09 2009-10 2010-11 2011-12 (3rd RE) (2nd RE) (1st RE) (3rd RE) (2nd RE) (1st RE) 12345678 9 1 Household Saving 13,30,872 16,30,799 18,32,901 20,03,720 23.6 25.2 23.5 22.3 of which : a) Financial Assets 5,71,026 7,74,753 8,08,334 7,19,529 10.1 12.0 10.4 8.0 b) Physical Assets 7,59,846 8,56,046 10,24,567 12,84,191 13.5 13.2 13.1 14.3 2 Private Corporate Saving 4,17,467 5,40,955 6,19,370 6,44,473 7.4 8.4 7.9 7.2 3 Public Sector Saving 54,280 10,585 1,99,662 1,17,097 1.0 0.2 2.6 1.3 4 Gross Domestic Saving 18,02,619 21,82,338 26,51,934 27,65,291 32.0 33.7 34.0 30.8 śȱ ȱȱ Ě ȱ ŗǰŘŞǰŝŜŖȱ ŗǰŞŖǰŝşŚȱ Řǰŗşǰŝŗśȱ řǰŝŜǰŗŝŚȱ Řǯřȱ ŘǯŞȱ ŘǯŞȱ ŚǯŘ 6 Gross Domestic Capital Formation 19,31,379 23,63,132 28,71,649 31,41,465 34.3 36.5 36.8 35.0 7 Total Consumption Expenditure (a+b) 38,64,617 44,78,717 52,40,922 60,98,896 68.6 69.1 67.2 68.0 a) Private Final Consumption Expenditure 32,49,284 37,07,566 43,49,889 50,56,219 57.7 57.2 55.8 56.3 b) Government Final Consumption Expenditure 6,15,333 7,71,151 8,91,033 10,42,677 10.9 11.9 11.4 11.6 Memo Items Saving-Investment Balance (4-6) -1,28,760 -1,80,794 -2,19,715 -3,76,174 2.3 2.8 2.8 4.2 Public Sector Balance# -4,77,450 -5,82,203 -4,54,297 -5,88,111 8.5 9.0 5.8 6.6 Private Sector Balance# 3,52,179 5,29,599 3,86,653 4,14,944 6.3 8.2 5.0 4.6 a) Private Corporate Sector -2,18,847 -2,45,154 -4,21,681 -3,04,585 3.9 3.8 5.4 3.4 b) Household Sector 5,71,026 7,74,753 8,08,334 7,19,529 10.1 12.0 10.4 8.0

ǱȱȱȮȱȱǲȱǛǱȱ ȱęȱȱȱȱȱȱȱǯ ǱȱȱȱĜ

In absolute terms, Gross Domestic 12, the Financial Savings shrunk by 11.0 Saving (GDS) at current prices in 2011- percent from ` 8,08,334 crore to ` 7,19,529 12 stood at ` 27,65,291 crore as against crore for the corresponding time period. ` 26,51,934 crore in 2010-11, registering a Private Corporate Savings moved up by 4.1 growth of 4.3 percent. Household savings percent in absolute terms from ` 6,19,370 increased by 9.3 percent from ` 18,32,901 crore in 2010-11 to ` 6,44,473 crore in 2011-12. crore in 2010-11 to ` 20,03,720 crore in 2011- Public Sector Savings dwindled to ` 1,17,097 12. While absolute Savings in Physical Assets crore in 2011-12 from ` 1,99,662 crore in 2010- increased by 25.3 percent from `10,24,567 11 registering a decline of 41.4 percent. crore in 2010-11 to ` 12,84,191 crore in 2011-

6 Part One: Policies and Programmes

The savings-investment gap has widened majorly to the imports. With oil marketing to 4.2 percent of GDP at market prices in ȱ ȱ Ĵȱ ȱ ȱ ȱ 2011-12, up from being 2.8 percent in the prices along with the move to cap the number ȱęȱ¢ǯȱȱȱȱȱ of subsidized cylinders during the year would decreased, there has not been a proportionate ensure some relief in the near future. Hike decrease in investment in recent times, a in Gold Import duties is a stepping stone to result of which has been heavy reliance contain India’s increasing appetite of gold. ȱ ȱ Ě ȱ ȱ ȱ ¢ȱ ŝŗǯŘȱ With respect to Coal imports, it would be ǯȱȱ ȱȱęȱęȱ ȱȱ interesting to note that while India ranks to be reduced to stimulate public savings, 5th with 7.0 percent of global coal reserves, domestic savings would also need to be it remains the fourth biggest importer of the channelized to meet the growing investment fuel. An upturn in the mining sector is hence ȱ ȱ ȱ ¢ȱ ȱ Ěȱ not only imperative for the import bill to ȱȱȱęǯ decline but also for the manufacturing sector to gain momentum in India from the current ȱȱęȱȱȱę lag. India currently encounters the dilemma High CAD may also symbolize the gap ȱ ȱęǯȱȱȱęȱ ȱȱ in Savings and Investments in the country. in the stride of growth as nation progressed, While Savings in general and financial lately the burgeoning number has posed a savings in particular have decimated, the number of problems both for the economy investment has not decreased proportionately. and polity alike. Given the Indian economy’s This in turn has been at the root of higher resurgent nature, a comfortable level of both ȱ ęȱ ȱ ȱ ȱ ȱ ȱ is desired as well essential. to higher demand which is being viciously Current Account Deficit (CAD) was supported by imports instead of domestic 4.8 percent (USD 87.8 billion) of GDP, way capacity development and exports. above its comfortable range of 2.5 – 3.0 As against the Revised Estimates 2012-13 percent. However, Financial Inflows to ȱȱęȱȱ` śǰŘŖǰşŘśȱǰȱȱęȱ the tune of USD 85.4 billion during the for 2012-13 constituted 94 percent and as a ęȱ¢ȱȱȱȱȱȱ ȱȱȱęȱȱŘŖŗŘȬŗřȱȱĴȱ ȱęȱȱȱȱ¢ȱȱȱ at 4.9 percent of GDP as against the Revised exchange reserves. It may be noted that Estimates of 5.2 percent. Revenue Deficit ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱęȱ ȱ flows have increased when compared to points to a higher revenue expenditure. Over the corresponding period of previous year the years while revenue expenditure has been (USD 80.7 billion). The surge in portfolio increasing as proportion of GDP (12.8 percent investments has outperformed the decline of GDP as per Revised Estimates 2012-13), the in direct investment hence causing the net Capital Expenditure seems to have shrunk. ęȱĚ ȱȱǯ This combined with dependence of CAD The burgeoning CAD has been fuelled ęȱ ȱ ȱ Ě ȱ ¢ȱ ȱ by soaring Oil and Coal Imports, Gold Rush a potential cause of concern for the policy and Slowdown in exports. Oil bill contributes makers. Interest payments and subsidies add

7 Annual Report 2012-13

ȱ ę¢ȱ ȱ ȱ ȱ ¡ȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ ȱ and an improvement seems to be due. in the policy rates apart from the 100 basis points cut undertaken in 2012-13. The foreign exchange reserves stood at USD 292.6 billion in end March 2013 In absence of policy cuts, the cash compared to USD 294.4 billion as of end reserve ratio (CRR) and statutory liquidity March 2012. ratio (SLR) have been tuned to adjust the state of liquidity. In 2012-13, CRR was reduced by Indian scene in the wake of these two 75 basis points while SLR was reduced by deficits is apprehensive of the financial 100 basis points. The open market operations instability in the economy. CAD in absolute (OMO) injected primary liquidity of ` 1.5 terms pose no risk of any kind but when seen trillion. against the backdrop of varied factors may be a potential weak spot. In Indian context, Credit Growth ȱȱȱȱȱȱȱęȱ¢ȱȱ Non food credit growth registered a ȱ Ě ȱ ȱ ȱ ȱ ȱ ǰȱ growth of 14.0 percent in 2012-13 when the situation remains balanced but given the compared with 16.6 percent recorded in 2011- ȱȱȱĚ ȱ ȱȱǰȱ 12, indicating a slower pace of credit growth. any adverse global development may trigger The credit to Industry slowed to 15.7 percent abrupt stoppage in inflows which would in 2012-13 from 20.3 percent in 2011-12 on affect the Consumption, Investment and ȱȱȱĴȱȱȱ Expenditure. Notwithstanding the fact that by the industry. Credit to the Agriculture ȱȱ¢ȱȱ¢ȱěȱ ȱȱ meanwhile increased by 8.1 percent in FY 13 foreign exchange reserves, depreciated but as compared to 13.3 percent in FY 12 while stable currency and healthy credit growth, that to the Services sector increased by 13.6 it still remains crucial for the economy to be percent as compared to 14.4 percent in the proactively monitoring the developments. respective periods.

Liquidity Tighter liquidity conditions along with the slowdown in economic activity have prevented Liquidity conditions altered during the the credit growth to pick up. Deposit growth year 2012-13 that started with tighter liquidity ȱȱȱ ȱȱȱȱęȱ¢ǰȱ conditions prevalent in the economy. The past falling short of the RBI projections. measures of policy rate cuts in the previous fiscal yielded results in the latter part of Ě Q1 2012-13 through Q2 but the liquidity Post the monetary tightening measures, conditions tightened again in November the wholesale price index (WPI) showed some 2012 driven by buildup of government cash ȱ ȱ ¢ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ Ěȱ balances and the gap in credit and deposits for 2012-13 was at 7.3 percent as against 8.9 growth. The global fears of tighter liquidity percent registered for 2011-12. in the event of withdrawal of any quantitative easing have also added to the prevalence Ěȱ ȱ ¢ȱ ȱ ȱ of tighter liquidity predictions ahead. The at 9.8 percent in 2011-12 as well as 2012-13. ¢ȱȱ¢ȱȱĚȱȱ ¢ȱ ȱ ȱ ȱ Ěȱ Ě¢ȱȱȱȱȱȱȱȱ declined from 7.3 percent in 2011-12 to 5.4

8 Part One: Policies and Programmes

percent in 2012-13. The fuel group meanwhile with decreasing gold and non-gold non-oil showed a decrease in inflation from 13.9 imports coming steadily at the back of a hike ȱȱȱȱęȱȱȱȱŗŖǯřȱ in customs duty on gold from 4 to 6 percent. ȱ ȱ ȱ ȱ ęǰȱ ȱ ȱ ȱ dropped. Exchange Rate ` ȱ ȱ Ěȱ ȱ ȱ ȱ The exchange rate declined to 54.39 2013 stands at 10.4 percent compared to per USD on March 28, 2013, depreciating 6.32 9.4 percent as of March 2012. The index is percent over March 30, 2012 when the rate ` ȱ Ĵȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ was 51.16 per USD which was a further ` demand pressures which are currently decrease from 44.65 per USD in March 31, ȱȱȱĚǯ 2011. The average value of rupee per USD touched an all-time low of ` 57.22 on June Along with these developments in the 27, 2012. path of taming inflation, the sticky food ¢ȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ the Indian rupee vulnerable amidst the Euro the policymakers. The figure for March zone uncertainties and modest recovery in 2013 was as high as 8.7 percent. Persistent the US. ȱĚȱȱȱȱ¢ȱȱȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Capital markets ȱ ȱ ęȱ ęȱ ȱ ȱ ǯȱ Indian securities market started the year ȱ ȱ ¢ȱ ȱ ȱ Ĝȱ 2012-13 on a low note following the global distribution, storage and productivity hold economic signals of 2011-12. The reform the key to the issue in the medium and long measures undertaken by the government as term. well as slender improvements visible in the Trade Balance global economic condition have however uplifted the mood in the domestic securities Exports for 2012-13 stood at USD 300.6 market. The Sensex which closed at 17,404 on billion, with a decline of 1.8 percent when March 30, 2012 reached 18,836 as on March compared with a growth of 21.3 percent 28, 2013. It touched the 20,000 mark during recorded in the same period of the previous the year, which was last seen in October year when the exports were USD 305.9 2010. Nifty, too, touched the 6,000 mark while billion. During 2012-13, Imports registered a closing at 5,683 on March 28, 2013 while the mild increase of 0.4 percent compared with a ęȱȱȱřŖǰȱŘŖŗŘȱ ȱȱśǰŘşŜǯȱȱ ȱȱřŘǯřȱȱȱȱȱęȱ¢ǯȱ Sensex registered a growth of 8.2 percent, ȱȱęȱȱŗřȱȱȱȱŗşŖǯşȱ Nifty recorded a growth of 7.3 percent. Indian ȱȱȱȱęȱȱȱŗŞřǯŚȱȱ markets also witnessed the establishment of in FY12. a third stock exchange in the country with Fall in exports occurred on account of nationwide terminal with MCX-SX going live the global uncertainties. Demand from the in equities and equities derivatives segment advanced as well as the Emerging market on February 11, 2013. The benchmark index, and developing economies (EMDEs) fell SX40, is however yet to be disseminated. The in wake of the subdued economic activity development is testimony to the expanding in these regions. Import growth softened Indian markets and their potential and would

9 Annual Report 2012-13

help in further strengthening the participation The derivative segment developments of investors across the country. may be seen in the light of the Futures Industry Association (FIA) Annual Volume The market capitalisation of BSE stood Survey 2012 which has reported the “biggest at ` 63, 87, 887 at end-March 2013 compared and broadest decline in at least a decade” to ` 62, 14,941 crore as of end-March 2012 in the global listed derivatives market. while its ratio to GDP stood at 63.7 percent The total number of futures and options for 2012-13. The market capitalisation of NSE contracts traded on the exchanges world was ` 62,39,035 at end-March 2013 compared over in calendar year 2012 has declined to ` 60, 96,518 crore as of end-March 2012 by 15.3 percent. The survey, nonetheless, while its ratio to GDP stood at 62.2 percent highlights the BSE’s volume explosion, which for 2012-13 The number of demat accounts at moved from just three million contracts in the two depositaries grew by over 5 percent calendar year 2011 to 243.76 million contracts ȱ ȱ ęȱ ¢ǯȱ ȱ ȱ ȱ ȱ in calendar year 2012. NSE meanwhile is companies at NSE and BSE continued to rise. ranked third among the top thirty derivative (Table 1.5) exchanges in terms of number of contracts The turnover in the Equity derivative traded or cleared in the calendar year 2012. segment displayed an increase of 20.4 percent Nifty Options have retained their rank as ` and reached 3,87,04,572 crore in 2012-13. the world’s second most traded option in The Currency derivative segment however calendar year 2012 as well. In the category ` declined by 12 percent to 87,10,504 crore in “Foreign Exchange Futures & Options 2012-13 despite volatile rupee. (Table 1.6) Contracts” the U.S. Dollar/Indian Rupee ȱȱȱȱȬȱ¢ȱȱęȱ and second position respectively. Table 1.5 (a): Demat Statistics The foreign investments in India NSDL CDSL contributed by the FII and FDI own assets Demat Demat ` Year Quantity Quantity under custody valued at 15, 77,288 crore for (million shares) (million shares) 2012-13, up from ` 13, 39,240 crore in 2011-12. 2010-11 4,71,304 1,05,310 (Table 1.7). 2011-12 5,79,801 1,33,570 2012-13 6,86,476 1,51,792 Table 1.6 : Growth of Turnover in Various

Source: NSDL & CDSL Segments of Indian Stock Market

Table 1.5 (b): No. of Listed Companies Turnover (` crore) Year NSE BSE Cash Equity Currency No. of No. of Year Segment Derivatives Derivatives Companies Companies (All India) (NSE+BSE+ (NSE+MCX- listed listed MCX-SX) SX+USE)

2010-11 1,574 5067 2010-11 46,82,437 2,92,48,375 76,43,805 2011-12 1,646 5133 2011-12 34,78,391 3,21,58,208 98,96,413 2012-13 1,666 5,211 2012-13 32,57,087 3,87,04,572 87,10,504

Source: NSE & BSE Source: BSE, NSE, MCX-SX & USE

10 Part One: Policies and Programmes

Table 1.7: Assets under the Custody of Custodians

FIIS/SAs Foreign FDI Foreign Venture Year Depositories Investments Capital Investments Amount (` crore) Amount (` crore) Amount (` crore) Amount (` crore) 2010-11 11,06,550 1,85,931 1,46,231 24,002 2011-12 11,07,399 1,43,370 2,31,841 35,041 2012-13 13,36,557 1,57,159 2,40,731 54,144

Source: SEBI

Investor protection has been at the ȱ ȱ ǯȱ ȱ ¢ȱ ȱ Ĝȱ forefront of the objectives of SEBI and policy ¢ȱȱȱĚȱȱȱȱ measures have been undertaken in this regard stability that further accentuates the investor during the FY13. Framework for registration ęȱ ȱ ȱ ǯȱ ȱ ¢ȱ and regulation of Investment Advisors has markets have seen a revival in the activity been notified, SME platforms for equity ¢ȱ Ěȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ the global scenario. Resources mobilized in reforms in FII investments and many other the primary market have risen by around 20 policy measures which are discussed in the percent in the wake of the renewed economic forthcoming section. fervor. A total of ` 15,474 crore of Equity capital has been raised in 2012-13 through 2. REVIEW OF POLICIES AND 49 issues, compared with ` 12,857 crore PROGRAMMES raised through 51 issues in 2011-12. Certain ȱ ȱ ¢ȱ ȱ ęȱ ȱ reforms in policies have been undertaken to ever changing, the need for an active and ȱȱȱȱęȱǯȱȱ evolving regulatory regime is integral. SEBI major policy initiatives related to the primary has initiated many policies and programmes ȱȱŘŖŗŘȬŗřȱȱȱǱ in FY13 which are presented in this Section. A. Manner of Dealing with Audit Reports The developments are categorized Filed by Listed Companies under eleven major heads viz., Primary A mechanism has been put in place Securities Market, Secondary Securities to process qualified annual audit reports Market, Corporate Debt Market, Mutual filed by the listed companies with stock Funds, Alternative Investment Fund, exchanges and annual audit reports where Investment Advisors, Portfolio Managers, accounting irregularities have been pointed Foreign Institutional Investors, Takeovers, out by the Financial Reporting Review Board Investor Assistance and Education and Legal of the Institute of Chartered Accountants of Framework. The section concludes with India (ICAI-FRRB). In order to enhance the ‘Retrospect and Prospects’. ¢ȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ I. Primary Securities Market companies, it has been, inter-alia,ȱȱǱ Primary markets play the role of a. Listed companies would be required to mobilizing the capital to the corporate both ęȱ ȱ ȱ ȱ ȱ ȱ ȱ

11 Annual Report 2012-13

Social and Governance norms. The said exchanges along with the applicable reporting requirement is in line with the ȱǻȱǱȱȁęȂȱȦȱȁĴȱȱ ‘National Voluntary Guidelines on Social, ȱȂǲȱȱǱȱȁęȂȱȦȱ Environmental and Economic Responsibilities ‘Subject To’ / ‘Except For Audit Report’). ȱȱǻ ǼȂȱęȱ¢ȱȱ¢ȱ b. After preliminary scrutiny and based on ȱȱěǰȱ ȱȱ ǰȱȱ materiality, the stock exchanges would July 2011. (Box 1.1 may be referred for details) ȱ ȱ ȱ ȱ ȱ Ȧȱ ęȱ ȱ ȱĴȱǻǼǯ ǯȱ ȱȱȱěȱ Listed companies have been mandated c. QARC represented by ICAI, stock to update their disclosures in the prospectus exchanges, etc. shall review the cases on an annual basis and to ensure that the received from the stock exchanges and same is available in public domain. Such ȱ ȱ ȱ ȱ ȱ ęȱ consolidated public disclosures can be used annual audit reports referred by the ȱȱȱȱȱȦȱȱ ȱęȱ stock exchanges through appropriate hyper-links without d. Cases, wherein the qualifications are requiring a repetition of such disclosures. significant and explanation given by the company is unsatisfactory, would D. Revised Timeline for Disclosing be referred to the Financial Reporting Financial Information Prior to Issue Review Board of ICAI (ICAI-FRRB). If Opening Ȭȱȱȱȱęȱ Disclosure of price band along with ȱ ęǰȱ ȱ ¢ȱ ȱ ȱ ȱ relevant financial information shall be ¢ȱȱȱȱěȱȱȱ published by way of an advertisement at financial accounts by way of revised ȱ ęȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ Ȭȱ ęȱ ȱ ¢ȱ ȱȱȱěȱȱȱ ȱ ȱ to the shareholders through stock days prescribed earlier in order to ensure exchange(s). However, the financial ȱ ȱ ȱ Ĝȱ ȱ ȱ ¢£ȱ ěȱȱȱȱ¢ȱȱȱȱ the issue before investing. This information in the annual accounts of the subsequent ȱ ȱ ȱ Ȭęȱ ȱ ȱ ȱ ęȱ¢ȱȱȱȱȱǯ forms available for download from websites of the stock exchanges. B. Mandating Inclusion of Business Responsibility Report as Part of Annual E. Revised Requirements for the Stock Report Exchanges and Listed Companies in SEBI has mandated the top 100 listed Respect of Scheme of Arrangement companies to include Business Responsibility under the Companies Act, 1956 Report as part of Annual Reports with a Pursuant to a scheme of reconstruction focus on the Environmental, Social and or amalgamation being sanctioned by the Governance issues. The report would also Hon’ble High Court under sections 391- include compliance with the nine principles 394 or 101 of the Companies Act, 1956, for business responsibility reporting to the companies desirous of getting their assess compliance with Environmental, equity shares listed after merger/de-merger/

12 Part One: Policies and Programmes

Box 1.1 : Business Responsibility Report

At a time and age when enterprises are increasingly seen as critical components of the social system, they are ȱȱ¢ȱȱȱȱȱȱȱȱę¢ȱȱȱȱȱȱȱ society which is also its stakeholder. Hence, adoption of responsible business practices in the interest of the social Ȭȱȱȱȱȱȱȱȱȱęȱȱȱǯ Considering the larger interest of public disclosure regarding steps taken by listed companies from a Environmental, Social and Governance (ESG) perspective, SEBI, vide circular dated August 13, 2012, mandated inclusion of Business Responsibility Reports (BR Reports) as part of the Annual Reports, initially for top 100 listed companies based on market capitalization as on March 31, 2012. Other listed companies may voluntarily disclose BR Reports as part of their Annual Reports. ȱ ȱȱȱ¢ȱȱǱȱȱ ȱȱȱ¢ǰȱęȱ details of the company, details about subsidiaries, details of directors responsible for BR and also compliance with ȱȱȱȱȱ¢ȱǰȱ ȱȱȱǱ ȱŗǱ Businesses should conduct and govern themselves with Ethics, Transparency and Accountability ȱŘǱ Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle ȱřǱ Businesses should promote the wellbeing of all employees ȱŚǱ Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized ȱśǱ Businesses should respect and promote human rights ȱŜǱȱȱȱǰȱǰȱȱȱěȱȱȱȱ ȱŝǱȱǰȱ ȱȱȱĚȱȱȱ¢ȱ¢ǰȱȱȱȱȱȱȱ manner ȱŞǱ Businesses should support inclusive growth and equitable Development ȱşǱ Businesses should engage with and provide value to their customers and consumers in a responsible manner The companies are required to report their compliance with the above principles. ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ¢ȱ ȱ ȱ ȱ ¢ȱ Ȧ stakeholders based on internationally accepted reporting frameworks need not prepare a separate report for the purpose of these guidelines but only furnish the same to their stakeholders along with the details of the framework under which their BR Report has been prepared and a mapping of the principles contained in these guidelines to the disclosures made in their sustainability reports. amalgamation, etc. without making an However, in the recent past, SEBI ȱȱěȱȱȱȱȱȱ has received certain applications, seeking to seek an exemption from SEBI from the exemption, containing, inter alia, (a) requirements of rule 19(2) (b) of Securities inadequate disclosures, (b) convoluted Contracts (Regulation) Rules, 1957. In terms schemes of arrangement, (c) exaggerated of rule 19(7) of SCRR, SEBI has been granting valuations, etc. In order to avoid such ¡ȱȱȱȱȱȱěȱ situations and in the interest of investors, to the public under SEBI (Issue of Capital and the requirements have been streamlined Disclosure Requirements) Regulations, 2009 to by mandating, inter alia, requirements of such listed companies on a case to case basis. obtaining comments of SEBI on the draft

13 Annual Report 2012-13

schemes of arrangement, disclosure of disclosure of Balance Sheet under Schedule draft schemes and observation letters of ȱȱȱȱǰȱŗşśŜǲȱȱ stock exchanges on websites for wider amendments regarding interim disclosure of dissemination, furnishing a report on ęȱȱ¢ȱȱȱȱȱ complaints received on draft schemes, to exchanges were carried out in the Listing the stock exchanges prior to obtaining Agreement. ȱĴǰȱǯ ǯȱ ęȱȱȱřŜȱȱȱ¢ȱ F. Manner of achieving Minimum Public Listing Agreement Shareholding Requirements It came to the notice of SEBI that certain In accordance with the provisions of listed companies were giving monthly Securities Contracts (Regulation) Rules, 1957, disclosure of their sales/turnover/production SEBI had specified certain means for the figures to their respective trade bodies/ listed companies to achieve minimum public industry associations and the same was shareholding requirements. Additionally, not disclosed to the stock exchanges. It ȱȱȱȱȱęȱ¢ǰȱ ȱ ȱ ǰȱ ęȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ or material information which will have a rights or bonus issues to public shareholders, bearing on the performance / operations with promoters/promoter group shareholders of the company as well as price sensitive forgoing their entitlement for the purpose ȱȱȱęȱȱȱȱ of achieving compliance. Further, it has also stock exchanges as required under clause 36 been prescribed that listed entities desirous of of the Listing Agreement. achieving the minimum public shareholding requirement through other means / relaxation J. Extending the Reach of ASBA Facility from the available methods may approach To make the application process more SEBI with appropriate details. convenient for investors, it was decided to extend the reach of Application Supported G. Mandatory Authentication by Listed by Blocked Amount (ASBA) by mandating Companies on SEBI Complaints ȱȱęȱ¢ȱȱǻǼȱȱ Redress System (SCORES) provide the facility in all their branches in a With a view to facilitate the processing phased manner. of investor complaints in the centralized web based complaints redress system ‘SCORES’, K. Application Supported by Blocked ȱ ȱ ȱ Ĵȱ ȱ ¢ȱ Amount (ASBA) Facility against shares listed on the stock exchanges were Funded Deposit Account mandated to obtain authentication on ȱ ęȱ ¢ȱ ȱ ǻǼȱ SCORES, before listing approval is granted were advised to ensure that for applications by the stock exchange. made by an investor using Application Supported by Blocked Amount (ASBA) facility, H. Formats for Disclosure of Financial the SCSBs shall block the application amount Results only against/in a funded deposit account ȱ ȱ ęȱ ȱ ȱ ¢ȱ and also ensure that clear demarcated funds ȱ ȱ ěȱ ȱ ȱ ȱ ȱ are available for ASBA applications. Further,

14 Part One: Policies and Programmes

SCSBs were also directed to ensure that for and non-profit making issuers have been making applications on own account using reviewed. The revised criteria require the ASBA facility, they should have a separate ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ account in own name with any other SCSB. ȱȱȱęȱ¢ǰȱ ȱȱȱ ȱ Ȭ¡ȱ ȱ ęȱ ȱ ȱ L. Public Issues in Electronic Form and ȱ ȱ ęȱ ¢ȱ ȱ ` 15 crore, to Use of Nationwide Broker Network be eligible to come out with IPOs through of Stock Exchanges for Submitting ȱ ę¢ȱ ȱ ȱ ǯȱ ȱ Application Form not meeting with this requirement may come To widen the distribution network of out with IPOs, if the issuer undertakes to public issues, in addition to the existing ȱȱȱŝśȱȱȱȱȱěȱȱȱ channels, the nationwide broker network of ęȱ ȱ¢ȱǻ Ǽǯ stock exchanges at more than 1000 locations have been made available for distributing public N. Eligibility Criteria for Further Public issues in electronic form. This mechanism can ěȱ ȱ ȱ ȱ ȱ ȱ be used by the investors to submit both ASBA Fast-Track Route and non-ASBA applications. (Box 1.2 may be referred for details) One of the eligibility conditions for well- established listed companies to come out with M. Eligibility Criteria for IPOs ȱ ȱ ěȱ Ȧȱ ȱ ȱ ȱ Eligibility criteria for making initial the fast-track route is to have a minimum ȱ ěȱ ǻ Ǽȱ ȱ ȱ ęȬȱ level of average market capitalisation of

Box 1.2 : Public issues in electronic form and use of nationwide broker network ȱȱ¡ȱȱĴȱȱ

ȱ Ȃȱȱȱȱȱ ȱȱȱȱ ȱȱȱȱŘŖŗŘȬŗřǱ

ȃ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ǻ Ǽǰȱ ȱ ȱ ȱ ȱ ȱ ȱ reach more retail investors in small towns. To achieve this, in addition to the existing IPO process, I propose to make it mandatory for companies to issue IPOs of Rs.10 crore and above in electronic form through nationwide broker network of stock exchanges”.

Pursuant to the above, in consultation with various market participants, SEBI introduced a new mechanism (e-IPO facility) to submit application forms in public issues. It is an additional mode for investors to submit applications using the nationwide stock broker network of Stock Exchanges and where there is a presence of the brokers’ terminals (broker centre), who may not be the syndicate or sub-syndicate members in an issue.

Investors can submit both ASBA and non-ASBA applications using e-IPO facility. Application forms can be downloaded from the Stock Exchanges’ websites/broker terminals. This will enable the investors to download / print the forms directly and submit the same to any registered stock broker of the Stock Exchange.

The e-IPO facility to submit applications has been made available in more than 1000 locations. The Stock Exchanges have disclosed the list of such broker centres, where the applications can be accepted. This has resulted in enabling investors to submit applications in more than 1000 locations as against less than 100 centers available earlier. This has enabled small investors in small towns to participate in public issues and also assisted the companies reach more number of retail investors.

15 Annual Report 2012-13

public shareholding. This has been brought Lead Manager’ in the offer document. down from ` 5000 crore to ` 3000 crore. However, all the BRLMs to the issue, including the Marketing Lead Managers, will O. Minimum Promoters’ Contribution by ȱ ȱ ȱ ȱ ęǯȱ ȱ ȱ AIFs bring in ample clarity on the role of a BRLM Minimum promoters’ contribution in who may be an associate of the issuer by way IPOs is required to be at least 20 percent of of adequate disclosures. the post-issue capital. In order to facilitate capital raising by companies founded by R. SEBI Framework For Rejection of Draft ȱȦȱęȱȱǰȱ ěȱȱ it has been decided that in case the post- In order to protect the interest of issue shareholding of the promoter is less investors who may not always be in a than 20 percent, the Alternative Investment position to assess the risks associated with a Funds (AIFs) may contribute for the purpose business model due to complexities involved of meeting the shortfall in minimum therein and to ensure that only reasonably contribution, subject to a maximum of 10 credible issuers with adequate disclosures in percent of the post-issue capital. ȱ ěȱ ȱ ȱ ȱ ȱ ȱ the public issuances route, a framework for P. Flexibility to the Issuers and Better ȱ ȱ ěȱ ȱ ȱ ȱ Transparency in Disclosure of Objects illustrative list of objective criteria for the of the Issue purpose and consequences of rejection has ȱ ȱ ȱ Ě¡¢ȱ ȱ ȱ ǰȱ been put in place by SEBI. changes up to 20 percent in the amount proposed to be raised under the objects The draft offer documents would be of the issue at the red herring prospectus scrutinized by SEBI based on broad criteria (RHP) stage, as against the erstwhile 10 including, existence of circular building up ǰȱ ȱ ȱ ȱ Ȭęȱ ȱ of capital, showcasing enhanced prospects SEBI. Further, deletion of objects of the issue for issuer by changing accounting policies etc. ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭęǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ except in certain cases where SEBI retains ȱęȱȱȱȱǯ ȱ¢ȱȱȱȱȱȬęȱ in case of apparent exacerbation of risk. S. Decentralisation of Processing of Draft Moreover, to bring more transparency in Offer Documents to the Regional capital raising, ‘General Corporate Purposes’ Ĝȱȱ as an object of the issue has been capped at 25 As a further step towards percent of the proceeds raised by the issuer. decentralisation, Regional Offices of SEBI ȱ ȱ ȱ ȱ ȱ ȱ ěȱ Q. Investment by BRLMs and their documents in respect of issues of size up Associates in Public Issues to ` 500 crore. Merchant Bankers were A Book Running Lead Manager (BRLM) ¢ȱ ȱ ȱ ęȱ ȱ ȱ ěȱ which is also an associate of the issuer shall documents / offer documents with the have the restricted role of marketing the issue, ȱ Ĝȱ ȱ ȱ ǰȱ ȱ ȱ ȱ and accordingly declare itself as a ‘Marketing estimated issue size.

16 Part One: Policies and Programmes

T. Revision in Pricing for Qualified of shareholders in corporate proposals, top Institutions Placements 500 listed companies were mandated to To provide flexibility to issuers on enable e-voting facility to their shareholders, ȱȱęȱ ȱȱ in respect of those businesses which are (QIPs), a maximum discount of 5 percent has transacted through postal ballot by the listed ȱĴȱȱȱȱȱȱȱ companies. the SEBI (ICDR) Regulations, 2009, subject ȱ ȱ ¢ȱ ǯȱ ȱ Ě¡¢ȱ X. Partial Two-Way Fungibility of Indian is expected to help issuers carry out QIPs Depository Receipts during volatile markets. In order to encourage more number of foreign companies to issue Indian Depository U. Amendments to SEBI (Employee Stock Receipts (IDRs) in the Indian market and Option Scheme and Employee Stock also to enable the investors to take informed Purchase Scheme) Guidelines, 1999 and investment decision, it was decided to enable Equity Listing Agreement partial two-way fungibility of IDRs through Listed companies were mandated to detailed guidelines providing a roadmap for ȱ ¢ȱ ęȱ ȱ ȱ the future IDR issuances as well as for the securities of the company only in accordance existing listed IDRs. with the SEBI (ESOS and ESPS) Guidelines, 1999. The companies whose schemes are not Y. Minimum Allotment to Retail in conformity with the same, have been given Individual Investors time to align their schemes with the said All retail individual investors (RIIs) shall guidelines. Further, such schemes have been ȱĴȱȱȱȱȱȱ prohibited from acquiring securities of the size, subject to availability of shares in the RII company from the secondary market. category. This would encourage wider retail V. Amendment to SEBI (ICDR) regulations participation in public issues. The remaining in Respect of Infrastructure Sector available shares, if any, shall be allotted on a proportionate basis. The minimum In order to harmonize the SEBI (ICDR) application size for all investors has also Regulations relating to Infrastructure Sector been increased to ` 10,000 - 15,000 as against with the amended Securities Contracts ` 5,000 - 7,000 prescribed earlier. (Regulation) Rules, 1957, consequential amendments to SEBI (ICDR) Regulations Z. Revision of Bidding by Investors pertaining to minimum public shareholding and minimum subscription requirements To avoid any misleading signals to retail were carried out whereby, such relaxations investors about the extent of subscription granted to infrastructure companies / sector in the issue, no withdrawal or lowering were withdrawn. ȱ £ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ Ȭ retail investors at any stage. However, retail W. Enabling Shareholders to Electronically ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ Cast their Vote £ȱ ȱ ȱ ȱ ȱ ęȱ ȱ In order to enable wider participation allotment.

17 Annual Report 2012-13

II. Secondary Securities Market process of KYC in the interest of investors, the Secondary markets are often referred ȱȱ ȱȱȱ Ǳ to as the barometer to a nation’s health. The a. KYC Requirements for Foreign stock prices in FY13 started on a low note Investors carrying forward the fluctuations of the ȱ ęȱ ¢ȱ ȱ ȱ ȱ ęȱ The foreign investors viz. Foreign year saw the indices scaling new height and Institutional Investors and their Sub Accounts achieving the pre crisis levels. Initiatives have ȱęȱȱ ǰȱ ȱȱ ȱȱȱȱȱȱęȱ certain difficulties while complying with and participation which was dampened in KYC requirements because of their status of the previous year on global cues. The policy overseas location. SEBI vide circular dated initiatives taken in the secondary securities ȱśǰȱŘŖŗŘȱęȱȱ£ȱ ȱȱŘŖŗŘȬŗřȱȱȱǱ such requirements by issuing necessary ęǯȱ ǰȱ ȱ ȱ A. Centralisation of KYCs of Investors shall conduct ongoing client due diligence The system for centralized database based on the risk profile and financial of the KYC records of the clients was made position of the clients as prescribed in SEBI applicable for new clients who opened Guidelines. accounts with the intermediaries from January 1, 2012. But, for convenience of ǯȱ ¡¢ȱȱȱę clients registered prior to January 1, 2012 With a view to bring about operational (hereinafter referred to as ‘existing clients’) Ě¡¢ȱ ȱ ȱ ȱ ȱ ȱ ǻȱ and to expand the database of the KYC account number provided by Income Tax records of the entire securities market, it was Ǽȱ ęȱ ǰȱ ȱ ȱ decided to upload the KYC details of the ȱ ȱ ¢ȱ Śǰȱ ŘŖŗřȱ ęȱ ȱ existing clients of the intermediaries in the the intermediaries may verify the PAN of system of KYC Registration Agencies (KRAs), their clients online at the Income Tax website in a phased manner. instead of insisting on the original PAN cards The information about the existing from the investors - domestic and foreign client which is not available as per earlier investors. KYC norms shall be highlighted in the KRA system. When the existing client c. Accepting ‘Aadhaar’ as Proof of Address approaches another intermediary, it shall For the convenience of investors, SEBI be the responsibility of that intermediary ȱ ȱ ȱ ȱ ęȱ which downloads the data of that client Authority of India (UIDAI), Government of from the KRA system, to update the missing India, provided vide circular dated August information on the KRA system. (Box 1.3 may 13, 2012, that the Aadhaar Letter issued be referred for details) by UIDAI shall be admissible as Proof of Address also. It was already being recognized B. Rationalisation of Know Your Client as Proof of Identity. As a result, ‘Aadhaar’ can (KYC) Requirements now be used as a proof of identity as well as During the year, SEBI rationalized the of address.

18 Part One: Policies and Programmes

Box 1.3 : Single One Time KYC

ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘŖŗŗȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ £ȱ ȱ ȱ requirements for investors at the time of opening accounts with the intermediaries in securities markets. This has also reduced the cost of compliance for both clients and brokers.

Establishment of a centralized KYC Registration Agency (KRA) : ȱȱȱȱȱ£ȱȱȱ ȱȱȱȱȱǰȱ ȱȱęȱȱ ȱǻ ȱ Registration Agency) Regulations, 2011 which provided the framework for the establishment of KYC Registration Agency (KRA). KRA is an agency which maintains KYC records of the clients of an intermediary at a central place. This system is compliant with FATF standards and PMLA guidelines.

ęȱȱȱȱȱ ȱ¢ȱȱȱȱǱ Ȋȱ ȱȱȱ ȱȱȱǻ Ǽȱȱ ȱ¢ȱ¢ȱ¢ȱȱȱȱȱ for centralization of the KYC records in the securities market. Once the client has done KYC with one SEBI registered intermediary, he need not undergo the same process again with another. When customer shifts from ȱ¢ȱȱǰȱȱĴȱȱȱ¢ȱȱ ȱȱȂȱȱȱȱ¡ȱ KRA.

Ȋȱ ȱȱ ȱ¢ǰȱȱ ȱȱȱȱȱȱȱȱ¢ȱ ȱȱȱȱȱȱ intermediary or mutual fund as compared to 7-10 days earlier. The client can start trading or investment immediately.

Ȋȱ ȱȱȱȱ ȱ ¢ȱȱ¢ȱȱȱ ȱȱȱȱȱ ȱȱȱ ensured by the KRA.

Ȋȱ ȱȱȱȱęȱ ȱȱȱȱȱ¢ǰȱȱȱ¢ȱȱȱǰȱ ȱęȱ ǯȱ ȱ ȱȱȱȱȱȱȱȱ ȱȱĴȱǯ

Ȋȱ Ȭȱ ȱȱ ȱȱȱǲȱȱ ȱȱȱȬȱȱȱȱ ȱȱ ȱȱȱȱȱěȱȱȱȱǯ

Ȋȱ ȱȱȱ¡ȱȱȱȱȱȱȱ¢ȱȱȱȱȱȬĜȱěȱȱ carrying out KYC requirements.

Ȋȱ ȱȱȱ ȱ ȱȱ£ȱ¢ȱ ǰȱȱȱ ȱȱȱȱȱȱȱ enhanced due diligence of their clients.

ȱ ȱ ȱ ȱ ȱ ě¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ Řřǰȱ ŘŖŗŗȱ ȱ ȱ ȱȱȱȱ ǯȱ ȱ¢ȱ ȱ¢ȱȱ¢ȱȱȱ ȱȱ ȱěȱ from January 1, 2012. Subsequently, SEBI implemented the system for the KYCs of the existing clients also by issuing guidelines vide circular dated April 13, 2012. The time lines were given to the intermediaries to upload the KYCs of the existing clients in the KRA system in a phased manner.

ȱȱȱȱ ȱ ȱȱ ȱȱȱȱȱȱĴȱȱȱȱ ǯȱȱǰȱęȱ ȱȱȱ ȱ ȱ£ǯȱȱȱ

(CVL), NSDL Database Management Limited, DotEx International Limited (DotEx), CAMS Investor Services Private Limited and Karvy Data Management Services Ltd. KYCs of approximately 1.6 crore investors have been uploaded / registered on the KRA system. The focus is to provide faster access to the data to all the intermediaries and easy sharing of information between the KRAs. The same has been achieved through inter-operability among the systems of KRAs. The inter-operability provides an online medium of exchange of client records between the KRAs.

19 Annual Report 2012-13

d. Facilitating Electronic Uploading of allowed to change his / her name subject to KYC Documents the submission of following documents at the The Regulations prescribe that the time of change of name of the individual in KYC Registration Agencies (KRAs) shall ȱȱǱ require the intermediary to send original Change in name Document to be KYC documents of the clients to the KRAs. ȱ ȱȱȱȬȱ Ĵ Considering the issues faced in furnishing ȱ ȱęȱȱ¢ original KYC documents to the KRA viz. cost of Passport showing husband’s name or of retrieval, logistics involved, loss in transit, publication of name change etc., the KRA Regulations were amended for ȱ ȱĜȱ£Ĵǯ doing away with the requirement for sending Reasons other than Publication of name change ȱ ȱĜȱ£Ĵǯ original KYC documents of the clients to the Change in father’s Publication of name change KRAs. Instead, the intermediaries would ȱ ȱĜȱ£Ĵǯ upload documents electronically on the systems of KRAs with proper authentication. E. Prevention of Unauthorised Trading C. Strengthening KYC Norms - SEBI had earlier mandated that the ęȱȱęȱ stock exchanges shall send details of the SEBI has been taking steps to prevent transactions in cash and derivative segments money laundering and terrorist financing to the investors, by the end of trading day, through the securities markets. With a view to through SMS and E-mail alerts. This was further strengthen the existing framework and introduced with an objective to prevent the to tackle the risk presented by the misuse of complaints by investors of unauthorized complex legal structures, such as, companies, trading in their accounts by the stock brokers. partnerships, trusts etc., in facilitating money As the progress of registration of clients with ȱ ȱ ęȱ ȱ ǰȱ ȱ ȱ ȱ ¡ȱ ȱ Ĵȱ ȱ ȱ has made it mandatory for its intermediaries ȱ ¢ȱ ǰȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ ǻǼȱ ȱ made in the scheme in consultation with the to take all reasonable steps to verify the stock exchanges. As a result, the number of identity of such BOs for clients who are legal trade alerts sent through SMS/emails by stock persons/arrangements. SEBI vide circular exchanges has increased manifold. dated January 24, 2013 issued guidelines to ȱȱȱȱęȱ F. Reduction of Time-line for Transfer ownership. These guidelines are in line with of Equity Shares and Prescription the revised Financial Action Task Force (FATF) of Time-line for Transfer of Debt standards released in February 2012. Securities The listing agreement for equity shares ǯȱ ęȦȱ ȱ ȱ ȱ ȱ ȱ prescribed under the Securities Contracts ęȱ ȱǻǼȱ ǻǼȱ ǰȱ ŗşśŜȱ ȱ ȱ ęȱ ȱ In order to simplify the procedure of period of one month for registering transfer change of name in individual Beneficial of shares from the date of lodgment. With Owner’s (BO) account, the depositories a view to expedite the transfer process in were directed that an individual BO may be the interest of the investors, the time-line

20 Part One: Policies and Programmes

for registering the transfer of shares was systems of the stock exchanges / clearing reduced to 15 days vide SEBI circular dated ǰȱȱȱȱȱ Ǳ July 05, 2012, in consultation with Registrars a. The stock exchanges and the Clearing Association of India (RAIN), stock exchanges Corporations are required to inspect and market participants. The same time-line their active members in various has also been made applicable for transfer of segments every year. SEBI has reviewed debt securities. This circular came into force the policy of inspection with a view ȱěȱȱȱŖŗǰȱŘŖŗŘǯ to enhance focus on risk related issues G. Enhanced Level of Compliance by the and adopt risk based approach to such Intermediaries inspections. SEBI, vide circular dated December 07, 2012, has advised Stock In order to strengthen the monitoring Exchanges and Clearing Corporations mechanism through periodic reporting by that their policy for annual inspection of intermediaries, a revised reporting format their members in various segments, shall was prescribed by SEBI for Bankers to the also cover various kinds of risks posed Issue (by circular dated March 29, 2012), to the investors and market at large Merchant Bankers (vide circular dated May on account of the activities/business 14, 2012) and Registrar to an Issue and Share conduct of their members. The revised Transfer Agent (vide circular dated July 05, policy would ensure that the members 2012). Such format was earlier prescribed for who pose higher risks to the system debenture trustees. The revised formats along are adequately supervised by the Stock with directives issued to these intermediaries Exchanges. specify the accountability of their boards in respect of (a) review of compliance of all ǯȱ ȱ ȱ ȱ ȱ ȱ ěȱ regulatory requirements on half-yearly basis of supervision of members, SEBI, vide (b) review of the status of redressal of investor circular dated December 07, 2012, complaints (c) corrective measures initiated to also advised the stock exchanges ȱęȦȱȱǯ to establish an information sharing mechanism among themselves, to As this step taken by SEBI requires share the important outcomes/adverse placing of reports before the boards for observations of their inspections their review before sending to SEBI along of members who hold multiple with their comments, this would enhance membership with the stock exchanges. ¢ȱ ȱ ěȱ ȱ ȱ ȱ organisation of the intermediary and as a c. Stock exchanges are empowered under result would improve regulatory compliance their Byelaws to impose monetary ȱȱȱĴȱȱȱȱ penalties on their stock brokers for investors. violations/non-compliances based on findings of their inspections and H. Policy of Inspection of Stock Brokers regular monitoring. SEBI reviewed the by Stock Exchanges/Clearing penalty structure in consultation with Corporations stock exchanges. The stock exchanges SEBI took a number of steps during have framed the revised penalty the year 2012-13 to improve the inspection structure which is more deterrent in

21 Annual Report 2012-13

commensurate with the seriousness of J. Enhancing the Competency Level violations and repetitions of violations. of the Employees of the Market The revised penalty structure is Intermediaries proposed to be implemented in the ȱ ȱ ěȱ ȱ ȱ ȱ Financial Year 2013-14. competency levels of the employees of the market intermediaries and with a view I. Requirement of Base Minimum Capital to improve the quality of intermediation for Stock Broker and Trading Member services in the securities market, SEBI The Base Minimum Capital (BMC) mandated the requirement of obtaining the deposit requirement for Stock Broker and ȱ ęȱ ¢ȱ ȱ ¢ȱ ȱ Trading Member (BMC) has been prescribed ȱǱ to be commensurate with the risks, other a. Equity Derivative Certification than market risk, that the broker may bring Examination (“EDCE”) for associated to the system. BMC is the deposit given by persons functioning as approved users the member of the exchange against which no and sales personnel of the trading exposure for trades is allowed. members of an equity derivative Over the years the market structure has exchange or equity derivative segment undergone significant structural changes. of a recognized stock exchange. The various technological changes and the b. Securities Intermediaries Compliance increased speeds of trading have brought ǻȬǼȱ ęȱ ¡ȱ to fore the greater quantum of risks arising (“SICCE”) for associated persons during the course of execution of transactions. functioning as compliance officers of In light of this, based on deliberations at intermediaries registered with the Board various forums, SEBI has realigned the BMC as stock brokers, depository participants, ȱ ȱ ȱ ȱ ęȱ ȱ ȱ merchant bankers, underwriters, bankers stock brokers / trading members in cash / to the Issue, or debenture trustees or derivative segment of the stock exchange. credit rating agencies. In terms of the said circular, the Base Minimum Capital (BMC) deposit shall be K. Sharing of Information Regarding introduced for members holding registration Issuer Companies between Debenture as “trading member” in any derivative Trustees and Credit Rating Agencies segment and shall be enhanced for members Debenture Trustees (DTs) and Credit holding registration as “stock-broker” in cash Rating Agencies (CRAs) collect and have segment. Stock brokers / trading members access to information about the issuer shall maintain the prescribed BMC based companies in their respective capacity. ȱ ȱ ęȱ £Ǳȱ ǻŗǼȱ ¢ȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ trading without Algorithmic trading (Algo) SEBI Regulations on both of these groups (2)Trading only on behalf of Client (without of intermediaries to protect the interests of proprietary trading) and without Algo. (3) debenture holders. It was felt that there is Proprietary trading and trading on behalf of a need for these two intermediaries to have Client without Algo.(4) All Trading Members/ Ĵȱ ȱ ȱ ȱ ȱ Brokers with Algo. ȱ ȱ ȱ ȱ ȱ ěȱ

22 Part One: Policies and Programmes

discharge of duties by them by taking action minimum Median Quarter Sigma Order on timely basis. Size (MQSOS) requirement for a stock to be eligible for introduction in derivatives SEBI issued guidelines for sharing of the segment has been revised from ` 5 lakh following information among the DTs and to ` 10 lakh. The minimum Market wide Ǳ position limit (MWPL) requirement for a stock ǯȱ ȱ ȱ ȱ Ǳȱ ȱ ȱ to be eligible for introduction in derivatives and rationale, non cooperation by issuer segment has been revised from ` 100 crore on sharing information for monitoring to ` 300 crore. Further, minimum MWPL ȱ¢ǰȱ¢ȱȱĴȱ¢ȱ requirement for a stock to be retained in ǲ derivatives segment has been revised from ǯȱ ȱ ȱ ȱ Ǳȱ ǰȱ ȱ ` 60 crore to ` 200 crore. The minimum any, on the asset in respect of which MQSOS requirement for a stock to be retained security has been created, adequacy in derivatives segment has been revised from of asset cover, any defaults in interest/ ` 2 lakh to ` 5 lakh. redemption payments, delay in creation An additional criterion of ‘stock of security, restructuring of terms derivatives to have average monthly turnover of issue, grievances in respect of the in derivatives segment for last three months debentures issued, and non cooperation of ` 100 crore has also been decided to be in furnishing information to DT etc. implemented for a stock to be retained in c. Any other information as required. derivatives segment.

L. Mini Derivative (Futures & Options) N. Revised Position Limits for Trading Contract on Index (Sensex & Nifty) Member (Banks) in Exchange Traded With a view to ensure that small/retail USD:INR Derivative Contracts ȱȱȱĴȱ ȱȱ SEBI Circular dated July 30, 2010, inter segment, SEBI discontinued mini derivative alia, provides for position limits applicable for contracts (having contract size of ` 1 lakh) Ǳ ȱȱȱȱȱ on Index (Sensex and Nifty). The existing norms applicable to Trading Member (Banks). ¡ȱ ȱ ȱ Ĵȱ ȱ ȱ till expiry and new strikes could also be ȱ ȱ ȱ ȱ ȱ ȱ Ǳȱ introduced in the existing contract months. RBI/2011-12/569 dated May 21, 2012 on Accordingly, the last expiry available on mini ‘Risk Management and Inter-bank dealings’ derivative (Futures & Options) contract on which revised norms on position limits Index (Sensex & Nifty) was in January 2013. for Authorized Dealers Category – I (AD ¢ȱȮȱ Ǽȱǰȱ ȱęȱ¡ȱ M. Revision of Eligibility Criteria for II, para-3 of page 5 of the above stated SEBI Stocks in Derivatives Segment Circular dated Jul 30, 2010, as “Gross open In order to improve market integrity, in positions of the bank across all contracts (both consultation with stock exchanges, tightened futures and options contracts) not to exceed the eligibility and exit criteria for stocks 15 percent of the total open interest or USD in derivatives segment. Accordingly, the 100 million whichever is lower”.

23 Annual Report 2012-13

O. Corporate Bonds and Government on July 18, 2012. The following major changes Securities as Collateral ȱȱ ȱȱȱǱ The Hon’ble Finance Minister, in his ǯȱ ȱ ƹŗŘȱ ȱ Ȭěȱ ȱ ȱ ȱ announcement in the Union Budget for promoter(s)/promoter group entities the year 2013 -14, has proposed, inter- with respect to the purchase / sell shares alia, to permit FIIs to use their investment of the company was relaxed such that, in corporate bonds and Government within the cooling off period of ±12 securities as collateral to meet their margin ǰȱ ȱ ȱ ȱ Ĵȱ requirements towards their transactions on ȱ ěȱ ȱ ȱ ¢ȱ ȱ ȱ the recognized stock exchanges in India. / Institutional Placement Programme Reserve Bank of India vide Circular (IPP) with a gap of 2 weeks between ǯȱ şŖȱ ȱ ȱ ŗŚǰȱ ŘŖŗřȱ ȱ Ĵȱ ȱěǯ ȱ ȱ ǰȱ ȱ ȱ ȱ ¢ȱ Ĵȱ b. The size of offer was allowed to be collaterals, their investments in corporate less than ` 25 crore so as to achieve bonds as collateral in the cash segment and minimum public shareholding in a single government securities and corporate bonds as tranche. collaterals in the F & O segment. c. An option was given to the issuer to ȱȱȱȱǰȱ ȱȱĴȱ £ȱ ȱ ěȱ ȱ ȱ ȱ FIIs to offer the following collaterals - disclosure in the notice and advance government securities, corporate bonds, cash pay-in of shares. and foreign sovereign securities with AAA ǯȱ ęȱ Ȧȱ ȱ ȱ Ȧȱ ratings, for their transactions in both cash and bids were allowed during the last 60 F&O segments. In this regard, the stipulations ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ sale as against the earlier provision of the acceptance of various collaterals shall be last 30 minutes. adhered to. e. The stock exchanges were advised to disclose indicative price only during the P. Comprehensive Guidelines on Offer last 60 minutes of the duration of the For Sale (OFS) of Shares by Promoters OFS. through the Stock Exchange Mechanism f. Option was given to institutional In order to achieve minimum public investors to place bids/orders with either shareholding in listed companies and to 100 percent margin or 25 percent margin. allow promoters to dilute their shareholding in transparent manner ensuring wider g. It was advised that the dissemination ǰȱ ěȱ ȱ ȱ ǻǼȱ ȱ ȱĚȱȱ ȱȱȱȱȱȱȱ stock exchange mechanism was introduced notice as against the earlier provision. on February 01, 2012. ȱȱȱȱȱȱȱĚȱ price, the price may be disclosed after Subsequently, based on the experience the close of business hours on (T-1) day. and feedback received from market participants, the OFS framework was h. Additional half an hour time was reviewed and revised guidelines were issued provided to custodian during post close

24 Part One: Policies and Programmes

ȱȱȱęȱȱȱ investors. In case of institutional bids, subject to the condition that the investors who place orders/bids with bids and payments have been received 100 percent of margin upfront, custodian before closure of the bidding process. confirmation shall be within trading Further, in order to align OFS with hours. In case of institutional investors secondary market trades, the guidelines were who place orders without upfront further revised on January 25, 2013 and the ǰȱȱęȱȱȱȱ ȱȱ ȱǱ the existing rules for secondary market transactions. a. The eligible seller may be all promoters/ promoter group entities of top 100 ǯȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ companies by market capitalisation in trade basis. For non-institutional orders/ any of the last four completed quarters bids and for institutional orders with 100 as against last completed quarter as per ȱ ǰȱ Ĵȱ ȱ ȱ earlier provisions. on T+1 day. In case of orders/bids of institutional investors with no margin, ǯȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ Ĵȱȱȱȱȱ¡ȱȱȱ OFS- secondary market. i. Orders with 100 percent of margin paid upfront by institutional Q. Activation of ISIN in Case of investors and non-institutional Additional Issue of Shares / Securities investors. Such orders can be In order to curtail the transfer ęȱ ȱ ȱ ȱ ¢ȱ ȱ of additional issue of shares / securities during the trading hours. ȱ¢ȱ ¢ȱȱȱȱěǰȱ ii. Orders without paying upfront rights issue, preferential allotment and bonus margin by institutional investors issue, etc., of the listed company, prior to only. Such orders cannot be receipt of final listing/ trading approval, modified or cancelled by the the Depositories were advised to allot such investors or stock brokers, except additional shares/securities under a new for making upward revision in the temporary ISIN which would be kept frozen. price or quantity. It was further advised that, upon receipt c. Cumulative bid quantity is made ȱ ȱ ęȱ Ȧȱ ȱ ȱ ȱ available online to the market the exchange for such additional shares / ȱȱȱȱȱęȱ securities, the shares / securities credited in intervals in respect of orders with 100 the new temporary ISIN shall be debited percent upfront margin and separately and the same would get credited in the pre- in respect of orders placed without any existing ISIN for the said security. Thereafter, upfront margin. Indicative price shall the additional securities shall be available for be disclosed to market throughout the trading. Further, in case of issuance of equity trading session. The indicative price is shares by a company listed on multiple stock calculated based on all valid bids/orders. exchanges, the concerned stock exchanges d. Clearing Corporation collects 100 percent shall synchronize their effective dates of margin in cash from non-institutional listing / trading approvals.

25 Annual Report 2012-13

R. ęȱ ȱ ȱ ȱ ȱ S. Facility for a Basic Services Demat (DMA) Account (BSDA) ȱ ȱȱȱ ȱęȱȱ With a view to achieve wider the following extent in light of the feedback financial inclusion, encourage holding of received from the market participants and demat accounts and to reduce the cost of measures prescribed by SEBI to simplify maintaining securities in demat accounts and rationalize “Trading Account Opening for retail individual investors, all depository ȄǱ participants (DPs) were advised to provide a “Basic Services Demat Account” (BSDA) with a. The facility of DMA provided by limited services. The salient features of the the stock broker shall be used by the ȱȱȱ Ǳ client or an investment manager of the client. A SEBI registered entity shall ǯȱ ¢ȱ Ǳȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ who have or propose to have only manager on behalf of institutional one demat account where they are the clients. In case the facility of DMA is ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ used by the client through an investment have a BSDA provided that the value manager, the investment manager may of securities held in the demat account execute the necessary documents on does not exceed Rupees two lakh at any point of time. An individual can have behalf of the client(s). only one BSDA in his/her name across b. In order to bring uniformity on the all depositories. requirement of documentation for b. Charges / Annual Maintenance Charges trading account opening process, the (AMC) ęȱ ȱ Ȯȱ ȱ ȱ ȱ ` the purpose of DMA shall be replaced i. Upto 50,000 there will be NIL with the “Terms and Condition” that Annual Maintenance Charge shall be provided to the client or (AMC), and, investment manager acting on behalf of ii. for value of holding from ` 50,001 a client(s) for availing the DMA facility. to ` 2,00,000 AMC will be upto ` 100. c. Exchange shall specify from time to time the categories of investors to whom the The value of holding shall be determined DMA facility can be extended. Currently, by the DPs on the basis of the daily closing this facility is available for institutional price or NAV of the securities or units of clients. Brokers shall specifically mutual funds. If the value of holding in such BSDA exceeds the prescribed criteria at any authorize clients or investment managers date, the DPs may levy charges as applicable acting on behalf of clients for providing to regular accounts (non-BSDA) from that ȱ¢ǰȱȱęȱ ȱȱ date onwards. Client requirements and carrying out necessary due diligence. The broker shall Further, in order to reduce the cost of maintain proper records of such due compliance of DPs, following rationalisation diligence. ȱ ȱȱȱȱǱ

26 Part One: Policies and Programmes

a. Accounts with zero balance and nil U. Review of the Securities Lending and ȱ ȱ ȱ ¢Ǳȱ ȱ ȱ Borrowing (SLB) Framework shall send one physical statement of Securities Lending and Borrowing (SLB) holding annually to such BOs and ȱ ȱ ęȱ ȱ ȱ ȱ shall resume sending the transaction facility for any lender or borrower who statement as and when there is a wishes to extend an existing lent or borrow transaction in the account. position. Further, Liquid Index Exchange b. Accounts which become zero balance ȱ ȱ ǻǼȱ ȱ ȱ Ĵȱ ȱ ȱ ¢Ǳȱ ȱ ȱ ǰȱ ȱ under SLB. transaction statement may be sent for V. Rajiv Gandhi Equity Savings Scheme, the duration when the balance remains 2012 nil. However, an annual statement of holding shall be sent to the BO. Rajiv Gandhi Equity Savings Scheme, ȱ ¡ȱ ȱ ǰȱ ȱ ęȱ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ Ǳȱ ȱ ȱȱȱĚ ȱȱȱȱ accounts with credit balance but no ęȱȱȱȱȱȱ transactions during the year, one of domestic capital market by bringing in new statement of holding for the year shall investors. SEBI, in this regard, directed stock be sent to the BO. exchanges, depositories and mutual funds to implement the scheme. T. Review of Margining with Respect to Exchange Traded Funds (ETFs) ǯȱ ȱ ȱ ȱ ȱ ěȱ ȱ Allotment of Units of Mutual Fund ȱȱȱȱĜ¢ȱȱȱ Scheme Eligible under Rajiv Gandhi of index ETFs that track broad based market Equity Savings Scheme, 2012 (RGESS) indices, it was decided that VaR margin computation for such ETFs shall be computed For mutual fund schemes eligible under as higher of 5 percent or three times sigma of RGESS, the maximum period for which initial ȱǯȱǰȱȱȱȱȱĜȱ ěȱ ȱ ȱ ȱ ȱ ȱ ǰȱ use of margin capital by market participants, was extended from the existing stipulation it was decided to extend cross margining ȱęȱ¢ȱȱ¢ȱ¢ǲȱȱȱȱ facility to ETFs based on equity index and within which Mutual fund/ AMC should ȱȱȱȱ ȱěȬĴȱ allocate the units, refund money and issue ȱȱȱȱǱ statements of accounts, was extended from ȱ¡ȱȱȱęȱ ȱ¢ȱ a. ETFs and constituent stocks (in the from the closure of the initial subscription ȱęȱȱȱǼȱȱȱ ȱęȱ¢ȱȱȱȱȱȱȱ ¡ȱ¢ȱěȱȱǰ subscription. b. ETFs and constituent stock futures (in X. Guidelines for providing Dedicated ȱȱęȱȱȱǼȱȱ Debt Segment on Stock Exchanges ȱ¡ȱ¢ȱěȱȱǰȱǰ With an objective to develop corporate c. ETFs and relevant Index Futures to the bond markets and encourage trading on ¡ȱ¢ȱěȱȱǯ stock exchange trading platform, it was

27 Annual Report 2012-13

decided that the stock exchanges may create Ĵȱǰȱȱȱ ȱ a separate debt segment to provide for and other necessary provisions. (Box 1.4 may trading, reporting, membership, clearing and be referred for details)ȳ

Box 1.4 : Dedicated Debt segment on stock exchanges

With an objective to develop corporate bond markets and encourage trading on stock exchange trading platform, it was decided that the stock exchanges may create a separate debt segment to provide for trading, clearing, Ĵǰȱȱȱȱȱȱȱȱȱ Ǳ ǯȱ ȃȱȄȱȱęȱȱȱȱ¡ȱȱȱ ȱǻ ȱȱȱȱȱǼȱ ǰȱŘŖŖŞǲ b. Government Securities, Treasury Bills, State Government loans, SLR and Non-SLR Bonds issued by Financial Institutions, municipal bonds, single bond repos, basket repos and CBLO kind of products subject to RBI ǰȱ ȱǲ ǯȱ £ȱȱȱȱęȱȱ ȱǻȱěȱȱȱȱȱȱ Ǽ ǰȱŘŖŖŞǲ ǯȱ ¢ȱȱȱȱȱ¢ȱȱęȱȱȱȱȱ¢ȱȱȱ¢ ȱȱȱȦȱ ȱȱȱȱȱȱǱ

(i) Ǳ ǯȱ ȱȱȱȱěȱǰȱȱȱȱȱȱȱǰȱȱȱ quote, negotiated trades etc. b. The debt segment shall provide separate platforms for the markets described below - i. Retail market - which shall be a market for listing of and trading in publicly-issued debt instruments and where participation by registered trading members can be on their own account or for execution of orders placed their clients. ii. Institutional market - which shall be a market for non-publicly-issued debt instruments with a market lot size of minimum ` 1 crore.

(ii) ȱǱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ şǱŖŖȱ ȱ ȱ ŗŝǱŖŖȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ government securities as issued by RBI. b. The day count convention of Actual/Actual shall be followed for calculating interest rates. c. The stock exchange shall facilitate availability of price quotes on clean price, dirty price and yield. d. There shall be no shut period during which trades/ transfers are restricted for payment of interest or part redemptions. For other corporate actions such as redemptions / put-call options, issuers may choose to specify a shut period. ǯȱ ȱȱȱȱȱę¡ȱȱȱȱŗśȱ¢ȱȱȱȱȱȱȱ ȱȱȱ displayed on trading terminal by stock exchanges. f. In case of negotiated trades by members of the debt segment, the trades shall be reported to stock exchange within 30 minutes of the trade.

(iii) ȱȱĴǱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ǰȱ ȱ ȱ members shall be self clearing members or may clear through a clearing member. ǯȱ ȱĴȱȱȱȱȱȱ¢ǰȱȱȱ Ǳ ǯȱ ȱȱǱȱȱȱȱȱĴȱȱƸŗȱȱĴȱȱȬ ȱȱȱ ȱ ȱǯȱȱ¡Ȧȱȱ¢ȱȱȱȱȱȱĴȱȱ

28 Part One: Policies and Programmes

Box 1.4 : Dedicated Debt segment on stock exchanges (contd.)

DVP-II or DVP-III basis for this market in future and shall put in place appropriate risk management framework for the same. ǯȱ ȱȱǱȱȱȱȱȱĴȱȱƸŘȱȱĴȱȱȬ ȱȱ ȱĴȱ guarantee. (iv) ȱȱ Ǳ a. For retail market, a uniform margin rate of 10% shall be applicable on debt instruments with rating of AA or above (or with similar rating nomenclature) by recognised credit rating agencies and 25% for all other debt instruments. Further, in case of shortages, there shall be compulsory close-out with a markup of 5% in case of debt instruments which are assigned a credit rating of AA and above and 10% in case of other debt instruments. ǯȱ ȱȱǰȱȱȱ ȱĴȱȱȱȱȬ ȱȱȬ ȱǰȱȱȱ may be prescribed after approval by SEBI. c. The clearing corporation shall specify appropriate risk management framework for each market, wherein it shall, inter-alia, provide for computation and collection of margins, capital adequacy norms and collateral ȱȱȱȱǰȱĴȱȱȱȱǯ Further, in order to enable direct membership of institutional participants, SEBI Board inter-alia approved the following amendments in SEBI (Stock-Brokers and Sub-Brokers) Regulations, 1992 to- ǯȱ ȱȱȱȱȱȱȱȱȱ¢ȱȱȱȱȱęȱȱ ȱǰȱȱȱǰȱȱǲ ǯȱ ȱ ęȱ ȱ ȃ¢ȱ ȱ Ȅȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ commercial banks, primary dealers, pension funds, provident funds, insurance companies, mutual funds and ¢ȱȱȱȱ¢ȱȱęȱ¢ȱȱȱȱȱȱǯ

Y. Pre-Trade Risk Controls ȱ¡ȱ ȱĴȱȱȱ In view of the need to put-in place ȱȱ¢ȱȱȱ ȱǱ additional risk control measures to mitigate a. Securities having a mean impact cost disruption of trading at the exchanges on greater than or equal to 2 percent for account of erroneous orders, stock exchanges an order size of ` 1 lakh, where mean were directed to implement various pre-trade impact cost of the security on the stock risk controls such as order-level check(s), exchange is calculated over the past 60 dynamic price bands and risk reduction trading days. mode. ǻ¡ȱŗǯśȱ¢ȱȱȱȱǼȳ b. Securities introduced for trading in the Z. Liquidity Enhancement Schemes for ȃĴȱȱȄȱ¢ǯ Illiquid Securities in Equity Cash Further, stock exchanges were also market directed that LES may be continued till such In view of the demand from the market time as the security achieves mean impact participants for a scheme similar to the cost of less than 2 percent for an order size of Liquidity Enhancement Schemes (LES) in ` 1 lakh on the stock exchange during the last derivatives segment to enhance liquidity of 60 trading days. illiquid securities in their Equity Cash market,

29 Annual Report 2012-13

Box 1.5 : Pre-trade Risk Controls

In view of the need to put-in place additional risk control measures to mitigate the risk of disruption in trading at the exchanges on account of erroneous orders, it was decided that stock exchanges shall implement the following Ǳ i. ȬȱǱ Minimum pre-trade risk controls for all categories of orders placed on Stocks, Exchange ȱȱǻǼǰȱ ¡ȱȱȱȱǱ a. Ȧ¢ȱȱȱǱ i. Any order with value exceeding ` 10 crore per order shall not be accepted by the stock exchange for execution in the normal market. ii. In addition, stock exchange shall ensure that appropriate checks for value and / or quantity are ȱ¢ȱȱȱȱȱȱȱȱȱęȱȱȱǯ iii. Stock exchange to ensure that stock brokers put-in place a mechanism to limit the cumulative value of all unexecuted orders placed from their terminals to below a threshold limit set by the stock brokers. b. Stock exchanges shall enhance monitoring of the operating controls of the stock brokers to ensure ȱȱȱȱȱǲȱȱ¢ȱȱ¢ȱȱȱ¢ȱȱȱȱ at the end of stockbroker in implementing such checks. ii. Dynamic Price Bands (earlier called Dummy Filters or Operating Range) a. It was decided to tighten the initial price threshold of the dynamic price bands such that stock exchange ȱȱȱ¢ȱȱȱȱŗŖƖȱȱȱȱȱȱȱȱ ȱǱ i. Stocks on which derivatives products are available, ii. Stocks included in indices on which derivatives products are available, iii. Index futures, iv. Stock futures. b. Further, in the event of a market trend in either direction, the dynamic price bands shall be relaxed by the stock exchanges in increments of 5%. Stock exchanges shall frame suitable rules with mutual consultation for such relaxation of dynamic price bands. iii. Risk Reduction Mode a. Stock brokers to be mandatorily put in risk-reduction mode when 90% of the stock broker’s collateral available for adjustment against margins gets utilized on account of trades that fall under a margin system. ȱȱȱȱȱȱȱ Ǳ i. All unexecuted orders shall be cancelled once stock broker breaches 90% collateral utilization level. ǯȱ ¢ȱȱ ȱ ȱȱȱĴȱȱȱĴȱȱȱǯ ǯȱ ȱ ȱȱȱȱȱȱĜ¢ȱȱǯ iv. Non-margined orders shall not be accepted from the stock broker in risk reduction mode. b. The stock broker shall be moved back to the normal risk management mode as and when the collateral of the stock broker is lower than 90% utilization level.

ZA. Introduction of Periodic Call Auction to introduce trading in illiquid shares for Illiquid Scrips and Extension of Pre- through periodic call auction. Accordingly, Open Session to all Scrips the guideline for trading in illiquid scrips SEBI in consultation with Secondary was issued on February 14, 2013 and stock ȱ¢ȱĴȱǻǼȱȱ exchanges were advised to implement the

30 Part One: Policies and Programmes

same from April 01, 2013. Around 2000 scrips of Pre-open call auction session was extended at BSE and around 260 scrips at NSE would from the scrips forming part of Nifty and ȱȱȱęȱȱȱȱȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ would not be available for trading under April 01, 2013. (Box 1.6 may be referred for continuous market. Further, the framework details)

Box 1.6 : Periodic Call Auction for Illiquid scrips and Extension of Pre-Open Call Auction Session

SEBI introduced Call Auction in Pre-open session for scrips forming part of Nifty and Sensex on July 15, 2010 on pilot basis at NSE and BSE. Further the framework was subsequently extended to IPO scrips and re-listed scrips on January 20, 2012. Based on the experience & in consultation with SMAC, it was decided to introduce trading in illiquid scrips through periodic call auction. Accordingly, the guidelines for trading in illiquid scrips were issued on February 14, 2013 which was implemented from April 08, 2013. Following are the key features of periodic call ȱ Ǳ

1. Trading in illiquid scrips in the equity market shall be conducted only through periodic call auction sessions. Řǯȱ ȱ ȱ ¢ȱ Ȯȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵǰȱ ȱ ȱ ęȱȱȱȱȱȱ¡ȱȱȱȱ ȱȱȱǱ ǯȱ ȱȱ¢ȱȱȱȱȱȱȱȱȱȱȱȱŗŖŖŖŖǲ ǯȱ ȱȱ¢ȱȱȱȱȱȱȱśŖȱȱȱǲ ǯȱ ȱȱȱęȱȱȱȱȱ¡ȱ ȱȱȱǯ

3. Entry into periodic call auction mechanism – Stock exchanges shall identify illiquid scrips at the beginning of every quarter and move such scrips to periodic call auction mechanism. 4. Exit from periodic call auction mechanism – Stock exchanges shall move scrips from periodic call auction ȱȱȱȱȱȱȱ ȱȱȱǱ a. The scrip has remained in periodic call auction for at least two quarters ǯȱ ȱȱȱęȱȱȱȱȱȱǻǼ 5. Notice to market – For entry and exit of scrips in the call auction mechanism, a notice of two trading days shall be given to the market. 6. Number of auction sessions – Periodic call auction sessions of one hour each shall be conducted throughout ȱȱȱ ȱȱęȱȱȱȱşǱřŖǯ 7. Session duration - The call auction session duration shall be one hour, of which 45 minutes shall be allowed ȱȱ¢ǰȱȱęȱȱȱǰȱŞȱȱȱȱȱȱȱȱȱ ęȱȱȱŝȱȱȱȱȱěȱȱȱȱȱȱȱȱȱ the transition to next session. The session shall close randomly during last one minute of order entry between the 44th & 45th minute. Such random closure shall be system driven. 8. Un-matched orders- All un-matched orders remaining at the end of a call auction session shall be purged. 9. Price band – A maximum price band of 20% shall be applicable on the scrips through the day. Exchanges may reduce the price bands uniformly based on surveillance related concerns. 10. If the Market wide Index Circuit Breaker gets triggered at any time during the periodic call auction session, the session shall be cancelled and all orders shall be purged. The periodic call auction session shall be resumed at the nearest half hour after the normal market resumes.

31 Annual Report 2012-13

Box 1.6 : Periodic Call Auction for Illiquid scrips and Extension of Pre-Open Call Auction Session (contd.)

11. Penalty for certain trades - In the event where maximum of buy price entered by a client (on PAN basis) is equal to or higher than the minimum sell price entered by that client and if the same results into trades, a penalty shall be imposed on such trades. The penalty shall be calculated and charged by the exchange and collected from trading members on a daily basis. Trading members may recover such penalty from clients. The penalty so collected shall be deposited to Investor Protection Fund. Penalty for each such instance per session ȱȱȱȱȱ Ǳ a. 0.50% of the trade value for sale and 0.50% of trade value for the buy, resulting in 1% penalty for the client on PAN basis. OR b. 2500/- for the buy trade and 2500/- for the sell trade, resulting in penalty of 5000/- for the client on PAN Basis. 12. In addition to this, SEBI in consultation with SMAC decided to extend the call auction mechanism in pre-open session from scrips forming part of SENSEX and NIFTY to all liquid scrips. Accordingly guidelines issued on ¢ȱŗśǰȱŘŖŗŖȱȱȱȱ ȱ ȱ¢ȱęȱȱǱ a. Pre-open call auction session shall be applicable to all exchanges with active trading and for all scrips that ȱȱęȱȱȱȱȱȱǻǼȱǯ b. Price bands in pre-open session shall be as applicable in the normal market. ǯȱ ȱȱȱȱȱȱȱĜ¢ȱȱȱȱȱȱȱȬȱǯ

ZB. Usage of Electronic Payment Modes for ǯȱ ȱȱ¢ȱĴ making Cash Payments to the Investors ǯȱ ¢ȱȱ¢ȱĴȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ (SMAC) of electronic payment systems in the last SMAC recommends measures, for decade, it was decided that companies whose changes and improvements in the market securities are listed on the stock exchanges structure, for improving market safety, shall use, either directly or through their efficiency, transparency and integrity, RTI & STA, any Reserve Bank of India (RBI) and for reducing transaction costs. SMAC approved electronic mode of payment such ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ as ECS [LECS (Local ECS) / RECS (Regional facility for a Basic Services Demat Account, ECS) / NECS (National ECS)], NEFT, etc for margining with respect to ETFs, rollover making cash payments to the investors. facility in SLB, periodic call auction for In order to ensure this, companies illiquid scrips, extension of pre-open session were directed to maintain requisite bank to all scrips, etc. Some of the policy decisions details of their investors - either directly taken in 2012-13 based on the SMAC for the investors that hold physical shares ȱ Ǳ / debentures certificates or by seeking i. Exit Policy for De-recognized / Non- relevant bank details from the depositories operational Stock Exchanges. for investors that hold shares / debentures in ii. Review of Margining with respect to demat mode. ¡ȱȱȱǻǼǱ

32 Part One: Policies and Programmes

Ȋȱ ȱȱȱȱȱȱ ǯȱ ȱ ȱ ȱ Ĵȱ that track broad based market index (RMRC) as higher of 5% or three times sigma RMRC was consulted on the matters of the ETF. related to the risk management framework Ȋȱ ȱ ȱ Ȭȱ of cash and derivatives market with the facility in respect of offsetting view to align the extant risk management positions in ETFs based on equity framework with the need of current indices and constituent stocks, stocks market infrastructure. RMRC gave policy futures and relevant index futures. ȱȱȬȱȱǱȱ iii. Review of the Securities Lending and Order-level checks, Dynamic Price Bands and ȱǻǼȱ Ǳ Risk Reduction Mode. Ȋȱ ȱȱȬȱ¢ǯ ZD. Issuance of Guidelines on Business Ȋȱ ȱ ȱ ȱ ¡ȱ Continuity Plan (BCP) and Disaster Exchange Traded Funds (ETFs) Recovery (DR) to Stock Exchanges and under the SLB scheme. Depositories. iv. Introduction of trading through periodic Stock Exchange and Depositories are call auction for illiquid scrips in equity critical infrastructure providers and therefore market. any disruptions (major or minor) in their v. Extension of the pre-open session to all activities have the potential to threaten the liquid scrips in the equity market stability / integrity of markets. Keeping in view of the same, broad guidelines to stock ǯȱ ȱ¢ȱĴȱǻǼ exchange and depositories for Business continuity and Disaster recovery was issued Technological advancements have in the month of April 2012 with main brought to the fore several challenges objective to ensure that all critical operations associated with the use and adoption are restored within 4 hours, with maximum of technology in the securities market. permissible data loss of 30 minutes. TAC, comprising of technological experts, ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ III. Corporate Debt Market challenges so as to keep pace with such technological advancements and frame Debt markets play an important role in appropriate policies thereof. Some of the ȱęȱǯȱȱȱȱȱ policy decisions taken in 2012-13 based on the debt market is immense in India and with ȱȱ Ǳ the concerted efforts of SEBI, the market has begun seeing encouraging trends. In i. Guidelines for Business Continuity Plan the corporate debt market, ` 3,61,462 crore (BCP) and Disaster Recovery (DR) of the were raised through 2,489 issues by way of depositories and the stock exchanges private placement listed at BSE and NSE having nation-wide terminals. in 2012-13 as compared to ` 2,61,282 crore ǯȱ Ȭȱ ȱ Ǳȱ Ȭȱ through 1,953 issues raised in 2011-12, checks, Dynamic Price Bands and Risk mirroring the stronger growth sentiments in Reduction Mode. the market.

33 Annual Report 2012-13

A. Standardisation of the Application regulatory framework for issuance and listing Form and Abridged Prospectus for of non-convertible redeemable preference Public Issue of Debt Securities shares, SEBI Board approved the SEBI In order to make the public issue (Issue and Listing of Non-Convertible application form more investor friendly Redeemable Preference Shares) Regulations, and provide meaningful information in a 2013. As in case of SEBI (Issue and Listing simple manner, in July 2012, SEBI prescribed of Debt Securities) Regulations, 2008, the the structure, design, format, contents and proposed Regulations provide framework organisation of information in the Application for public issuance of non-convertible Form and Abridged Prospectus so as to redeemable preference shares and also listing standardize it and to make it uniform for of privately placed redeemable preference public issues of debt securities. shares. Considering the risks involved in the instrument, certain requirements like B. Online System for making Application minimum tenure of the instruments (3 to Public Issue of Debt Securities years), minimum rating (“AA-” or equivalent) ǯȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ In July 2012, SEBI issued guidelines in issuances. For listing of privately placed order to facilitate a system for making online non-convertible redeemable preference applications for public issue of debt securities shares, minimum application size for each and to reduce the timelines of the issue ȱ ȱ ę¡ȱ ȱ ȱ ȱ ǯȱ ȱ process for public issue of debt securities. per Basel III norms, Banks can issue non- This also assists in wider public participation, equity instruments such as Perpetual Non- reducing issuer cost while enabling listing of Cumulative Preference Shares and Innovative securities in a faster and time bound manner. Perpetual Debt Instruments, which are C. Standardized Offer Document/ in compliance with the specified criteria Memorandum in Public Issue & Listing for inclusion in Additional Tier I Capital. of Non-Convertible Debt as well as The proposed Regulations would also be Privately Placed Debt Securities which applicable to aforesaid instruments issued are Listed or Proposed to be Listed. by banks, subject to compliance with the provisions of Companies Act, 1956 or/ and A standardized format on the bond any other applicable laws and such other offering documentation was put in place ȱȱ¢ȱȱęȱ¢ȱ ȱȱ to facilitate the better understanding and subject to making adequate disclosures and preparation of such documents by issuers ȱȱȱȱȱěȱǯ as well as ease investors’ decision making ǯȱ ȱ ȱ ȱ ȱ ěȱ IV. Mutual Funds documents may also increase the tradability The year 2012-13 proved to be an of these corporate bonds among players and eventful year for mutual funds, ushering can support secondary market liquidity. various changes aiming at re-energising growth, development and regulation of the ǯȱ ȱ ęȱ ȱ ȱ mutual fund industry. The changes indeed for Issuance and Listing of Redeemable exemplified the philosophy of SEBI of Non-Convertible Preference Shares fusing development, regulation and investor For providing a comprehensive protectioȱȱȱěȱǯ

34 Part One: Policies and Programmes

The developmental approach was selling of mutual fund units as a ‘fraudulent Ěȱ ȱ ¢ȱ ȱ ȱ ¡ȱ ȱ and unfair trade practice’ under the relevant (TER),additional expense ratios allowed to ǰȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ be charged for penetration beyond the major Regulatory Organisation for distributors, ǰȱ Ĵȱ ȱ ȱ ȱ ¡ȱ ȱ harmonizing applicability of net asset values investment and advisory fees by the scheme across schemes, directing the mutual funds to over and above the maximum limit of the disclose monthly portfolio for all their schemes total expense ratio, introducing a new cadre in a standard format on their respective ȱ ȱ ȱ ęȱ ęȱ website , prudential limits and disclosures on and registration requirements, introduction portfolio concentration risk in debt oriented of a separate plan for direct investments, schemes, disclosures on distributor wise requirement of setting aside a portion of ȱ ȱ ȱ Ě ǰȱ ȱ ȱ ȱ the daily net assets for investor education, management (AUM) and ratio of AUM to Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ schemes, allowing distributors to opt in/ labelling in mutual funds. out of transaction charges based on type of A detailed description of the steps product, enabling participation of mutual ȱȱŘŖŗŘȬŗřȱȱȱ Ǳ funds in credit default swaps as users or protection buyers, changes in the framework A. Total Expense Ratio (TER) for participation of mutual funds in repo in Fungibility of TER was enabled by corporate bonds, for RGESS compliant mutual removal of the sub-limits on investment fund schemes - extending the timeline of management and advisory fees within the ȱěȱȱȱȱȱǰȱ TER. allotment and dispatch of account statement and enabling Gold Exchange Traded Funds to In order to enhance penetration of invest in the Gold Deposit Schemes of banks. mutual funds beyond the top 15 cities, it was decided that additional TER can be charged On the regulatory and investor protection up to 30 basis points on daily net assets of the ǰȱȱ ȱ ȱǱȱȱȱ scheme as per regulation 52 of SEBI (Mutual exit loads charged to the scheme, claw back ǼȱǰȱŗşşŜǰȱȱȱ ȱĚ ȱ of the additional expense ratios charged on from beyond top 15 cities are at least (a) 30 ȱ ȱ Ě ȱ ¢ȱ ȱ ȱ ŗśȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ if the investment is redeemed within a year, or (b) 15 percent of the average assets under disclosures in the half yearly report of Trustees management (year to date) of the scheme, ȱȱěȱȱ¢ȱȱȱ whichever is higher. increase geographical penetration of mutual ȱȱĚ ȱȱ¢ȱȱŗśȱȱ funds and the details of opening of new is less than the higher of (a) or (b) above, branches, launch of schemes under a single additional TER on daily net assets of the plan and ensuring that all new investors are scheme shall be charged on a proportionate subject to a single expense structure, creation basis. of a Unique Identity Number by Association of Mutual Funds in India (AMFI) for sales The top 15 cities shall mean top 15 cities persons of distributors, inclusion of mis- based on Association of Mutual Funds in

35 Annual Report 2012-13

India (AMFI) data on ‘AUM by Geography – Service tax on exit load, if any, shall be paid Consolidated Data for Mutual Fund Industry’ out of the exit load proceeds and exit load ȱȱȱȱȱȱȱęȱ¢ǯ net of service tax, if any, shall be credited to the scheme. Service tax on brokerage and Further, the additional expenses, transaction cost paid for asset purchases, if ȱ ȱěȱȱȱ any, shall be within the limit prescribed under under the Regulations, not exceeding 20 regulation 52 of the Regulations. bps of daily net assets of the scheme, were allowed to be charged to the scheme. d. Brokerage and Transaction Cost In case of a fund of funds scheme, The brokerage and transaction cost the total expenses of the scheme including incurred for the purpose of execution of trade weighted average of charges levied by the may be capitalized to the extent of 12 bps underlying schemes shall not exceed 2.50 and 5 bps for cash market transactions and percent of the daily net assets of the scheme. derivatives transactions respectively. Any payment towards brokerage and transaction a. Clawback of Additional TER and cost, over and above the said 12 bps and Disclosures on Penetration 5 bps for cash market transactions and The additional TER on account of derivatives transactions respectively may be Ě ȱȱ¢ȱȱŗśȱȱȱȱ charged to the scheme within the maximum shall be clawed back in case the same is limit of TER as prescribed under regulation redeemed within a period of 1 year from 52 of the SEBI (Mutual Funds) Regulations, the date of investment. Mutual funds/AMCs 1996. Any expenditure in excess of the said shall make complete disclosures in the half prescribed limit (including brokerage and yearly report of Trustees to SEBI regarding transaction cost, if any) shall be borne by the ȱ ěȱ ȱ ¢ȱ ȱ ȱ ȱ AMC or by the trustee or sponsors. geographical penetration of mutual funds and the details of opening of new branches, B. Investor Education and Awareness especially at locations beyond top 15 cities. It was decided that Mutual Funds/ AMCs shall annually set apart at least 2 b. Credit of Exit Load to the Scheme basis points on daily net assets within the It was decided that the exit load charged, maximum limit of TER as per regulation 52 if any, would be credited to the scheme. of the Regulations for investor education and awareness initiatives. Mutual Funds c. Service tax shall make complete disclosures in the half It was mandated that Mutual funds / yearly trustee report to SEBI regarding the AMCs may charge service tax on investment investor education and awareness initiatives and advisory fees to the scheme in addition undertaken. to the maximum limit of TER as prescribed in regulation 52 of the SEBI (Mutual Funds) C. Single Plan Structure for Mutual Fund Regulations, 1996. Service tax on other than Schemes investment and advisory fees, if any, shall be It was mandated that Mutual funds/ borne by the scheme within the maximum limit AMCs shall launch schemes under a single of TER as per regulation 52 of the Regulations. plan and ensure that all new investors are

36 Part One: Policies and Programmes

subject to single expense structure. Existing employee/ relationship manager/ sales schemes with multiple plans based on the person of the distributor interacting with the amount of investment (i.e. retail, institutional, investor for the sale of mutual fund products, super-institutional, etc) shall accept fresh in addition to the AMFI Registration Number ȱ¢ȱȱȱǲȱȱȱ (ARN) of the distributor. The application plans will continue till the existing investors form for mutual fund schemes shall have remain invested in the plan. provision for disclosing the UIN of such sales personnel along with the ARN of the D. Separate Option for Direct Investments distributor. It was decided that Mutual funds/ AMCs shall provide a separate plan for G. Harmonizing applicability of Net Asset direct investments, i.e., investments not Value(NAV) across schemes routed through a distributor, in existing as It was decided that in respect of well as new schemes. Such separate plan purchase of units of mutual fund schemes shall have a lower expense ratio excluding (other than liquid schemes), the closing distribution expenses, commission, etc., and NAV of the day on which the funds are no commission shall be paid from such plans. available for utilisation shall be applicable The plan shall also have a separate NAV. for application amount equal to or more than 2 lakh, irrespective of the time of receipt of E. New Cadre of Distributors such application. A new cadre of distributors, such as postal agents, retired government and semi- H. Monthly Portfolio Disclosures ȱ Ĝȱ ǻȱ ȱ ȱ ȱ ȱ It was mandated that Mutual funds/ equivalent) with a service of at least 10 years, AMCs shall disclose portfolio (along with retired teachers with a service of at least 10 ISIN) as on the last day of the month for all ¢ǰȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ their schemes on their respective website on at least 10 years, and other similar persons or before the tenth day of the succeeding (such as Bank correspondents) as may be month in a user-friendly and downloadable ęȱ ¢ȱ Ȧȱ ȱ ȱ ȱ ǰȱ format (preferably in a spreadsheet). Further, shall be allowed to sell units of simple and the format for monthly portfolio disclosure performing mutual fund schemes. Simple shall be same as that of half yearly portfolio and performing mutual fund schemes shall disclosures. Also, Mutual funds/AMCs may ȱȱęȱ¢ȱǰȱę¡ȱ disclose additional information (such as maturity plans (FMPs) and index schemes ratios, etc.) subject to compliance with the ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ Advertisement Code. than their scheme benchmark returns during each of the last three years. These distributors I. Cash Investments in Mutual Funds ȱ ȱ ȱ ęȱ ȱ ȱ ȱ In order to help enhance the reach ęȱȱ ȱǯ of mutual fund products amongst small investors, who may not be tax payers and F. Unique Identity Number (UIN) for may not have PAN/bank accounts, such as Employees of Distributors farmers, small traders/businessmen/workers, AMFI shall create a UIN of the it was decided that cash transactions in

37 Annual Report 2012-13

mutual funds to the extent of 20,000 per K. Transaction Charges ǰȱȱȱǰȱȱęȱ¢ȱ It was decided that distributors shall also shall be allowed subject to compliance with have the option to either opt in or opt out of Prevention of Money Laundering Act, 2002 levying transaction charge based on type of and Rules framed there under, the SEBI the product. Circular(s) on Anti Money Laundering (AML) and other applicable AML rules, regulations L. Disclosure with Respect to Half Yearly ȱ ȱ ȱ Ĝȱ ¢ȱ ȱ Financial Results procedures in place. Repayment in the form Mutual funds/AMCs shall make half of redemptions, dividend, etc. with respect ¢¢ȱȱȱȱȱęȱ to aforementioned investments shall be paid results on their respective website in a user- only through banking channel. friendly and downloadable format (preferably in a spreadsheet). J. Prudential Limits and Disclosures on Portfolio Concentration Risk in Debt- M. Additional Disclosures Oriented Mutual Fund Schemes Mutual funds/AMCs shall, in addition It was decided that Mutual funds/AMCs to the total commission and expenses paid shall ensure that total exposure of debt to distributors, make additional disclosures schemes of mutual funds in a particular sector regarding distributor-wise gross inflows (excluding investments in Bank CDs, CBLO, (indicating whether the distributor is an G-Secs, T-Bills and AAA rated securities associate or group company of the sponsor(s) issued by Public Financial Institutions and ȱ ȱ ȱ Ǽǰȱ ȱ Ě ǰȱ ȱ Public Sector Banks) shall not exceed 30 assets under management and ratio of percent of the net assets of the scheme. ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ¡ȱ ȱ ęȱ website on an yearly basis. In case the data services sector (over and above the limit of 30 mentioned above suggests that a distributor percent) not exceeding 10 percent of the net has an excessive portfolio turnover ratio, i.e. assets of the scheme shall be allowed by way more than two times the industry average, of increase in exposure to Housing Finance AMCs shall conduct additional due-diligence Companies (HFCs)only. Also, the additional of such distributors. Mutual Funds / AMCs exposure to such securities issued by HFCs shall also submit the said data to AMFI and are rated AA and above and these HFCs are the consolidated data in this regard shall be registered with National Housing Bank (NHB) disclosed on AMFI website. and the total investment/ exposure in HFCs N. Participation of Mutual Funds in Credit shall not exceed 30 percent of the net assets Default Swaps (CDS) Market as Users of the scheme. Existing schemes shall comply (“Protection Buyers”) with the aforementioned requirement within a period of one year from the date of issue It was decided to permit mutual funds of this circular. During this one year, total to participate in CDS market, as per the exposure of existing debt schemes of mutual guidelines issued by RBI from time to time, funds in a particular sector should not increase ȱȱȱ ȱǱ from the levels existing (if above 30 percent) as a. Mutual funds shall participate in CDS on the date of issuance of this circular. transactions only as users (protection

38 Part One: Policies and Programmes

buyer). Thus, mutual funds are decision, the concerned Scheme Ĵȱ ȱ ¢ȱ ȱ ȱ ¢ȱ Information Document (SID) shall to hedge their credit risk on corporate disclose the intention to participate bonds they hold. They shall not be in CDS transaction in corporate debt allowed to sell protection and hence not securities in accordance with directions Ĵȱȱȱȱȱȱȱ issued by RBI and SEBI from time the CDS contracts. However, they shall to time, and related information as ȱ Ĵȱ ȱ ¡ȱ ȱ ȱ ȱ appropriate in this regard. positions, subject to para d below. h. Mutual funds shall also disclose the b. Mutual funds can participate as users details of CDS transactions of the in CDS for the eligible securities as scheme in corporate debt securities in reference obligations, constituting from the monthly portfolio statements as within the portfolio of only Fixed well as in the half yearly trustee report, Maturity Plans (FMP) schemes having as per the prescribed format. Further, tenor exceeding one year. mutual funds shall disclose the scheme- c. Mutual funds shall buy CDS only from wise details of CDS transactions in the a market maker approved by the RBI notes to the accounts of annual report and enter into Master Agreement with of the mutual fund as per the prescribed the counterparty as stipulated under format. RBI Guidelines. Exposure to a single i. Mutual funds participating in CDS counterparty in CDS transactions shall transactions, as users, shall be required not exceed 10 percent of the net assets of to comply with the guidelines issued by the scheme. ǰȱ ȱ ęȱ ǯȱ ǯǯ d. The cumulative gross exposure through No.5053/14.03.04/2010-11 dated May 23, credit default swap in corporate bonds 2011 and subsequent guidelines issued along with equity, debt and derivative by RBI and SEBI from time to time. positions shall not exceed 100 percent of O. Participation of Mutual Funds in Repo the net assets of the scheme. in Corporate Debt Securities e. The total exposure related to premium In order to encourage growth of the paid for all derivative positions, corporate bond market, it was decided including CDS, shall not exceed 20 that the base of eligible securities may be percent of the net assets of the scheme. expanded, for mutual funds to participate in f. Before undertaking CDS transactions, repo in corporate debt securities, from AAA ȱȱȱȱȱȱȱ Ĵȱ rated to AA and above rated corporate debt policy on participation in CDS approved securities. by the Board of the Asset Management Company and the Trustees as per the P. Investment by Gold Exchange Traded ȱ ęȱ ¢ȱ ȱ ȱ ǯȱ Funds (ETFs) in Gold Deposit Schemes The policy shall be reviewed by mutual (GDS) of banks funds, at least once a year. GDS of banks was designated as a gold g. To enable the investors in the mutual related instrument eligible for investment by funds schemes to take an informed ȱȱȱȱȱ Ǳ

39 Annual Report 2012-13

a. The total Investment in GDS will not Further, the product label would exceed 20 percent of total AUM of such be disclosed in the Scheme Information schemes. Documents (SIDs), Key Information Memorandums (KIMs), front page of initial ǯȱ ȱȱȱȱȱȱȱ Ĵȱ application forms, common application forms policy with regard to investment in GDS and scheme advertisements in a prominently with due approval from the Board of the visible manner. Asset Management Company and the Trustees, which should have provision to The Circular is applicable from July 01, make it necessary for the mutual funds 2013 to all existing schemes and schemes to obtain prior approval of their trustees launched thereafter. for each investment proposal in GDS of R. Inclusion of Mis-Selling of Units of any Bank. The policy shall be reviewed Mutual Fund Schemes as a Fraudulent by mutual funds, at least once a year. and Unfair Trade Practice c. Gold certificates issued by Banks in The SEBI(Prohibition of Fraudulent and respect of investments made by Gold Unfair Trade Practices Relating to Securities ETFs in GDS shall be held by the mutual Market) (Amendment) Regulations, 2012 were funds only in dematerialized form. ęȱ ȱ ȱ ŗŗǰȱ ŘŖŗŘȱ ȱ ȱ inclusion of mis-selling of units of mutual Q. Product Labeling in Mutual Funds fund schemes as a fraudulent and unfair In order to address the issue of mis- ȱ ǯȱ Ȭȱ ȱ ęȱ ȱ selling, it was decided that all the mutual sale of units of a mutual fund scheme by any funds shall ‘Label’ their schemes on the person, directly or indirectly, by - ȱȱȱǱ a. making a false or misleading statement, a. Nature of scheme such as to create or wealth or provide regular income in an ǯȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ indicative time horizon (short/ medium/ the scheme, or long term). c. concealing the associated risk factors of b. A brief about the investment objective (in the scheme, or a single line sentence) followed by kind d. not taking reasonable care to ensure of product in which investor is investing suitability of the scheme to the buyer. (Equity/Debt). c. Level of risk, depicted by colour code ǯȱ ȱĴȱȱȱȱȱ¢ȱ ¡ȱȱǱ Organisation (SRO) for Distributors i. Blue – principal at low risk. To enable the setting up of an SRO ii. Yellow – principal at medium risk. for distributors, the SEBI (Self Regulatory Organisations) (Amendment) Regulations, iii. Brown – principal at high risk. ŘŖŗřȱ ȱęȱȱ ¢ȱŖŝǰȱŘŖŗřǰȱ ȱ d. A disclaimer that investors should stated that distributors shall be deemed as ȱ ȱ ęȱ ȱ ȱ ¢ȱ intermediaries. Further, by a notification are not clear about the suitability of the dated January 08, 2013 under sub-regulation product. (2) of regulation 1 of the SEBI (Self Regulatory

40 Part One: Policies and Programmes

Organisations) Regulations, 2004, the date of Ǽȱ ǰȱ ŘŖŗřȱ ȱ ęǰȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ thereby providing a framework for which the Regulations shall come into force registration and regulation of Investment in relation to distributors engaged by asset Advisors. The Regulations require all management companies of mutual funds. individuals, body corporate and partnership A public notice was issued on March 21, ęȱ ȱ ȱ ȱ ȱ ȱ ȱ 2013 inviting applications from any group investment advice to investors for or association of intermediaries which consideration to be registered and regulated are desirous of being recognized as a Self under these Regulations. The regulations Regulatory Organisation in terms of SEBI ȱȱěȱȱȱŘŗǰȱŘŖŗřǯ (Self Regulatory Organisations) Regulations, 2004 for distributors of mutual fund products, VII. Foreign Institutional Investors by making an application as prescribed in the (FIIs) said Regulations. A. Qualified Foreign Investors (QFI) V. Alternative Investment Funds Framework A. Regulations Notification of SEBI In line with the union budget speech (Alternative Investment Funds) 2011 and subsequent press release by Regulations, 2012 Government of India, it was decided to allow ȱȱȱȱęȱȱ In May 2012, the SEBI (Alternative Investors (QFI), who meet the prescribed Investment Funds) Regulations, 2012 (“AIF KYC norms, to invest in Indian equity shares, Ǽȱ ȱ ęǯȱ ȱ ȱ ȱ mutual funds and corporate debt subject to of framing the regulations, market comments the prescribed terms and conditions. Vide were also elicited on a concept paper SEBI circulars dated August 9, 2011 and prepared and placed on SEBI website for January 13, 2012, the framework for QFI public comments. The Regulations require investment in mutual funds and equity shares all pooling vehicles /funds such as Private has been prescribed. Subsequently, the QFI Equity Funds, Real Estate Funds, Hedge framework has been liberalised/ revised vide Funds, etc. to register with SEBI. The circulars dated June 07, 2012, July 18, 2012 Regulations endeavor to extend the perimeter and July 20, 2012. of regulation to unregulated funds, enhance ¢ȱ¢ǰȱȱȱĜ¢ǰȱ The revision in QFI framework primarily encouraging formation of new capital and ȱȱȱ Ǳ investor protection. The regulations also seek ǯȱ ȱęȱȱ ȱȱȱ ȱ to address regulatory gaps with respect to to include resident of a country which is oversight requirements under the venture a member of group which is a member capital regulations. of FATF and who is a signatory to IOSCO MMoU or a signatory of a VI. Investment Advisors bilateral MoU with SEBI. A. Notification of SEBI (Investment b. QFIs are allowed to invest in debt Advisors) Regulations, 2013 schemes of Indian mutual funds and In January 2013, the SEBI (Investment corporate debt.

41 Annual Report 2012-13

c. QFIs can open a single non-interest Central Bank, Govt. pension funds and bearing rupee account with any AD International or Multilateral Agencies. Category-1 bank in India for making investment through this route, subject to C. Introduction of Auction Calendar the conditions as may be prescribed by Vide circular dated April 27, 2012 it was RBI from time to time. decided that the auction of debt limits would d. The QFI has been extended the option be conducted on 20th of every month (if to appoint custodian of securities 20th is holiday, auction shall be done on the for clearing and settlement of its next working day), based on availability of transactions, provided such custodian is free limits at the end of respective previous ȱȱęȱȱȱȱ ǯ month. The auction shall be conducted if the free limit in any category (Government debt e. A separate investment limit of USD one long term, corporate debt old and Corporate billion created for QFI investment in Debt Long Term Infra) is more than ` 1,000 corporate debt. ǰȱȱȱȱ£ȱ Ǳ f. A separate investment limit of USD three billion created for QFI investment Particulars Details in Mutual Fund Infrastructure Debt Duration of bidding:ȱ ŘȱȱǻŗśǱřŖȱȱŗŝǱřŖȱǼ Scheme. Access to platform Trading members or custodians Minimum bid ` B. Know Your Client (KYC) – 1 crore Maximum bid ` ę 250 cr. or one-tenth of free limit whichever is higher ȱȱŘŖŗŘǰȱ ȱęȱ Tick Size ` 1 crore the Know Your Client (KYC) requirements for Allocation Price time priority foreign investors making investment through Methodology the portfolio route. The prominent relaxations Pricing of bidȱ ȱĚȱȱȱ` 1000 ȱȱ Ǳ or bid price whichever is higher ǯȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ ȱ Bidding date 20th of every month (if 20th by Global Custodian (GC), if Power is holiday, auction shall be ȱ Ĵ¢ȱ ȱ ȱ ¢ȱ ȱ Ȧȱ ȱ ȱ ȱ done on next working day) Time period for ȱǲ 90 days for corporate debt utilisation of the old and corporate debt long b. The requirement to provide names, limits term infra category and 45 residential address, photograph, proof days for Government debt old and Government debt of identity and proof of address of long term category individual promoters, partners/trustees, Auction Platform Alternatively on BSE & NSE whole time directors of foreign investor has been waived if the Global Custodian D. FII Investments in Government Debt (GC) gives an undertaking to provide Long and Corporate Debt Long Term the documents as and when requested Infra Categories ¢ȱȱ¢ǲ a. Government Debt Long Term category c. Special exemptions have been made for was enhanced to USD 10 billion. The SWF entities, Foreign Govt. Agencies, residual maturity requirement for

42 Part One: Policies and Programmes

investment in this category was reduced c. FII/sub-accounts may avail limits uniformly from 5 years to 3 years in the Corporate Debt Long Term Infra category without obtaining SEBI b. For the Corporate Debt Long Term approval till the overall FII investments Infra category, the lock-in period for reaches 90 percent, after which the investments was uniformly reduced to auction mechanism shall be initiated for one year while the residual maturity ȱȱȱȱȱęȱȱ allocation of remaining limits. SEBI will ȱȱȱęȱ put in place a mechanism to monitor the utilisation of the limit. c. The additional limit for FIIs investments in Government debt long term category F. FII Debt Limits: Operational Flexibility and the limits for corporate debt long term infra category (with one year lock- ȱȱȱȱȱĚ¡¢ȱ in and 15 months residual maturity), to those FIIs / sub-accounts which did not were allocated through a special auction hold debt investment limits as on January 03, on July 04, 2012. 2012 and purchased debt limits thereafter, it was decided that they shall be allowed a E. FII Debt Investment Provisions: cumulative re-investment facility to the extent Relaxations of 50 percent of their maximum debt holding at any point of time during the calendar year a. SEBI had provided the facility of re- 2013. The circular in this regard was issued investment up to two years from the on January 01, 2013. date of the circular or to the extent of twice the size of the debt portfolio, to those FIIs and sub-accounts that had G. FII Debt Limits: Increase in Limits and already acquired limits and /or invested Relaxation in Lock-In and Residual in debt in the manner prescribed in the Maturity said circular. With a view to provide ǯȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱĚ¡¢ǰȱȱ ¢ȱ each was made available under the 01, 2014, it has been decided that the Government – Long Term category FIIs/ Sub-Accounts can re-invest during and Corporate Bond – Old (non infra) each calendar year to the extent of 50 category respectively. percent of their debt holdings at the end b. The requirement of 3 years residual ȱȱȱȱ¢ǲ maturity under the Government – Long b. The time period for utilisation of the Term category was done away with. Government debt limits (for both old However, FIIs cannot invest in short and long term limits) allocated through term papers such as treasury bills under bidding process was reduced to 30 days this category. while the time period for utilisation of the corporate debt limits (for both old c. The requirement of initial maturity of 5 and long term infra limits) allocated years and lock-in period of 12 months through bidding process shall be 60 under Corporate – Long Term Infra ¢ǲ category was done away with.

43 Annual Report 2012-13

H. Reporting of Offshore Derivative ȱĴȱȱ ȱȱȱĴȱ Instruments (ODIs)/ Participatory Notes on Treatment of Foreign Investments. (PNs) Activity For streamlining the reporting of ǯȲ PNs (Participatory Notes)/ODIs (Offshore Amendments to SEBI (Substantial ȱ Ǽȱ ȱ ȱ ȱ Ǳȱ Acquisition of Shares and Takeovers) the FIIs issuing ODIs/PNs shall submit details Regulations, 2011 of ODI/PN transaction report along with the SEBI reviewed the provisions of the monthly summary report by 10th of every SEBI (Substantial Acquisition of Shares and month for previous month’s ODI transactions. Takeovers) Regulations, 2011 (‘Takeover Regulations’) in respect of which certain ǯȱ ¢ȱȱĴ concerns were raised during implementation. Committee on Rationalisation of ȱȱȱȱ Ǳ Investment Routes and Monitoring of Foreign a. It is now clarified that if the voting Portfolio Investments rights of a shareholder, increase beyond SEBI Board in its meeting held on the prescribed threshold limit pursuant October 06, 2012 has decided that SEBI to buyback by the target company, he will prepare a draft guideline based on the shall be exempt from the obligation to guidance of the Working Group on Foreign make open offer if the voting rights Investment (WGFI), for consideration of the are brought below the threshold limit Government of India (GoI). It was also decided within 90 days from the date on which that SEBI/RBI will create necessary regulatory the voting rights was increased and the framework based on the guidelines, which will period of 90 days will be reckoned from be laid down by the GoI. ȱȱȱȱȱȱ¢ȱěǯ Accordingly, in order to implement ǯȱ ȱ ȱ ȱ ěȱ ȱ ȱ the above Board’s decision, SEBI has triggered pursuant to an agreement or formed a “Committee on rationalisation otherwise in combination of any modes of investment routes and monitoring of of acquisition, the ‘relevant date’ for foreign portfolio investments”, under the making the Public Announcement and Chairmanship of Shri K. M. Chandrasekhar, determination of offer price shall be comprising of representatives from GoI, the earliest date on which obligations RBI and various market participants to are triggered subject to appropriate review, make recommendations and to disclosures of the subsequent prepare a draft guideline and regulatory ȱȱȱěȱǯ framework for an integrated policy on foreign c. The relevant date for making the Public investments, keeping as a starting point, the Announcement pursuant to an acquirer recommendations of the Working Group acquiring shares, voting rights or control on Foreign Investment in India (WGFI), for in target company subsequent to the consideration of the Government. ȱ ȱ ȱ ȱ ęȱ ȱ The committee held its meetings on the date on which the Board of Directors February 18, 2013 and March 19, 2013. The of the target company authorize such Ĵȱȱȱ ȱȱĴȱ£ǯȱ preferential issue.

44 Part One: Policies and Programmes

d. In order to bring parity in disclosure 20, 2007 on the framework for arriving at requirements among various SEBI Ĵȱȱȱȱȱ regulations, the disclosure requirement ȱȱȱěȦǯ with regard to buy or sell of two b. On the basis of the experience gained percent by persons holding more than and with the purpose of providing more five percent as specified in Takeover clarity on its scope and applicability Regulations has been modified in and for making the mechanism more line with SEBI (Prohibition of Insider transparent by providing standard Trading) Regulations, 1992. guidelines/ formulae for arriving at the e. It is clarified that acquisition made Ĵȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ¢ȱ stock exchange can be completed in 25, 2012. ȱ ȱ ȱ ȱ Ĵȱ c. The salient features of the modified process applicable to the stock exchange ȱȱȱȱ Ǳ mechanism subject to such shares being i. Certain defaults including insider kept in an escrow account. trading, front running, failure to make an open offer, mandated IX. Investor Assistance and Education disclosures, non-redressal of A. SCORES investor grievances and non- response to the summons issued SEBI issued a circular on August 13, by SEBI would be excluded from 2012 directing all companies whose securities the consent process. The defaults are listed on stock exchanges to obtain falling in the category of fraudulent SCORES authentication by September 14, and unfair trade practices, which in 2012, in accordance with the terms of the opinion of SEBI are very serious earlier dated June 3, 2011. SEBI, vide this and/or have caused substantial circular, also directed the companies to take losses to the investors, are also held appropriate necessary steps within seven to be non consentable. days of receipt of complaint by the concerned company through SCORES, so as to resolve ii. No consent application is to be the complaint within 30 days of receipt of considered, if any violation is complaint and also keep the complainant Ĵȱ ȱ ȱ ȱ ȱ ȱ duly informed of the action taken thereon. In years from the date of any consent case of failure to comply with the circular, it order. However, if the applicant was informed that SEBI would be constrained has already obtained more than to initiate enforcement actions as per the law two consent orders, no consent as may be deemed appropriate. application shall be considered for a period of three years from the date X. Legal Framework of the last order.

ǯȱ ęȱȱ ȱȱȱ iii. No consent application is to be ȱȱȱě considered by SEBI before the a. SEBI had issued a circular dated April completion of investigation /

45 Annual Report 2012-13

inspection, if any. to enhance or reduce the settlement amount considering the seriousness of iv. In respect of proceedings pending the cases as per the scheme of the Act, before the SEBI, no consent or even refuse to consider the case under application is to be considered if the consent process. ęȱȱ¡¢ȱ¢ȱȱȱȱ of the service of the show cause g. The circular also provides for non- notice. consideration of subsequent application with respect to the same default which d. The consent terms shall be determined has been rejected earlier and disposal ȱȱȱȱȱęȱȱ of the consent application expeditiously referred to in the modified circular, preferably within a period of six months which inter alia, provide for the from the date of registration of the following objective parameters for consent application. ȱȱȱǱ i. A minimum Benchmark Amount XI. Retrospect and Prospects for each category of default ĴȱȱȱȦȱ A. Retrospect for which the show cause notice is The economy was exposed to the vagaries issued or may be issued. of turmoil and pressure receding from the ii. The Benchmark Amount to take ȱǯȱȱ ȱęȱ into consideration the penalty in the FY13. However the reform agenda imposed by the Adjudicating ȱȱȱĴȱȱȱŘŖŗŘȬŗřȱȱ Ĝȱ ǻǼȱ ȱ ȱ ȱ ȱ hopes of the upturn. The estimates of GDP by the Whole Time Member (WTM) growth stood at 5 percent for FY13, mirroring as the case may be. the lowest rate in a decade and backed by the weakening activity in industry and services iii. Additional amounts for previous sector. IIP growth has declined further to only defaults/track record of the 1.0 percent when compared with a growth of applicant. Řǯşȱȱȱȱȱęȱ¢ǯȱȱ iv. Weightage given to the stage of the too declined along with the agriculture thus proceeding, nature of the default/ shrinking the total output of the economy. violation, gravity of the default/ The savings rate declined in 2011-12 to violation, volume traded, price řŖǯŞȱȱȱȱ ȱ ȱęȱȱ ǰȱ ȱ ǰȱ ęȱ ǰȱ of the household being only 8 percent, the nature of disclosure not made, its lowest over a decade. The gap in savings and impact, etc. investments widened to 4.2 percent of GDP, e. The consent terms also provides for non ȱ ęȱ ¢ȱ ¢ȱ ȱ ȱ ¢ȱ Ĵȱ £ǯȱ ȱ Ě ǯȱ ȱ ęȱ ȱ ȱ ȱ ȱ of ill-gotten profits, etc if considered ęȱǻǼȱ ȱȱśǯŚȱȱȱȱęȱ necessary. nine months of FY13. The policy reforms, hike ǯȱ ȱ ȱ ȱ¢ȱĴȱ in gold import duties and reducing subsidy (HPAC)/ Panel of WTMs is empowered on diesel and LPG have nonetheless paved

46 Part One: Policies and Programmes

the path to recovery as indicated by the swing The turnover at both NSE and BSE in financial markets. Liquidity conditions in equity derivatives segment showed an and credit growth remain subdued in wake increase in 2012-13 while that at the currency ȱ ȱ ȱ ¢ǯȱ Ěȱ ȱ derivative segment declined at two of the ȱȱȱȱȱȱĚȱ exchanges. The explosion in the number of is still sticky. contracts at BSE remains a major highlight in the FIA Annual Survey 2012. The global scenario touched upon the Indian trade and the exports are expected to The financial year 2012-13 also saw register a mild decline in 2012-13. Imports the primary market picking up. The total reduced marginally on account of high amount of equity issues mobilised in the ` customs duty on gold. Exchange rate too primary market stood at 15,474 crore in ` Ěȱ ȱ ǯȱ ¢ȱ ȱ 2012-13 as against 12,857 crore in 2011-12. followed by policy easing is anticipated to ȱȱȱȱęȱ ȱȱȱĚȱȱȱ¢ǯ Institutions’ Placement Mode (QIP) and Institutional Private Placement (IPP) ascended The securities market remained well from 16 issues raising ` 2,163 crore in 2011- reflective of the progression in global 12 to 45 issues raising ` 15,996 crore during economic state. The Sensex which closed at 2012-13. 17, 404 on March 30, 2012, touched 20,000 level, ended at 18,836 on March 28, 2013, Mutual funds saw a continuing trend registering a growth of 8.2 percent compared ȱ ȱ Ě ȱ ȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ to a decline of 10.5 percent seen in the ȱ ȱȱ¢ȱȱȱĚ ȱȱ ȱęȱ¢ǯȱ¢ȱȱ ȱ ȱ resources, mutual funds in 2012-13 saw a net the uneven trends and closed at 5,683 on Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` 76,539 ȱ ŘŞǰȱ ŘŖŗřȱ ȱ ȱ ęȱ ȱ ȱ crore as against ` 22,024 crore in 2011-12. 30, 2012 was at 5,296. The index registered FII invested ` 1,68,367 crore in the Indian a growth of 7.3 percent against a decline in market in 2012-13 compared to ` 93,725 crore ȱ ȱ şǯŘȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ in 2011-12. The cumulative net investment by The launch of MCX-SX into equity and FII stood at USD 1,71,529 million. The various equity derivative segment was a welcome measures in the securities market signaled a development in the securities market. World healthy growth over the previous year and Federation of Exchanges (WFE) figures resonated the strong fundamentals of the also outline India turning to be a better market. performing market in the calendar year 2012 owing to renewed investor faith on back of B. Prospects government reforms. India, as an economy has made massive While the turnover in cash market at leaps in its growth path in the past decade both the exchanges decreased, the market buttressed by impressive savings and capitalisation increased by 2.8 percent at investment rates. While demographics BSE and 2.3 percent at NSE. The market and resources have been at the root of the capitalisation to GDP ratio of BSE was 63.7 advantage India enjoys over its peers, the percent while it was 62.2 percent for NSE for execution of the policy and reform measures ȱęȱ¢ȱŘŖŗŘȬŗřǯ that have been taken also need to be given

47 Annual Report 2012-13

due credit. The strong fundamentals have have become vulnerable to the possibility ȱęȱȱȱ¢ǯȱȱȱ of fraud through sheer ingeniousness and World Economic Outlook by IMF, April 2013, innovativeness of perpetrators. The only while the Emerging market and developing antidote to this is increasing the access to economies are anticipated to grow by 5.3 banking and regulated financial services percent in 2013, India is projected to grow at and awareness of investors and continuous śǯŝȱǯȱȱęȱȱȱȱ fine-tuning of regulations to address any equal contributors to India’s growth trajectory regulatory lacunae. SEBI is committed to and continue remaining so reinforced by the promotion of awareness of financial sound infrastructure, well laid out regulatory markets in the public domain and would be framework and strong risk management ȱ ȱ ȱ ěȱ ȱ ȱ ȱ practices. Thus, despite the recent reduction protecting investors through workshops, in the stellar growth rates, the fact remains Grievance Redressal Mechanism Centre, that India is still one of the fastest growing ȱȱ ȱȱȱȱĜǯȱ economies and has a positive outlook. To this end, FSDC has released its draft National Strategy of Financial Education to Securities market in India has evolved ȱ ȱ ę¢ȱ ȱ ȱ ȱ in the wake of a number of reforms and India. It aims at undertaking a massive evolving economic conditions. While the Financial Education campaign to help people macro economic prospects currently may ȱ ¢ȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ Ĵǰȱ ȱ ȱ ȱ ęȱ ȱȱ¢ȱȱȱ have assured of positive growth. SEBI has financial products and services through ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ regulated entities with fair and transparent supervision and proactive regulations. machinery for consumer protection and The basic infrastructure for disclosure, grievance redressal. surveillance and trading are robust and synchronized with global standards. SEBI has also been easing the process for investors to enter the securities market. ǰȱ ȱ ęȱ ȱ ȱ KYC Centralisation, norms for e-IPOs, been witnessing technological transformation guidelines on Rajiv Gandhi Equity Saving which calls for a more vigilant and Scheme, dedicated debt segment on the progressive combination of regulations. stock exchanges, introduction of trading Of late, there have been instances of grey through periodic call auction for illiquid ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ scrips and extending the pre-open session be brought into the purview of regulation. to all other scrips in the equity market are Incidents such as unauthorized capital some of the steps undertaken by SEBI to mobilisation from the gullible investors are ensure more investor participation into the in the cognizance of the authorities and securities market. The surveillance system commensurate steps have been taken. As ȱ ȱ ě¢ȱ ȱ ȱ ȱ the regulatory framework for such activities and aberrations are investigated to ensure is still under construction, it is imperative a free and fair market. In its endeavour to for the investors to be well informed of widen and deepen the markets, SEBI would the financial decisions they take. Today consistently pursue the market developments world over the investors as well as entities and take proactive policy measures.

48 Part One: Policies and Programmes

While the Indian securities market is capital markets is also underway under deemed to be secure and regulated, an area ȱ ȱ ȱ ȱ ȱ Ĵǯȱ of concern for the regulator is the lack of The budget proposals like allowing AMFI involvement by retail participants. More registered mutual fund distributors to become and more of domestic savings have been members of the mutual fund segment on channelized into physical assets of late and stock exchanges, permitting pension and ęȱ ȱ ȱ ȱ ȱ ȱ provident funds to invest in ETFs/debt decline. Shares and Debentures have seen mutual funds and asset backed securities even a lower proportion primarily on would go a long way in encouraging and account of perceived intricate processes, revitalizing the mutual fund industry. want of financial awareness in addition Amendments to Insider Trading to the global concerns. Increasing the Regulations to fortify the framework individual participation would be precedent that protects fair market place is also in to the further development of our markets. progress. The unleashing of one of the Measures like introduction of Anchor biggest Insider trading scandal in US has investors in IPOs, prohibiting non-retail shifted the regulatory focus to the menace investors to withdraw or lower bid size, of insider trading and additional powers to discontinuation of mini derivative contracts regulators alike. In the Indian context, the on index have been timely taken to take extant regulatory regime on insider trading care of the interests of retail investors in would be reviewed and realigned with the the market and such measures as and when best practices adopted globally under the required would be adequately taken in the ȱȱȱȱȱĴǯ future as well. International co-operation is well sought In addition to investor participation, to integrate the mainstream markets with provision of capital for start-ups and early the best practices across the globe. Apart venture companies is a priority area. Recent from strengthening regulatory co-operation SEBI initiatives for angel and venture funds through MoUs with various countries, SEBI ȱęȱȬȱȱȱȱȱ is also an active member of IOSCO while needed beginning in addressing the paucity also being an integral member of the Internal of resources for start-up companies across Working Groups in wider association with the country. G-20 and FSB. Our openness to the global Budget announcements related to use of markets has seen embracing active work government and corporate bonds as collateral on contemporary issues of international by FII, infrastructure debt funds, and relevance like high frequency trading and dedicated debt segment on stock exchanges social media norms for dissemination of ȱȱ£ȱ ȱȱĴȱȱȱ information by listed companies in the Exchange is working on the proposal to allow present. High frequency trading has engaged SMEs to list on the SME exchange platform attention of regulators worldwide and in ȱȱ¢ȱȱȱěȱ India too, guidelines have been framed to and amendment of SEBI Act to strengthen ameliorate the risks posed by HFT and to ȱ ȱ ȱ ȱ ȱ ǯȱ ęȱ ȱ ȱ Ĵȱ ¢ȱ ȱ ǯȱ of norms related to foreign investments in The assurance to ongoing reforms during

49 Annual Report 2012-13

the roadshows at various global destinations, though various measures would continue to along with measures introduced by SEBI remain a priority area for SEBI. SEBI in its have ensured renewed interest of the foreign keenness to promote, protect and deepen the investors in Indian market markets would incessantly strive to maintain the market integrity. As we preserve our healthy markets, it is also crucial to promote fair practices that To sum up, the way forward for align with the best in class through stronger securities market is to create an atmosphere enforcement measures and in harmony with of trust in the market, confidence in the the technological developments worldwide. ȱ ȱ Ĝ¢ȱ ȱ ȱ ¢ǯȱ ȱ While some segments of the market may need, therefore, to work towards stricter and require constantly evolving vigil due to their ȱ ǰȱ ȱ ęȱ ȱěǰȱȱ¢ȱȱ ȱȱ education and upgrading technology. immediate intervention. Investor Education

50 PART TWO: TRENDS AND PartOPERATIONS Two: Trends and IN Operations SECURITIES in Securities MARKETS Markets

1. PRIMARY SECURITIES MARKET I. Resource Mobilisation through The primary markets continued to Public and Rights Issues remain subdued in 2012-13. The muted ȱ ŘŖŗŘȬŗřǰȱ Ŝşȱ ȱ ȱ ȱȱȱĚȱȱȱȱȱ the primary market and raised ` řŘǰŚśśȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ǻśřǼȱ ȱ ȱ ȱ ȱȱ ȱȱȱȱȱ ǻŗŜǼȱ ȱ ȱ ŝŗȱ ȱ ȱ ȱ ȱ ǰȱ Ě¢ȱ ȱ ` ŚŞǰŚŜŞȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ ȱ ǻśśǼȱ ȱ ȱ ȱ ǻŗŜǼȱ ǻȱ ŘǯŗǼǯȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ in the primary market activities in 2011-12 the negative returns recorded by many ȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ řřȱ ȱ ȱ ȱ ȱ ȱ ¢ǯȱ ¢ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ řŚȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ 2011-12. The amount raised through IPOs ęȱ ȱ ȱ ǻ Ǽȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ¢ȱ ȱ ȱ ȱȱ¢ȱȱ ȱȱ¢ȱǰȱ ` ŜǰśŘŞȱ ȱ ȱ ȱ ȱ ` śǰşŖŚȱ ȱ ȱ ȱ ȱ ȱ ǻȬ Ǽǰȱ ȱŘŖŗŗȬŗŘǯȱȱȱȱȱȱ ȱȱȱĴȱȱȱ ǰȱ` ŗǰśŞşȱȱ ȱȱěȱȱȱ ȱ ȱ ȱ Řśȱ ȱ ¢ȱ ȱ ¢ȱ¡ȱȱȱȱ ȱȱ ŘŖŗřǰȱȱȱȱ ȱŘŖŗŘȱȱȱ ȱȱȱȱǯȱȱ ȱ ȱȱ¢ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ ȱ is expected to reinvigorate primary market ȱȱȱȱȱȱȱȱȱ activities. ȱ ȱ ȱ ŝŘǯŚȱ ȱ ȱ

Table 2.1: Resource Mobilisation through Public and Rights Issues

2011-12 2012-13* Percentage share in Particulars total amount No. of Amount No. of Amount* 2011-12 2012-13 issues (` crore) issues (` crore) 1 234567 1. Public Issues (i)+(ii) 55 46,105 53 23,510 95.1 72.4 ȱ ǻǼȱ ȱ ȱ 35 10,482 33 6,528 21.6 20.1 (Equity/ PCD /FCD) of which ȱȱ ȱ ȱ řŚȱ śǰşŖŚȱ řřȱ ŜǰśŘŞȱ ŗŘǯŘȱ ŘŖǯŗ ȱ ȱ ȱ 1 4,578 0 0 9.4 0.0 ȱ ǻǼȱ ȱ ȱ(Bond / NCD) 20 35,611 20 16,982 73.5 52.3 2. Rights Issues 16 2,375 16 8,945 4.9 27.6 Total Equity Issues (1(i)+2) 51 12,857 49 15,473 26.5 47.7 Total Equity and Bond (1+2) 71 48,468 69 32,455 100.0 100.0 ȱ Ǳȱěȱȱȱ 5 2,054 4 1,589 4.2 4.9 ǱȱȘȱ¢ȱȱȱȱȱȱȱȱȱȱȱȱȱǯ

51 Annual Report 2012-13

ŘŖŗŘȬŗřȱ ȱ şśǯŗȱ ȱ ȱ ŘŖŗŗȬŗŘǰȱ Ȭȱȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ Śǯşȱ ¡ǯȱ ȱ ȱ ęȱ ¢ȱ ȱ ǰȱ ȱȱŘŖŗŗȬŗŘȱȱŘŝǯŜȱȱȱŘŖŗŘȬŗřȱ ŘŚȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱŘǯŗǼǯȱȱȱȱǰȱȱȱȱ ȱȱȱȱȱȱ` Řřşȱȱ ȱȱȱȱȱȱȱ ǻȱŘǯŘǼǯ ȱ ȱ ȱ ȱ śŘǯřȱ ȱ ȱ ȱ ȱ ¢ȱȱ ȱŚŝǯŝȱȱȱŘŖŗŘȬŗřǯ Table 2.2: SME Platform Year/Month Total A. Resource Mobilisation via SME No. ofAmount Platform issue (` crore) ȱȱĴȱĴȱȱȱȱ 123 2012-13 24 239 ȱȱȱȱȱȱȱ ȬŗŘȱ Ŗȱ Ŗ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȬŗŘȱ ŗȱ ŗŘ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȬŗŘȱ ŗȱ Ş ¡ȱȱȱȱȱȱȱ ȬŗŘȱ Řȱ ş £ȱȱ ȱȱ ȱǰȱ ȬŗŘȱ Řȱ ŗŘ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȬŗŘȱ Śȱ řŜ ȱ ȱ ȱ ȱ ȱ ȱ ` Řśȱ ǯȱ ȱ ȬŗŘȱ ŗȱ ş ȱ ȱ ȱ ȱ ȱ ȱ ȱ Nov-12 0 0 ȱ ǰȱ ȱ ȱ ȱ Dec-12 2 33 ȱ ȱ ȱ ȱ ¢ȱ ęȱ ȱ Ȭŗřȱ ŗȱ ŗŗ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ Ȭŗřȱ řȱ Řŝ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭŗřȱ ŝȱ ŞŘ

Chart 2.1: Share of Broad Category of Issues in Resource Mobilisation

Percent

52 Part Two: Trends and Operations in Securities Markets

B. Sector-wise Resource Mobilisation ȱ ȱ Řşǯśȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ Ȭ ȱ ȱ ȱ ȱ ŘǯŘǼǯȱȱȱȱȱȱȱ śśȱ ȱ ȱ ȱ ŗŚȱ ȱ ȱ ȱ ȱ Śśǯśȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǯȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ŜŖȱ ȱ ȱ ŘŖŖşȬŗŖȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŗȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ issues in 2011-12. The amount raised by ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` ŗŝǰŜşŖȱ ȱ ȱ ŘŖŗŘȬŗřȱ ǰȱ ȱ ȱ ȱ crore compared to ` ŗŚǰŝŜśȱ ȱ ȱ ǰȱ £ǯǰȱ ǰȱ ǰȱ ǰȱ ǰȱ ¢ȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯřǼǯȱ ǰȱǰȱȱȱ ǰȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ śŚǯśȱ ȱ ȱ ŘŖŗŘȬŗřȱ amount.

Table 2.3: Sector-wise Resource Mobilisation Percentage share in 2011-12 2012-13 Sector total amount No. of Amount No. of Amount 2011-12 2012-13 issues (` crore) issues (` crore) 1 234567 ȱ ȱ ŜŖȱ ŗŚǰŘşřȱ śśȱ ŗŝǰŜşŖȱ Řşǯśȱ śŚǯś ȱ ȱ ŗŗȱ řŚǰŗŝśȱ ŗŚȱ ŗŚǰŝŜśȱ ŝŖǯśȱ Śśǯś Total 71 48,468 69 32,455 100.0 100.0

Chart 2.2: Sector-wise Resource Mobilisation

120.0

100.0

100.0 94.

77.3

80.0 73.8

70.5

56.5

54.5 60.0 54.1

45.9

45.5

43.5 40.0

29.5

26.2

22. 20.0

5.3

0.0 0.0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Private Public

53 Annual Report 2012-13

C. Size-wise Resource Mobilisation ȱ ȱ ȱ ŞşǯŖȱ ȱ ȱ ` řŘǰŚśśȱ Issues above ` śŖŖȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱŘŖŗŘȬŗřǰȱȱȱ year. ¢ǯȱ ȱ Şřǯşȱ ȱ ȱ ȱ ȱ ȱȱȱȱŘŖŗŘȬŗřȱ ȱȱ ȱ ȱ¢ȱȱȱȱȱŘŖŗŘȬ ȱȱȱȱȱ ȱ ¢ȱȱ ŗřȱȱȱŞşǯŝȱȱȱŘŖŗŗȬŗŘǻȱ ȱ ǯȱ ǻ` śǰřŝřȱ Ǽȱ ȱ ȱ ŘǯŚǼǯȱ ȱ ¢ȱ ȱ ` ŗŖŖȬśŖŖȱ ȱ ȱ ȱ ȱ¢ȱȱ¢ȱ ȱȱȱ ȱ ȱȱȱȱȱŝǯŗȱȱȱŘŖŗŗȬŗŘȱȱ ǯȱ ǻ` Śǰŗŝřȱ Ǽȱ ȱ ȱ ȱ ȱ ȱ ŗřǯŜȱȱȱŘŖŗŘȬŗřǯ ȱȱ¢ȱǯȱǻ` ŘǰŞŞŚȱ ȱ ȱ ŘŖŗŗȬŗŘǰȱ ȱ ȱ ȱ Ǽǯ £ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ŘŖŗŘȬ ŗřǯȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ £ȱ D. Industry-wise Resource Mobilisation ȱ ` ŚŚŚȱ ȱ ȱ ȱ ` ŞřŞȱ ȱ ȱ ¢Ȭ ȱ ęȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱǰȱȱȱ£ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ǻȱȱȱǼȱ ȱȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ŗŜȱ ęȱ ȱ ȱ śŗǯŖȱ ȱ ȱ ` ŚŝŖȱ ȱ ȱ ` ŜŞŘȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯŜǼǯȱ ǰȱȱȱ ȱ£ȱȱȱ ȱ ȱ ȱ ȱ ȱ ` ŗŝŚȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ` ŗşŞȱ ȱ ȱ ȱ ŗŘǯşȱ ȱ ȱ ȱ ȱ 2012-13. ȱ ǯȱ Ȧȱ ȱ ȱ ȱŗşȱȱȱȱŘŖŗŘȬŗřȱȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŝǯŗȱ ȱȱŘŘȱȱȱȱŘŖŗŗȬŗŘȱǻȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ ŘǯśǼǯȱȱȱȱȱ` ŘŞǰŞŞśȱȱ years.

Table 2.4: Size-wise Resource Mobilisation

Percentage share in 2011-12 2012-13 Issue Size total amount

No.of Amount No. of Amount 2011-12 2012-13 issues (` crore) issues (` crore)

1 234567

< ` śȱȱ Řȱ şȱ Řȱ ŝȱ ŖǯŖȱ ŖǯŖ

ǃȱ` śȱȱǭȱǀȱ` ŗŖȱȱ Řȱ ŗŚȱ ŗŘȱ ŝşȱ ŖǯŖȱ ŖǯŘ

ǃȱ` ŗŖȱȱǭȱǀȱ` śŖȱȱ ŗşȱ śřśȱ ŗŜȱ Řşŝȱ ŗǯŗȱ Ŗǯş

ǃȱ` śŖȱȱǭȱǀȱ` ŗŖŖȱȱ ŗŚȱ ŗǰŖŗŞȱ Ŝȱ ŚŚŖȱ Řǯŗȱ ŗǯŚ

ǃȱ` ŗŖŖȱȱǭȱǀȱ` śŖŖȱȱ ŗśȱ řǰŚřŞȱ ŗŞȱ ŚǰŚŗŜȱ ŝǯŗȱ ŗřǯŜ

ǃȱ` śŖŖȱȱ ŗşȱ ŚřǰŚśřȱ ŗśȱ ŘŝǰŘŗŜȱ Şşǯŝȱ Şřǯş

Total 71 48,468 69 32,455 100.0 100.0

54 Part Two: Trends and Operations in Securities Markets

Table 2.5: Mega Issues in 2012-13*

Type of Type of Date of ěȱ£ Percentage No. Name of the entity issue instrument opening (` crore) share in of issue total amount 1 2 34567

Ȳŗȱ ȱȱǯȱ ȱ ¢ȱ ŘŗȬȬŗŘȱ şŚŖȱ řǯř

ȲŘȱ ŗŞȱȱȱ ȱǯȱ ȱ ¢ȱ ŗŞȬȬŗŘȱ ŘǰŝŖŖȱ şǯř

Ȳřȱ ŗŞȱȱǯȱ ȱ ¢ȱ ŘśȬȬŗŘȱ ŘǰŜşşȱ şǯř

ȲŚȱ ȱ¢ȱȱȱǯȱ ȱǻǼȱ ¢ȱ ŖŝȬȬŗŘȱ śŚŖȱ ŗǯş

Ȳśȱ ȱ ȱǯȱ ȱ ¢ȱ ŗŖȬȬŗŘȱ ŜŖŗȱ Řǯŗ

ȲŜȱ ȱ ȱǯȱ ȱ ¢ȱ ŗŗȬȬŗŘȱ Śǰŗŝřȱ ŗŚǯŚ ǻƸǼ

Ȳŝȱ ȱȱǯȱ ȱ ¢ȱ ŘŘȬ Ȭŗřȱ ŚŝŚȱ ŗǯŜ

ȲŞȱ ȱȱǯȱ ȱ ¢ȱ ŖŜȬȬŗřȱ ŝŚŚȱ ŘǯŜ

Ȳşȱ ȱ ȱǯȱ ȱ ¢ȱ řŖȬȬŗřȱ śśŗȱ ŗǯş

ŗŖȱ ȱȱȱ¢ȱǯȱ ȱ ȱ ŘŜȬ ȬŗŘȱ ŜŖŖȱ Řǯŗ

ŗŗȱ ȱ ȱȱǯȱ ȱ ȱ śȬȬŗŘȱ śŖŖȱ ŗǯŝ

ŗŘȱ ȱ¢ȱȱęȱǯȱ ȱ ȱ ŗŘȬȬŗŘȱ ŚřŚȱ ŗǯś

ŗřȱ ȱȱǯȱ ȱ ȱ ŗŚȬȬŗŘȱ řřŘȱ ŗǯŗ

ŗŚȱ ȱęȱȱǯȱ ȱ ȱ ŖřȬȬŗŘȱ ŘǰŖŗŝȱ ŝǯŖ

ŗśȱ ȱȱȱǯȱ ȱ ȱ ŗŚȬȬŗŘȱ ŝŖŖȱ ŘǯŚ

ŗŜȱ ȱ ȱȱ¢ȱǯȱ ȱ ȱ ŘŜȬȬŗŘȱ ŘǰŞŞŚȱ ŗŖǯŖ

ŗŝȱ ȱȱȱȱ ȱ ȱ şȬ Ȭŗřȱ ŘǰŗşŚȱ ŝǯŜ ȱ ȱǯ

ŗŞȱ ȱ ¢ȱȱȱǯȱ ȱ ȱ ŘŗȬ Ȭŗřȱ śǰřŝřȱ ŗŞǯŜ

ŗşȱ ȱ ¢ȱȱȱ ȱ ȱ ŘśȬȬŗřȱ ŚŘşȱ ŗǯś ȱ ǯȱȬȱȱŘ

Total 28,885

ȘȲȱȱȱȱȱ` řŖŖȱ

55 Annual Report 2012-13

Box 2.1 : Impact Analysis of policy measures introduced in Primary Market ȱȱȱ¢ȱȱȱȱȱĜ¢ȱȱ¢ȱǰȱȱȱȱĚ¡¢ȱȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱ¢ȱǯȱȱȱ ȱȱȱŘŖŗŘȬŗřǰȱȱȱȱȱ¢ȱȱȱȱȱȱęǯȱȱ ȱȬǰȱȱȱȬ ǰȱȬȱ¢ǰȱȱȱȱȱǰȱ¡ȱȱȱ ȱǯȱȱȱ ȱȱȱȱȱȱȱ¢ȱȱȱȱȱȱȱǰȱ ȱȱȱȬȱ¢ȱȱȱ¢ȱȱǰȱȱȱȱ ȱȱ£ȱȱ Ǳ Participation of retail investors Details of the study ŗǯȱ ¢Ȭęȱ ȱȱȱȱŘŖŗŗȬŗŘȱȱŘŖŗŘȬŗřȱ ȱ¢£ȱ ȱȱȱȱ¢ȱȱ investors. Řǯȱ ȱȱ ȱ ȱ ȱȱȱȱȱȱ ȱȱȱȱ¢ǯȱȱȱ ȱȱȱȱȱǯǯȱȱȱȱȱȱŘȱȱȱȱǰȱ ȱȱȱȱȱ¢ǯ řǯȱ ¢ǰȱřŝȱ ȱ ȱȱ¢£ȱ¢ȱȱȱȱŘȱǯȱ¢Ȭȱ ȱȱȱŗŞȱ ȱȱȱȱŖŗǰȱŘŖŗŗȱȱȱřŖǰȱŘŖŗŘȱǻȬȱǼȱ ȱȱȱȱȱȱ ȱŚȱ ȱȱȱŜȱȱȱȱȱȱŖŗǰȱŘŖŗŘȱȱȱřŗǰȱŘŖŗřȱǻȬȱ Ǽȱ ȱȱȱȱǯ Śǯȱ ȱȱ ȱȱȱȱ ȱȱ¢ǯ Results of the study ŗǯȱ ȱȱȱȱȱȱŚśȱ ǰȱȱ ȱȱȱȱȱȱȱȱȱ¢ȱ ȱȱȱȱřŝǰŜŘŜȱǻȬǼȱȱŗǰŗŜǰşŖŝȱǻȬǼǯ Řǯȱ ȱȱȱ¢ȱȱřŝȱ ǰȱȱ ȱȱȱǱ ǯȱ ȱȱȱȱȱ¢ȱȱȱȱȱȬȱȱȱȱȱŗŖȱ times. ǯȱ ȱȱȱȱ¢ȱȱȱȱȱȱ` ŝŖǯŝŖȱȱȱ` ŗşŖǯřȱǯ ǯȱ şŝƖȱȱȱȱȱȱȱĴȱȱȱȱȬȱǯ řǯȱ ȱȱȱȱŚȱȱ ȱȱǰȱȱȱȱȱȱ¢ȱȱȱȱ ȱŘǯśŞȱȱȱřǯŘŜȱǯ

Impact of other policy measures Ȋȱ ȱ¢ȱȱȱ ȱȱȱȱǰȱȱ ȱȱȱȱȱȱȱŗŖŖŖȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ Ĵȱ ȱ ȱ ȱǯ Ȋȱ ȱȱ ȱ¢ȱȱȱȱȱȱȱȱȱŜŝǰŖŖŖȱȱȱȱȱȱ ȱŗŖǰŖŖŖȱȱȱ¡ȱȱȱȱȱȱȱȱŘśǰȱŘŖŗŘǯ Ȋȱ ȱ ȱ ȱ ȱ ȱ ě¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ depressed market conditions. Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ǰȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱěȱȱȱȱȱŗśŘȱ¢ȱȱŚŞȱ¢ǯ

56 Part Two: Trends and Operations in Securities Markets

Table 2.6: Industry-wise Resource Mobilisation

2011-12 2012-13 Percentage share in Industry total amount No. of Amount No. of Amount 2011-12 2012-13 issues (` crore) issues (` crore) 1 234567

Ȧȱ ŗŗȱ ŘŖǰśŖřȱ ŝȱ ŘǰŚŝśȱ ŚŘǯřȱ ŝǯŜ ȱǭȱȱ Řȱ ŗŞŝȱ ŗȱ şȱ ŖǯŚȱ ŖǯŖ ȱ Ŗȱ Ŗȱ ŗȱ şȱ ŖǯŖȱ ŖǯŖ ȱ ŗȱ ŗŘŗȱ Ŗȱ Ŗȱ ŖǯŘȱ ŖǯŖ ȱ ŗȱ Řŗŝȱ Řȱ ŝŚȱ ŖǯŚȱ ŖǯŘ ȱ ŗȱ Şşȱ ŗȱ ŗŘȱ ŖǯŘȱ ŖǯŖ ȱ ŗŞȱ ŗŘǰŞŗŜȱ ŗŜȱ ŗŜǰśřŜȱ ŘŜǯŚȱ śŗǯŖ ȱȱ Ŗȱ Ŗȱ Řȱ ŗşȱ ŖǯŖȱ Ŗǯŗ ȱ ŗȱ Ŝśȱ Řȱ ŘŗŖȱ Ŗǯŗȱ ŖǯŜ ȱ¢ȱ Řȱ ŗřŞȱ ŗȱ Śȱ Ŗǯřȱ ŖǯŖ ȱǭȱȱ Řȱ řŖŜȱ Ŗȱ Ŗȱ ŖǯŜȱ ŖǯŖ ȱ ŗȱ ŗŗȱ Ŗȱ Ŗȱ ŖǯŖȱ ŖǯŖ ȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ ŖǯŖȱ ŖǯŖ ȱ Řȱ ŝŗȱ Ŗȱ Ŗȱ Ŗǯŗȱ ŖǯŖ ȱ Ŗȱ Ŗȱ ŗȱ Śǰŗŝřȱ ŖǯŖȱ ŗŘǯş ¡ȱ Ŗȱ Ŗȱ Śȱ śŞŘȱ ŖǯŖȱ ŗǯŞ ȱ Řşȱ ŗřǰşŚřȱ řŗȱ ŞǰřśŘȱ ŘŞǯŞȱ Řśǯŝř Total 71 48,468 69 32,455 100.0 100.0

II. Resource Mobilisation through QIP ŘŖŗŗȬŗŘǰȱ ȱ ȱ ȱ ȱ ȱ ȱ and IPP ȱȱȱȱȱȱ ȱǯ A. QIP and IPP ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱęȱȂȱȱǻ Ǽȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱ ȱ ȱȱ ȱȱȱ¢ȱ ¢ȱȱȱȱȱ to minimize the excessive dependence ȱ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ǰȱ ¢ȱ ěǰȱ ȱ ȱ ¢ȱ ǰȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ¢ȱȱ ǯ ȱ ȱ ȱ ȱ ǰȱ ȱ ęȱ ȱ ¢ȱ ǻ Ǽǯȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ Śśȱ ȱ ȱ ȱ ȱȱǰȱ ȱȱ ȱȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` ȱ ȱ ȱ Ȭȱ ȱ ȱ ǻ Ǽȱ ŗśǰşşŜȱ ǰȱ ȱ ȱ ŜřşǯŜȱ ȱ ` ǰȱ ŘŖŖşȱ ȱ ȱ ęȱ ¢ȱ higher than ŘǰŗŜřȱȱȱȱŘŖŗŗȬŗŘǯ

57 Annual Report 2012-13

ȱ ȱȱ ȱȱȱ ¢ȱŘŖŗŘǰȱ ȱŘǯŞǱȱěȱȱȱȱ ȱ ŘŖŗŘȱ ȱ ¢ȱ ŘŖŗřǯȱ ȱ ȱ Exchange Mechanism to conform to MPS ȱ ȱ ȱ ȱ ȱ ȱ ȱ Year No. of Companies ` şŚŗȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ 12 ȱ ȱ ȱ ` Śŝŗȱ ȱ ȱ ŘŖŗŗȬŗŘȱ 2011-12 2 ǻȱŘǯŝǼǯ 2012-13 33 Ǳȱǰȱ ǯȱ ěȱȱȱȱȱ¡ȱ III. Resource Mobilisation through Mechanism Preferential Allotment

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ Ȧȱ ¢ȱ ȱȱȱěȱȱȱȱȱ ȱ Ȧ¢ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱȱ¢ȱȱęȱȱ ȱ ¢ȱ ŘŖŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ¡ȱ ȱ ȱ ȱ ǯȱ ¢ǰȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ŘŖŗŗȬŗŘǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯŞǼǯȱ ȱŞŗȱǻŗǼȱȱȱǰȱŗşśŜǯȱȱ ȱ ŘŖŗŘȬŗřǰȱ řřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱěȱȱȱȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ exchanges. ȱ ȱ ȱ Ȭȱ ȱ

Table 2.7: Resource Mobilisation through QIP and Conforming to MPS through IPP

NSE BSE Common Total Year/Month No. of Amount No. of Amount No. of Amount No. of Amount issues (` crore) issues (` crore) issues (` crore) issues (` crorǼ 1 23456789 ŘŖŗŖȬŗŗȱ ŗŖȱ ŘǰŞŖŘȱ řȱ şŖȱ ŚŜȱ ŘŘǰşśşȱ śşȱ ŘśǰŞśŖ ŘŖŗŗȬŗŘȱ ŗȱ Şȱ ŗȱ ŚŖȱ ŗŚȱ ŘǰŗŗŚȱ ŗŜȱ ŘǰŗŜř ŘŖŗŘȬŗřȱ ŗȱ şśŖȱ ŗȱ ŗŜŖȱ Śřȱ ŗŚǰŞŞśȱ Śśȱ ŗśǰşşŜ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Řȱ Řśȱ Řȱ Řś ¢ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Řȱ ŗȱ Řȱ ŗ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ řȱ śŗŞȱ řȱ śŗŞ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Şȱ ŗǰŞşŞȱ Şȱ ŗǰŞşŞ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ ŗŘȱ ŘǰŘŗŗȱ ŗŘȱ ŘǰŘŗŗ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Ŝȱ ŗǰŖřŚȱ Ŝȱ ŗǰŖřŚ Oct-12 0 0 0 0 0 0 0 0 ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Řȱ ŗǰŖŚŘȱ Řȱ ŗǰŖŚŘ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ řȱ ŘǰŗŗŞȱ řȱ ŘǰŗŗŞ Ȭŗřȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ ŗȱ řŜŚȱ ŗȱ řŜŚ Ȭŗřȱ Ŗȱ Ŗȱ Ŗȱ Ŗȱ Śȱ śǰŜŝŜȱ Śȱ śǰŜŝŜ Ȭŗřȱ ŗȱ şśŖȱ ŗȱ ŗŜŖȱ Ŗȱ Ŗȱ Řȱ ŗǰŗŗŖ Ǳȱǰȱ

58 Part Two: Trends and Operations in Securities Markets

ǰȱȱȱȱǰȱȬǰȱǰȱ IV. Resource Mobilisation through ȱ ȱ ȱ ȱ ȱ ęȱ ȱ Private Placement of Corporate Debt ȱ ȱ ǰȱ ŗşśŜǯȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ` ŚŘŖȱ ȱ ȱ ȱ ŚŜǰşřşȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ řŗŗȱ ȱ ȱ ȱ raising debt money by the corporate entities. ` raised ŘśǰŝŖşȱȱȱŘŖŗŗȬŗŘȱǻȱŘǯşǼǯ ȱ ȱ ȱ ȱ ȱ ŘǯŗŖȱ ȱ ŘǰŚŞşȱ Table 2.9: Resource Mobilisation through Preferential Allotment NSE BSE Common Total Year/ Month No. of Amount No. of Amount No. of Amount No. of Amount issues (` crore) issues (` crore) issues (` crore) issues (` crore) 1 23456789 2010-11 83 1,393 156 12,072 134 17,046 373 30,511 2011-12 133 2,820 88 4,166 90 18,723 311 25,709 2012-13 188 7,442 87 12,729 145 26,768 420 46,939 ȬŗŘȱ ŗȱ Řȱ Řȱ şŝȱ ŗŞȱ ŗŖǰŗŜŜȱ Řŗȱ ŗŖǰŘŜś ¢ȬŗŘȱ ŗřȱ ŘǰŞŖşȱ Řŗȱ ŞǰśŖŞȱ ŗŖȱ řǰŜŝŖȱ ŚŚȱ ŗŚǰşŞŝ ȬŗŘȱ řŗȱ ŘǰŗŚŚȱ śȱ ŘǰřŖřȱ ŗřȱ ŘǰřŞŘȱ Śşȱ ŜǰŞřŖ ȬŗŘȱ Řřȱ řŝřȱ şȱ řŜŘȱ ŗřȱ ŗǰŘŚŞȱ Śśȱ ŗǰşŞŘ ȬŗŘȱ Řśȱ Şŗşȱ Śȱ řşŚȱ ŗŗȱ ŗǰŗŖŜȱ ŚŖȱ ŘǰřŘŖ ȬŗŘȱ ŗŝȱ ŘŝŞȱ Ŝȱ ŘŜřȱ ŗŘȱ řşřȱ řśȱ şřř ȬŗŘȱ ŗşȱ ŗŖŗȱ řȱ ŗŝśȱ ŝȱ ŜŖŚȱ Řşȱ ŞŞŖ ȬŗŘȱ ŗŜȱ ŘŝŚȱ Śȱ ŗśŗȱ ŗŚȱ ŞşŘȱ řŚȱ ŗǰřŗŝ ȬŗŘȱ ŘŘȱ řşŝȱ ŗȱ Řȱ ŗśȱ ŗǰŘśşȱ řŞȱ ŗǰŜśş Ȭŗřȱ şȱ şřȱ Śȱ şŜȱ ŗŖȱ ŜşŖȱ Řřȱ Şŝş Ȭŗřȱ ŗŗȱ ŗřşȱ Śȱ ŗŜŗȱ şȱ ŗǰśşŖȱ ŘŚȱ ŗǰŞşŗ Ȭŗřȱ ŗȱ ŗřȱ ŘŚȱ Řŗŝȱ ŗřȱ ŘǰŝŜŝȱ řŞȱ ŘǰşşŞ Ǳȱǰȱ Table 2.10: Private Placement of Corporate Bonds Reported to BSE and NSE NSE BSE Common Total Year/ Month No. of Amount No. of Amount No. of Amount No. of Amount issues (` crore) issues (` crore) issues (` crore) issues (` crorǼ 1 23456789 ŘŖŖŞȬŖşȱ Ŝşşȱ ŗǰŘŚǰŞŗŖȱ ŘŞśȱ ŗŝǰŖŚśȱ śŝȱ řŗǰŚŘŜȱ ŗǰŖŚŗȱ ŗǰŝřǰŘŞŗ ŘŖŖşȬŗŖȱ ŜŚŝȱ ŗǰŚřǰŘŞŜȱ śşŝȱ Śşǰŝřşȱ řŚȱ ŗşǰŜŗŖȱ ŗǰŘŝŞȱ ŘǰŗŘǰŜřś ŘŖŗŖȬŗŗȱ ŝŝŚȱ ŗǰśřǰřŝŖȱ śşŗȱ śŘǰśşŗȱ řşȱ ŗŘǰŞŘśȱ ŗǰŚŖŚȱ ŘǰŗŞǰŝŞś ŘŖŗŗȬŗŘȱ ŗǰŗśŘȱ ŗǰŞşǰŞŖřȱ ŝŞřȱ śŜǰşŝŚȱ ŗŞȱ ŗŚǰśŖśȱ ŗǰşśřȱ ŘǰŜŗǰŘŞř ŘŖŗŘȬŗřȱ ŗǰŘşśȱ ŘǰŖŜǰŗŞŝȱ ŗǰŖşŚȱ ŝŘǰŚŝŚȱ ŗŖŖȱ ŞŘǰŞŖŗȱ ŘǰŚŞşȱ řǰŜŗǰŚŜŘ ȬŗŘȱ ŝşȱ ŗŝǰŖśŖȱ Ŝŗȱ řǰŞŝśȱ śȱ ŘǰśşŖȱ ŗŚśȱ Řřǰśŗś ¢ȬŗŘȱ şŚȱ ŗřǰśŘŞȱ śŞȱ ŜǰŞŜśȱ Ŝȱ řǰŜŖŖȱ ŗśŞȱ Řřǰşşř ȬŗŘȱ ŘŚŗȱ ŗŞǰŘśŞȱ ŘŜȱ ŗǰŞŞŘȱ Ŝȱ ŜǰŗŗŖȱ Řŝřȱ ŘŜǰŘśŖ ȬŗŘȱ ŗřŝȱ ŘŞǰŞŝřȱ śśȱ ŗŖǰŗŞŞȱ ŗŖȱ ŗŞǰŜŞśȱ ŘŖŘȱ śŝǰŝŚś ȬŗŘȱ şŚȱ ŗŞǰśśŞȱ Şŗȱ ŜǰşŜŝȱ ŗŗȱ şǰřŜŝȱ ŗŞŜȱ řŚǰŞşŘ ȬŗŘȱ śŖȱ ŝǰşŜśȱ ŜŜȱ řǰŚŗŚȱ Ŝȱ řǰŖŚŖȱ ŗŘŘȱ ŗŚǰŚŘŖ ȬŗŘȱ ŗŖŖȱ ŗŞǰřśŝȱ şŖȱ ŚǰśśŜȱ ŗŘȱ ŝǰśŞŖȱ ŘŖŘȱ řŖǰŚşř ȬŗŘȱ ŗŗřȱ ŗřǰŜŜŜȱ ŘŖŝȱ ŞǰŚŚŗȱ śȱ řǰşŞşȱ řŘśȱ ŘŜǰŖşŜ ȬŗŘȱ śŚȱ ŗŗǰŚŝŝȱ ŗŗřȱ ŞǰŝŖŖȱ şȱ ŜǰŖŜŘȱ ŗŝŜȱ ŘŜǰŘřş Ȭŗřȱ ŗŗŗȱ Řřǰřřşȱ ŗŚřȱ ŞǰŚŝŞȱ śȱ ŝǰŘŖŝȱ Řśşȱ řşǰŖŘś Ȭŗřȱ ŗřŘȱ ŗŗǰŝŜřȱ ŗŖŖȱ řǰŝŗŗȱ Şȱ ŚǰŗśŖȱ ŘŚŖȱ ŗşǰŜŘŚ Ȭŗřȱ şŖȱ Řřǰřśřȱ şŚȱ śǰřşśȱ ŗŝȱ ŗŖǰŚŘŘȱ ŘŖŗȱ řşǰŗŝŖ Ǳȱǰȱ

59 Annual Report 2012-13

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` řǰŜŗǰŚŜŘȱ heightened conceȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ řŞǯřȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ęȱ ǯȱ compared to ` ŘǰŜŗǰŘŞřȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱ ȱȱȬȱȱȱȱ ȱȱȱȱȱȱȱȱ ¢ȱȱ ȱĚ ȱȱȱȱ mechanism. ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ 2. SECONDARY SECURITIES ȱ ȱȱ ǯȱ¢ȱȱȱȱȱ MARKET ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ I. Equity Markets in India ęȱ ěȱ ȱ ȱ ¢ȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ¢ȱ ȱ by advanced economies. The BSE Sensex ȱȱ ȱ¢ȱ ȱ¢ȱęȱ ȱ ȱ ¢ȱ ȱ ȱ ŘŖŖŖŖȱ ȱ ŜŖŖŖȱ ȱȱȱ ȱȱ ǰȱ¢ȱȱ ȱ¢ȱȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ŘŖŗřǯȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱ ȱ£ȱ¢ȱȱȱ ȱȱǯȱ ǰȱ ȱȱȱ ȱ ȱȱȱȱȱ ȱȱȱȱȱ¢ȱȱ £ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ¢ȱȱȱȱ ȱȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ corporate earnings. ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ¡ȱ ȱ ȱȱȱȱȱǯ ȱ ¢ȱ ȱ ¢ȱ ŞǯŘȱ ȱ ȱ ǰȱ ȱ ȱ ŝǯřȱǰȱ¢ǰȱȱȱřŖǰȱŘŖŗŘȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯřǼǯȱ ȱ ȱ ¡ȱ ȱ ¢ȱ ŗŚřŘȱ ȱȱ Ȃȱȱȱȱȱ ȱ ȱ ȱ ȱ ŗŞŞřŜȱ ȱ ȱ Řşǰȱ ŘŖŗřȱ ȱ ȱ ȱ ǰȱ ȱ ǰȱ ȱ ȱ ŗŝŚŖŚȱ ȱ ȱ řŖǰȱ ŘŖŗŘǯȱ ȱ ȱ ǰȱȱȱȱȱȱęȱ ȱ¢ȱȱȱřŞŝȱȱȱȱ ȱ ȱ ȱ ęǯȱ ȱ ȱ ȱśŜŞřȱȱȱȱȱȱŘŖŗřȱȱśŘşŜȱȱ ȱ ȱ ǰȱ Ȃȱ ȱ ȱȱȱȱŘŖŗŘǯ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ¡ȱȱȱ¢ȱȱȱ ȱ ǰȱ ȱ ęȱ ¡ȱ ȱ ¢ȱ Řşǰȱ ŘŖŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱȱȱȱȱŘŖŘŖŚȱȱŜŗŗŘȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ¢ǯȱȱ ȱȱȱȱęȱ domestic economic scenario. ¢ȱ ȱȱȱ ȱŚǰȱŘŖŗŘȱ ȱȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǰȱ ¡ȱ ȱ ȱ ¢ȱ ȱ ŗśŝŚşȱ ȱ ȱ ȱ ęȱ ǰȱ ¢ȱ ȱ ȱ ŚŝŝŖǰȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱȱȱ¢ȱ ȱȱȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ŜǰȱŘŖŗŘȱ ȱȱȱȱ¢ȱŘǯŝȱ

60 Part Two: Trends and Operations in Securities Markets

Chart 2.3: Movements of Benchmark Stock Indices

25000 7000 6000 20000 5000 15000 4000

10000 3000

BSE Sensex 2000

5000 S&P CNX Nifty 1000 0 0

Mar-13

Nov-12

Oct-12

Jul-12

Apr-12

Feb-13

Jan-13

Dec-12

Sep-12

Aug-12

Jun-12

May-12

Sensex Nifty

ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ŘǯŘȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱ¢ȱŞǰȱŘŖŗŘȱȱȱ ȱȱȱȱȱ¡ȱȱŘŖǯřȱȱ ęȱ¢ǯ in 2012-13. ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŗŝǯŞȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ řǯŝȱ ȱ ¢ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱȱȱŘǯŚǯȱ ȱȱ ȱ¢ȱ ȱ ȱ ȱ ȱ ȱ řşǯŜȱ ȱ ȱ ŘŗǯŚȱ ǰȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ǰȱ ¢ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ¢ȱȱȱ ȱȱȱȱ ŘǯŗŗǼǯȱ ǰȱȱȱȱǰȱȱ ȱŝŜȱȱ ȱ¢ȱ¢ȱȱ

61 Annual Report 2012-13

Table 2.11: Major Indicators of Indian Stock Markets Percentage Variation over the Item 2011-12 2012-13 Previous Year 2011-12 2012-13 1 2345 A. Indices BSE Sensex ȱ ȱ Ȭȱ ŗŝŚŖŚȱ ŗŞŞřŜȱ ȬŗŖǯśȱ ŞǯŘ ȱ ȱ ȱ ŗŝŚŘřȱ ŗŞŘŖŘȱ ȬŜǯŚȱ Śǯś ȱ ȱ¢ ȱ ȱ Ȭȱ śŘşŜȱ śŜŞřȱ ȬşǯŘȱ ŝǯř ȱ ȱ ȱ śŘŚřȱ śśŘŖȱ ȬŜǯŗȱ śǯř ȱ ȱśŖŖ ȱ ȱ Ȭȱ ŚŘŘŘȱ ŚŚřŞȱ ȬŞǯŝȱ śǯŗ ȱ ȱ ȱ ŚŗŞŜȱ Śřŝŝȱ ȬŞǯŜȱ ŚǯŜ B. Annualised Volatility (percent) ȱ ȱ¡ȱ ŘŖǯŘȱ ŗŘǯśȱ Ȯȱ Ȯ ȱ ȱ¢ȱ ŘŖǯŚȱ ŗŘǯşȱ Ȯȱ Ȯ C. Total Turnover (`ȲǼ ȱ ȱȱǻȬ Ǽȱ řŚǰŞŚǰřŞŗȱ řŘǰŜŗǰŝŖŗȱ ȬŘśǯŜȱ ȬŜǯŚ of which ȱ ȱ ȱ ŜǰŜŝǰŚşŞȱ śǰŚŞǰŝŝŚȱ ȬřşǯŜȱ ȬŗŝǯŞ ȱ ȱ ȱ ŘŞǰŗŖǰŞşŘȱ ŘŝǰŖŞǰŘŝşȱ ȬŘŗǯŚȱ Ȭřǯŝ ȱ ¢ȱȱȱ řǰŘŗǰśŞǰŘŖŞȱ řǰŞŝǰŗŘǰŜŘŗȱ şǯşȱ ŘŖǯŚ of which ȱ ȱ ȱ ŞǰŖŞǰŚŝŜȱ ŝŗǰŜřǰśŗşȱ Șȱ ŝŞŜǯŗ ȱ ȱ ȱ řǰŗřǰŚşǰŝřŘȱ řǰŗśǰřřǰŖŖŚȱ ŝǯŘȱ ŖǯŜ D. Market Capitalisation (`ȲǼ ȱ ȱ ȱ ŜŘǰŗŚǰşŚŗȱ ŜřǰŞŝǰŞŞŝȱ Ȭşǯŗȱ ŘǯŞ ȱ ȱ ȱ ŜŖǰşŜǰśŗŞȱ ŜŘǰřşǰŖřśȱ ȬşǯŖȱ Řǯř E. No. of Listed Companies ȱ ȱ ȱ śǰŗřřȱ śǰŘŗŗȱ ŗǯřȱ ŗǯś ȱ ȱ ȱ ŗǰŜŚŜȱ ŗǰŜŜŜȱ ŚǯŜȱ ŗǯŘ E. P/E Ratio ȱ ȱ¡ȱ ŗŝǯŞȱ ŗŜǯşȱ Ȯȱ Ȯ ȱȱ ȱ¢ȱ ŗŞǯŝȱ ŗŝǯŜȱ Ȯȱ Ȯ ȱȱ ȱśŖŖȱ ŗŞǯřȱ ŗŝǯŗȱ Ȯȱ Ȯ

Ǳȱ ŗǯȱ ȱ ȱȱȱȱȱǰȱǰȱȱȱȬǯ ȱ Řǯȱ ȱȱȱȱȱȱȱȬǯ ȱ řǯȱ Șȱ¡ȱȱȱȱȱȱ ȱǯ Ǳȱǰȱ

ǻŗŝȱ Ǽǰȱ ȱ ȱ ǻ¡ȱ Ǽȱ ȱ priced compared to emerging and other ȱȱǻȱǼǯ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ǯȱ ȱȱȱȱȱȱȱȱ ¢ǰȱȱ¢ȱ£ȱȱ ¢ȱ ŘǯŞȱ ȱ ȱ Řǯřȱ ȱ ¢ǯȱ ǰȱ ȱ ¢ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱȱȱȦȱȱȱȱ compared to the previous year. ȱ¢ǰȱȱ ȱȱȱ¢ȱ

62 Part Two: Trends and Operations in Securities Markets

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱȱȱȱǯ ęȱ¢ǯȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱȱǰȱ ȱȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ǯȱ¢ȱȱ ȱȱ¢ȱ ȱȱȱęȱȱȱȱ ǰȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ¢ȱȱȱ ǯȱ ¢ȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱȱȱȱ¢ȱȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ Instruments such as Exchange Traded Notes ȱȱȱȱǯȱȱ ǻǼȱ ȱ ȱ ȱ ȱ ¢Ȭȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŚŖȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ę¢ȱ ěȱ ȱ ǭȱ śŖŖȱ ǯȱ ȱ ȱ ȱ ęȱǯȱȱȱȱȱȱ ȱȱ ȱȱȱȱ ȱ ȱȱ ȱȱȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱŘŖŗŘȬŗřǯȱȱȱȱȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȬȬȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻřŖǯŚȱ Ǽǰȱ ȱ ¢ȱ ȱ ¢ȱ ǯȱ ǰȱ ȱ ¢ȱ ȱ ǻŘŝǯśȱ Ǽȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱǻŗşǯşȱǼǯȱǻȱŘǯśǼ

63 Annual Report 2012-13

ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ǰȱ ȱ ȱ ȱ śŖŖȱ ȱ ȱ ȱ¢¢ȱȱ ȱȱȱ ȱǻŘřǯŖȱ ¢ȱ ȱȱ¢ȱśǯŗȱȱȱŝǯŚȱ Ǽȱ ȱ¢ȱȱǻŗŘǯŝȱǼȱ ȱ¢ȱȱŘŖŗŘȬŗřǰȱȱȱȬ ȱ ¢ȱ ǻŗŘǯŘȱ Ǽǯȱ ȱ ȱ ȱȱ¢ȱŚǯŖȱǯ ȱȱ¡ȱȱ£ȱǻŗŘǯŜȱǼǰȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻŗŖǯŜȱ Ǽȱ ȱ ȱ ǻŜǯŖȱ ȱ ¢ȱ ȱ ǯȱ ȱ ȱ Ǽǯ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ¢ȱ ȱ ȱ ¡ȱ II. Performance of Major Stock ǻřŗǯŝȱ Ǽȱ ȱ ¢ȱ ȱ ȱ Indices and Sectoral Indices ¡ȱ ǻŘŖǯşȱ Ǽȱ ȱ ȱ ȱ ¡ȱ ǻŗřǯŘȱ Ǽǯȱȱȱȱȱȱǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱ¡ȱ ȱǰȱȱȱ ȱ¡ȱȱ ǻŘŘǯŞȱǼǰȱ ȱ¢ȱȱ ȱ¡ȱ ȱȱȱȱȱǯȱȱ ǻŘŗǯřȱ Ǽǰȱ ȱ ȱ ¡ȱ ǻŗŗǯřȱ Ǽ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱŘǯŜǼǯ ȱ ȱ ŘǯŗŘȱ ȱ Řǯŗřȱ ȱ ȱ ŘǯŜȱ ȱ ŘǯŝǯȱȱȱȬȱȱǰȱȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ŗŖŖǰȱ ȱ ŘŖŖȱ ȱ ȱ śŖŖȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŜǯŞȱ ǰȱ ŜǯŖȱ ȱ ȱ ŚǯŞȱ ȱ ȱ¡ȱǻřřǯşȱǼǰȱ ȱ¢ȱȱ ¢ȱȱȱȱ¢ǯȱȱȱ ȱ ǻŘŖǯŜȱ Ǽǰȱ ȱ ȱ Ȭȱ ¡ȱ ȱ ȱ ȱ ȱ ŗŘǯŚȱ ǻŗśǯŚȱǼȱȱȱȱǻŗŘǯşȱǼȱ ȱȱŘŖŗŘȬŗřǯȱ¢ǰȱȱȱ ǻȱŘǯŝǼǯ

Table 2.12: Major Stock Indices and their Percentage Variation Year/ BSE Percentage BSE Percentage CNX Percentage CNX Percentage CNX Percentage Month Sensex Variation 100 Variation Nifty Variation Mid-cap Variation 500 Variation 1 234567891011 ŘŖŖŞȬŖşȱ şŝŖşȱ Ȭřŝǯşȱ ŘŞŜŝȱ ȬŚŖǯŖȱ řŖŘŗȱ ȬřŜǯŘȱ řŚŖŞȱ ȬŚśǯŚȱ ŘŘşśȱ ȬŚŖǯŖ ŘŖŖşȬŗŖȱ ŗŝśŘŞȱ ŞŖǯśȱ śřşŚȱ ŞŞǯŘȱ śŘŚşȱ ŝřǯŞȱ ŝŝŖśȱ ŗŘŜǯŗȱ Śřŗřȱ Şŝǯş ŘŖŗŖȬŗŗȱ ŗşŚŚśȱ ŗŖǯşȱ śŞśŜȱ ŞǯŜȱ śŞřŚȱ ŗŗǯŗȱ ŞŖŚŖȱ Śǯřȱ ŚŜŘŜȱ ŝǯř ŘŖŗŗȬŗŘȱ ŗŝŚŖŚȱ ȬŗŖǯśȱ śřŗśȱ ȬşǯŘȱ śŘşŜȱ ȬşǯŘȱ ŝŝŗŗȱ ȬŚǯŗȱ ŚŘŘŘȱ ȬŚǯŗ ŘŖŗŘȬŗřȱ ŗŞŞřŜȱ ŞǯŘȱ śŜŝşȱ ŜǯŞȱ śŜŞřȱ ŝǯřȱ ŝŚŖŘȱ ȬŚǯŖȱ ŚŚřŞȱ śǯŗ ȬŗŘȱ ŗŝřŗşȱ ȬŖǯśȱ śŘŜŞȱ ȬŖǯşȱ śŘŚŞȱ ȬŖǯşȱ ŝŚŝŗȱ Ȭřǯŗȱ ŚŗŝŞȱ ȬŗǯŖ ¢ȬŗŘȱ ŗŜŘŗşȱ ȬŜǯŚȱ ŚşŚŘȱ ȬŜǯŘȱ ŚşŘŚȱ ȬŜǯŘȱ ŜŞşŞȱ Ȭŝǯŝȱ řşŗřȱ ȬŜǯř ȬŗŘȱ ŗŝŚřŖȱ ŝǯśȱ śŘŝşȱ ŜǯŞȱ śŘŝşȱ ŝǯŘȱ ŝřśŘȱ ŜǯŜȱ Śŗŝŗȱ ŜǯŜ ȬŗŘȱ ŗŝŘřŜȱ Ȭŗǯŗȱ śŘŘşȱ ȬŖǯşȱ śŘŘşȱ ȬŖǯşȱ ŝŗŜşȱ ȬŘǯśȱ ŚŗŘŜȱ Ȭŗǯŗ ȬŗŘȱ ŗŝŚřŖȱ ŗǯŗȱ śŘśŗȱ ŖǯŚȱ śŘśşȱ ŖǯŜȱ ŝŖŜŜȱ ȬŗǯŚȱ ŚŗřŖȱ Ŗǯŗ ȬŗŘȱ ŗŞŝŜřȱ ŝǯŜȱ śŝŖŗȱ ŞǯŜȱ śŝŖřȱ Şǯśȱ ŝŞŚŗȱ ŗŗǯŖȱ ŚśŖŚȱ şǯŗ ȬŗŘȱ ŗŞśŖśȱ ȬŗǯŚȱ śŜŘŗȱ ȬŗǯŚȱ śŜŘŖȱ Ȭŗǯśȱ ŝŝŜřȱ ȬŗǯŖȱ ŚŚŚşȱ ȬŗǯŘ ȬŗŘȱ ŗşřŚŖȱ Śǯśȱ śşŖşȱ śǯŗȱ śŞŞŖȱ ŚǯŜȱ ŞŗŚŖȱ Śǯşȱ ŚŜŝśȱ śǯŗ ȬŗŘȱ ŗşŚŘŝȱ ŖǯŚȱ śşŝŜȱ ŗǯŗȱ śşŖśȱ ŖǯŚȱ ŞśŖśȱ Śǯśȱ ŚŝŚřȱ ŗǯś Ȭŗřȱ ŗşŞşśȱ ŘǯŚȱ ŜŖşŗȱ ŗǯşȱ ŜŖřśȱ ŘǯŘȱ ŞřŜŚȱ Ȭŗǯŝȱ Śŝşśȱ ŗǯŗ Ȭŗřȱ ŗŞŞŜŘȱ ȬśǯŘȱ śŝŘŖȱ ȬŜǯŗȱ śŜşřȱ Ȭśǯŝȱ ŝśŚŖȱ ȬşǯŞȱ ŚŚŝŞȱ ȬŜǯŜ Ȭŗřȱ ŗŞŞřŜȱ ȬŖǯŗȱ śŜŝşȱ ȬŖǯŝȱ śŜŞřȱ ȬŖǯŘȱ ŝŚŖŘȱ ȬŗǯŞȱ ŚŚřŞȱ ȬŖǯş

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64 Part Two: Trends and Operations in Securities Markets

Table 2.13: Sectoral Stock Indices and their Returns Year/ CNX Percentage CNX Percentage CNX Percentage BSE Oil Percentage BSE Percentage Month IT Variation Bank Variation PSE Variation and Gas Variation FMCG Variation 1 234567891011 2008-09 2319 -55.3 4133 -22.2 2454 -1.2 7053 9.9 2036 17.1 2009-10 5856 152.6 9460 128.9 3766 53.5 10159 44.0 2831 39.1 2010-11 7148 22.1 11705 23.7 3567 -5.3 10241 0.8 3596 27.0 2011-12 6516 -8.8 10213 -12.8 2900 -18.7 8088 -21.0 4493 24.9 2012-13 7219 10.8 11362 11.3 2748 -5.2 8327 3.0 5919 3.0 ȬŗŘȱ ŜŖŞśȱ ȬŜǯŜȱ ŗŖŘŝŝȱ ŖǯŜȱ ŘŞřşȱ ȬŘǯŗȱ ŝşŜśȱ Ȭŗǯśȱ ŚŝŝŘȱ ŜǯŘ ¢ȬŗŘȱ ŜŖŖşȱ Ȭŗǯřȱ şŚŚŗȱ ȬŞǯŗȱ ŘŜŜŖȱ ȬŜǯřȱ ŝśŞŞȱ ȬŚǯŝȱ ŚśŝŚȱ ȬŚǯŝ ȬŗŘȱ ŜŗŚśȱ Řǯřȱ ŗŖřŚŗȱ şǯśȱ ŘşŖŝȱ şǯřȱ ŞŖŝŜȱ ŜǯŚȱ ŚşşŘȱ ŜǯŚ ȬŗŘȱ śŜşśȱ Ȭŝǯřȱ ŗŖřŞŚȱ ŖǯŚȱ ŘşŖŗȱ ȬŖǯŘȱ ŞŗśŞȱ ŗǯŖȱ śŖŚŜȱ ŗǯŖ ȬŗŘȱ ŜŖŝŘȱ ŜǯŜȱ şşşŗȱ ȬřǯŞȱ ŘŞŚŘȱ ȬŘǯŖȱ ŞŘŗŘȱ Ŗǯŝȱ śřśŜȱ Ŗǯŝ ȬŗŘȱ ŜřŗŚȱ ŚǯŖȱ ŗŗŚśŝȱ ŗŚǯŝȱ ŘşŝŘȱ ŚǯŜȱ ŞŜŜŘȱ śǯśȱ śśŖŝȱ śǯś ȬŗŘȱ ŜŖŞŞȱ ȬřǯŜȱ ŗŗŘŜşȱ ȬŗǯŜȱ ŘŞśŗȱ ȬŚǯŗȱ Şřśśȱ Ȭřǯśȱ śŜŞŝȱ Ȭřǯś ȬŗŘȱ ŜŘŜřȱ Řǯşȱ ŗŘŗśşȱ ŝǯşȱ ŘŞŝŜȱ Ŗǯşȱ ŞŘśŘȱ ȬŗǯŘȱ ŜŖřŞȱ ȬŗǯŘ ȬŗŘȱ ŜŖŘśȱ ȬřǯŞȱ ŗŘŚŝŚȱ ŘǯŜȱ ŘŞşŗȱ Ŗǯśȱ Şśŗşȱ řǯŘȱ śşŗŜȱ řǯŘ Ȭŗřȱ ŜŝŝŞȱ ŗŘǯśȱ ŗŘŝŖşȱ ŗǯşȱ řŖşŚȱ ŝǯŖȱ şřśşȱ şǯşȱ śşŘŘȱ şǯş Ȭŗřȱ ŝŗŖŝȱ ŚǯŞȱ ŗŗŚŞŝȱ ȬşǯŜȱ ŘŞśřȱ ȬŝǯŞȱ ŞŜŚŞȱ ȬŝǯŜȱ śŜŜşȱ ȬŝǯŜ Ȭŗřȱ ŝŘŗşȱ ŗǯŜȱ ŗŗřŜŘȱ Ȭŗǯŗȱ ŘŝŚŞȱ Ȭřǯŝȱ ŞřŘŝȱ Ȭřǯŝȱ śşŗşȱ Ȭřǯŝ

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65 Annual Report 2012-13

III. Turnover in Indian Stock Market ŗřǯȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŜǯŚȱ ȱ ȱ ` ` ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ řŘǰŜŗǰŝŖŗȱȱȱŘŖŗŘȬŗřȱȱ řŚǰŞŚǰřŞŗȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬ ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ŘǯŗŚǼǯȱ ȱ ȱ ȱ

Table 2.14: Exchange-wise Cash Segment Turnover (` Ǽ Stock Exchange 2010-11 2011-12 2012-13 Percentage Share 1 2334 Recognized Stock Exchanges ȱ ȱ ȱ ȱ ȱ ŗŗǰŖśǰŖŘŝȱ ŜǰŜŝǰŚşŞȱ śǰŚŞǰŝŝŚȱ ŗŜǯŞ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ Řǰśşŝȱ śǰşşŗȱ ŚǰŜŗŚȱ Ŗǯŗ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȯȱ Ȯȱ řřȱ ŖǯŖ ȱ ȱ ȱ ȱ ȱ řśǰŝŝǰŚŗŖȱ ŘŞǰŗŖǰŞşŘȱ ŘŝǰŖŞǰŘŝşȱ ŞřǯŖ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŖǯŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ Total 46,85,034 34,84,381 32,61,701 100.00 Ǳȱȱȱ¡

66 Part Two: Trends and Operations in Securities Markets

togetherȱ ȱ şşǯŞȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ŞřǯŖȱ ȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŜǯŞȱ ȱ ȱ ȱ ǻȱ ŘǯŗŜǼǯȱ Ȭȱ ȱ ǰȱ ȱǯȱȱȱȱȱǰȱȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱŘŖŗŘȬŗřȱ ȱĴȱȱ¡ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱȬǯȱȱ ȱȱ¡ǰȱȬ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ Ŝŗǯŝȱ ȱ ¢ȱ ŗŗǰȱ ŘŖŗřǯȱ ȱ ¢ȱ ¢ȱ ȱȱȱȱȱȱȱȱśŗǯŝȱ transaction on other stock exchanges. The ȱȱȱ ȱȱȱȱ ȱǰȱȱęȱȱȱȱ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŗŝǯŞȱ ȱ ǰȱ Ȧ £ȱ ȱ ŞǯŖȱ ȱ ȱ řǯŝȱ ǰȱ ¢ȱ ȱ ȱȱĴȱȦ ȱȱȱ ŘŖŗŘȬŗřȱȱȱȱ¢ǯȱȬ ǰȱ ŝǯŝȱȱȱȱǯȱȱȱȱȱ BSE and NSE together recorded the highest ȱ ǰȱ ȱ ȱ ȱ ȱ ȱȱ ¢ȱŘŖŗřȱ ȱ¢ȱȱ ŞǯŖȱȱȱŜǯřȱȱ¢ǯȱȱ ŘŖŗŘȱȱȱŘŖŗŘȱǻȱŘǯŗśǼǯ ȱ ęȱ ȱ ȱ ȱ ŞŜǯřȱ ȱ ȱ

Table 2.15: Turnover at BSE and NSE: Cash Segment

BSE NSE Total Year / Month Turnover Percentage Turnover Percentage Turnover (` crore) Variation (` crore) Variation (` crore) 1 23456 2008-09 11,00,074 -30.3 27,52,023 -22.5 38,52,097 2009-10 13,78,809 25.3 41,38,023 50.4 55,16,833 2010-11 11,05,027 -19.9 35,77,410 -13.5 46,82,437 2011-12 6,67,498 -39.6 28,10,893 -21.4 34,78,390 2012-13 5,48,774 -17.8 27,08,279 -3.7 32,57,054 ȬŗŘȱ ŚŘǰřŖśȱ ȬřŘǯśȱ ŗǰşŞǰřŘŚȱ ȬŘŝǯŘȱ ŘǰŚŖǰŜřŖ ¢ȬŗŘȱ ŚŗǰŜśśȱ Ȭŗǯśȱ ŘǰŗŜǰŝśśȱ şǯřȱ ŘǰśŞǰŚŖş ȬŗŘȱ ŚŚǰřŗśȱ ŜǯŚȱ ŘǰŖŘǰŗŖŚȱ ȬŜǯŞȱ ŘǰŚŜǰŚŗŞ ȬŗŘȱ ŚŚǰŚŝśȱ ŖǯŚȱ ŘǰŗŖǰřŘśȱ Śǯŗȱ ŘǰśŚǰŞŖŖ ȬŗŘȱ ŚŘǰŝŞşȱ ȬřǯŞȱ ŘǰŖŚǰŞŝŚȱ ȬŘǯŜȱ ŘǰŚŝǰŜŜř ȬŗŘȱ ŚśǰśŖŗȱ Ŝǯřȱ ŘǰŚŖǰŗŞşȱ ŗŝǯŘȱ ŘǰŞśǰŜşŖ ȬŗŘȱ śŗǰŖřŖȱ ŗŘǯŘȱ Řǰřşǰŝşśȱ ȬŖǯŘȱ ŘǰşŖǰŞŘś ȬŗŘȱ ŚŝǰŝŞřȱ ȬŜǯŚȱ ŘǰŘŖǰşřřȱ Ȭŝǯşȱ ŘǰŜŞǰŝŗŜ ȬŗŘȱ śŖǰřŝŝȱ śǯŚȱ ŘǰŚŖǰřŘśȱ ŞǯŞȱ ŘǰşŖǰŝŖŘ Ȭŗřȱ śŜǰŜŜŘȱ ŗŘǯśȱ ŘǰşśǰŚŗśȱ ŘŘǯşȱ řǰśŘǰŖŝŝ Ȭŗřȱ ŚŘǰŗřŞȱ ȬŘśǯŜȱ ŘǰŘŜǰŜŚŘȱ ȬŘřǯřȱ ŘǰŜŞǰŝŞŖ Ȭŗřȱ řşǰŝŚśȱ Ȭśǯŝȱ ŘǰŗŘǰśşŞȱ ȬŜǯŘȱ ŘǰśŘǰřŚř

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67 Annual Report 2012-13

Table 2.16: City-wise Turnover of Top 20 Cities in Cash Segment during 2012-13

BSE NSE Percentage Percentage City Turnover Share in City Turnover Share in (` crore) Cash (` crore) Cash Turnover Turnover 123456 ȱ ŘǰŞřǰśŗŝȱ śŗǯŝȱ ȱȦȱȱ ŗŜǰŝŗǰŗřŝȱ Ŝŗǯŝ ȱ ŚřǰŜşşȱ ŞǯŖȱ Ȧ £ȱ ŘǰŗŝǰśŞŝȱ ŞǯŖ ȱ řŚǰŝśşȱ Ŝǯřȱ ĴȱȦȱ ȱ ŘǰŖŞǰŘŘşȱ ŝǯŝ ȱȱ ŘśǰŘŗŚȱ ŚǯŜȱ ȱ ŗǰŘŜǰşśŝȱ Śǯŝ ȱ ŘŗǰşŜŝȱ ŚǯŖȱ £ȦȦȱ ŗǰŗřǰŗŞŘȱ ŚǯŘ Sahibabad ȱ śǰşŝśȱ ŗǯŗȱ ¢ȦȦȱ ŞŘǰřşŚȱ řǯŖ ȱ ȱ ȱ ¢ £Ƹȱ śǰřśśȱ ŗǯŖȱ ȦȦȦȱ Śŗǰŝřřȱ ŗǯś ȱ ȱ ȱ ¢Ȧ ¢ ȱ śǰŖśŘȱ Ŗǯşȱ ȱ řşǰŖŚśȱ ŗǯŚ ȱ ŚǰŘśŚȱ ŖǯŞȱ ȱ řŗǰŘŝşȱ ŗǯŘ ȱ řǰşŘŗȱ Ŗǯŝȱ ȱ ŘŚǰśřŗȱ Ŗǯş ȱ řǰŗŚŖȱ ŖǯŜȱ ȦȦȱ ŗřǰŝŜŖȱ Ŗǯś ȱ ȱ ȱ ȱ řǰŖŞŚȱ ŖǯŜȱ ȱ ŗŗǰŜŚŖȱ ŖǯŚ ȱ ŘǰŞśşȱ Ŗǯśȱ ȱ ŗŗǰŚŗŘȱ ŖǯŚ ȱ ŘǰŗŞŞȱ ŖǯŚȱ ȱ ŗŖǰśŗŜȱ ŖǯŚ ¢ȱ ŗǰŞŜŗȱ Ŗǯřȱ ȱ şǰşŖŚȱ ŖǯŚ ȱ ŗǰŞŗşȱ Ŗǯřȱ ȱ şǰŚŞşȱ ŖǯŚ ȱ ŗǰŝŞŘȱ Ŗǯřȱ ȱ ŜǰŖŞŖȱ ŖǯŘ ȱ ŗǰŝŜśȱ Ŗǯřȱ ȱ śǰŞŜřȱ ŖǯŘ ȱ ŗǰśŝśȱ Ŗǯřȱ ȱ śǰŝŚśȱ ŖǯŘ ȱ ŗǰŚŘşȱ Ŗǯřȱ £ȱ śǰśŝśȱ ŖǯŘ Total 4,55,212 83.0 26,46,056 97.7

Ǳȱǰȱ turnover at NSE during 2012-13 compared to ȱȱȱȱȱ ȱȱ ŞśǯŘȱȱȱŘŖŗŗȬŗŘǯȱȱǰȱŝŚǯŜȱȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ during 2012-13. ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ǰȱ IV. Market Capitalisation ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘǯŞȱ ȱȱȱȱȱȱ percent to ` ŜřǰŞŝǰŞŞŝȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ £ȱ ȱ ȱ ȱ ǯȱ ȱ ` ŜŘǰŗŚǰşŚŗȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱŘǯŗŝǼǯȱ ȱ ȱȱȱĚȱ ȱ ȱȱǰȱȱȱȱȱ

68 Part Two: Trends and Operations in Securities Markets

Table 2.17: Market Capitalisation at BSE (` Ǽ Year/ All Listed Percentage BSE Percentage BSE- Percentage Bankex Percentage BSE Percentage Month Companies Variation Sensex Variation Teck Variation Variation PSU Variation 1 234567891011

2008-09 30,86,075 -39.9 15,07,742 -32.2 4,10,923 -39.7 2,33,895 -38.0 9,49,211 -17.7 2009-10 61,65,619 99.8 26,17,900 73.6 7,40,817 80.3 5,54,127 136.9 17,33,662 82.6 2010-11 68,39,084 10.9 29,44,451 12.5 8,69,794 17.4 6,89,751 24.5 19,48,555 12.4 2011-12 62,14,941 -9.1 14,59,141 -50.4 3,45,958 -60.2 3,90,614 -43.4 16,03,085 -17.7 2012-13 63,87,887 2.8 16,07,224 10.1 3,91,259 13.1 4,40,395 12.7 14,38,155 -10.3 ȬŗŘȱ Ŝŗǰŝśǰřŝŝȱ ȬŖǯŜȱ ŗŚǰśŘǰřŚśȱ ȬŖǯśȱ řǰŘřǰŖřśȱ ȬŜǯŜȱ řǰşřǰŘřşȱ Ŗǯŝȱ ŗśǰŞşǰřŝŞȱ ȬŖǯş ¢ȬŗŘȱ śŞǰŗŝǰŚŘŘȱ ȬśǯŞȱ ŗřǰŜŖǰşşřȱ ȬŜǯřȱ řǰŗŞǰŘśřȱ Ȭŗǯśȱ řǰŜŖǰŗŜŘȱ ȬŞǯŚȱ ŗŚǰşŜǰŖŗŘȱ Ȭśǯş ȬŗŘȱ ŜŗǰśŘǰřŖşȱ śǯŞȱ ŗŚǰŝśǰşŗŚȱ ŞǯŚȱ řǰŘśǰŚŘŞȱ Řǯřȱ řǰşśǰŖŖŘȱ şǯŝȱ ŗŜǰŗŖǰśŚŖȱ ŝǯŝ ȬŗŘȱ ŜŖǰŝŜǰśŚŗȱ ȬŗǯŘȱ ŗŚǰŜŖǰśśśȱ ȬŗǯŖȱ řǰŖŝǰŝŚśȱ ȬśǯŚȱ řǰşśǰŜŗŜȱ ŖǯŘȱ ŗśǰŝŜǰśŞŖȱ ȬŘǯŗ ȬŗŘȱ ŜŖǰŞŖǰŝşŞȱ Ŗǯŗȱ ŗŚǰŝŜǰśşŘȱ ŗǯŗȱ řǰŗŜǰřŜŞȱ ŘǯŞȱ řǰŞŗǰşşŘȱ ȬřǯŚȱ ŗśǰřşǰŞřŗȱ ȬŘǯř ȬŗŘȱ ŜśǰśşǰŖśŖȱ ŝǯşȱ ŗśǰşŘǰřřşȱ ŝǯŞȱ řǰřřǰŚŚŜȱ śǯŚȱ ŚǰřśǰşŜřȱ ŗŚǯŗȱ ŗŜǰŚśǰśśŖȱ Ŝǯş ȬŗŘȱ ŜŚǰŝŗǰŖśŗȱ Ȭŗǯřȱ ŗśǰŝŗǰŘşŞȱ Ȭŗǯřȱ řǰŘřǰŜŜŚȱ ȬŘǯşȱ ŚǰŘşǰŝŞŗȱ ȬŗǯŚȱ ŗśǰŝŜǰśŗŖȱ ȬŚǯŘ ȬŗŘȱ ŜŝǰřŞǰŝŗřȱ Śǯŗȱ ŗŜǰŚŘǰśŖŜȱ Śǯśȱ řǰŚŜǰŘśŜȱ ŝǯŖȱ ŚǰŜŚǰŘśŜȱ ŞǯŖȱ ŗśǰşŘǰŝŖŚȱ ŗǯŖ ȬŗŘȱ ŜşǰŘŗǰŞŗśȱ Řǯŝȱ ŗŜǰśŖǰřŝřȱ Ŗǯśȱ řǰŚŗǰşŖŖȱ Ȭŗǯřȱ ŚǰŞŖǰŘŘśȱ řǯŚȱ ŗŜǰŘŝǰśśŜȱ ŘǯŘ Ȭŗřȱ ŝŖǰŘŚǰśŝŝȱ ŗǯśȱ ŗŜǰşŖǰŚŞşȱ ŘǯŚȱ řǰŝŞǰŞşŘȱ ŗŖǯŞȱ ŚǰŞŞǰřřŘȱ ŗǯŝȱ ŗŝǰŖŖǰŗŘşȱ Śǯś Ȭŗřȱ ŜśǰřŞǰŖřŞȱ ȬŜǯşȱ ŗŜǰŖřǰŖŗśȱ ȬśǯŘȱ řǰşŖǰŜŖŗȱ řǯŗȱ ŚǰŚŘǰŚŞŞȱ ȬşǯŚȱ ŗśǰŘŘǰŝśśȱ ȬŗŖǯŚ Ȭŗřȱ ŜřǰŞŝǰŞŞŝȱ ȬŘǯřȱ ŗŜǰŖŝǰŘŘŚȱ Ŗǯřȱ řǰşŗǰŘśşȱ ŖǯŘȱ ŚǰŚŖǰřşśȱ ȬŖǯśȱ ŗŚǰřŞǰŗśśȱ ȬśǯŜ

Ǳȱ increased by 2.3 percent to ` ŜŘǰřşǰŖřśȱȱ ȱ ¢ȱ ŗŖǯřȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱŘŖŗŘȬŗřȱȱ` ŜŖǰşŜǰśŗŞȱȱȱŘŖŗŗȬŗŘǯȱ ȱęȱ¢ǯ ȱȱ ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ŗŗǯŝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱęȱ¢ǯȱȱȱȱ ¢ǯȱȱ ȱ ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ŘŖŗŘȱȱȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱȱȱȱǯȱ ȱȱ ȱ ǻȱ ŘǯŗŞǼǯȱ ¡ȱ ȱ ȱȱȱęȱ¢ǰȱ ǰȱȱȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱȱȱȱȱȱ compared to the previous year. The market ǯ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ŗŖǯŝȱȱȱŘŖŗŘȬŗřȱȱȱȱ¢ǯȱ ¡ȱ ȱ ȱ ¢ȱ ¢ȱ ȱǰȱȱȱȱ¢ǰȱȱ ŗŖǯŗȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ¢ȱ ŗřǯŗȱ ȱȱǻŗŜǯŝȱǼȱ ȱ¢ȱȱ ȱ ȱ ȱ ŗŘǯŝȱ ǰȱ ȱ ȱ ȱ ȱ ǻŗśǯřȱǼǯ

69 Annual Report 2012-13

Table 2.18: Market Capitalisation at NSE (` Ǽ Year/ All listedPercentage CNX Percentage CNX Percentage CNX Percentage CNX Percentage Month Companies Variation Nifty Variation Mid Cap Variation IT Variation Bank Variation 1234567891011 2008-09 28,96,194 -40.4 18,92,629 -33.6 2,73,627 -40.9 2,01,810 -37.5 2,24,132 -36.1 2009-10 60,09,173 107.5 15,25,162 -19.4 3,17,619 16.1 2,28,558 13.3 3,17,351 41.6 2010-11 67,02,616 11.5 17,55,468 15.1 3,12,736 -1.5 2,78,848 22.0 4,03,234 27.1 2011-12 60,96,518 -9.0 16,32,058 -7.0 3,18,794 1.9 2,55,463 -8.4 3,59,370 -10.9 2012-13 62,39,035 2.3 18,22,965 11.7 2,84,721 -10.7 2,94,435 15.3 4,19,220 16.7 ȬŗŘȱ ŜŖǰśşǰŘśŞȱ ȬŖǯŜȱ ŗŜǰřŝǰŜŚśȱ Ŗǯřȱ ŘǰŝŞǰřśŖȱ ȬŗŘǯŝȱ ŘǰŚŖǰŘŗŝȱ ȬŜǯŖȱ řǰŜŞǰŚśŞȱ Řǯś ¢ȬŗŘȱ śŜǰşśǰśŚŝȱ ȬŜǯŖȱ ŗśǰřŝǰśŗŘȱ ȬŜǯŗȱ ŘǰśŝǰŞşşȱ Ȭŝǯřȱ ŘǰřŝǰřŘřȱ ȬŗǯŘȱ řǰřŞǰŝŞŞȱ ȬŞǯŗ ȬŗŘȱ ŜŖǰŘŜǰŝŜŜȱ śǯŞȱ ŗŜǰŚŞǰŝŖŖȱ ŝǯŘȱ ŘǰŝśǰŖŚŝȱ ŜǯŜȱ ŘǰŚŘǰŝŖŜȱ Řǯřȱ řǰŝŗǰŘśŞȱ şǯŜ ȬŗŘȱ śşǰśŗǰśŚŖȱ ȬŗǯŘȱ ŗŜǰřřǰŝŖŖȱ ȬŖǯşȱ ŘǰŜŞǰŘşśȱ ȬŘǯśȱ ŘǰŘŚǰşŞŗȱ Ȭŝǯřȱ řǰŝřǰŗřŚȱ Ŗǯś ȬŗŘȱ śşǰŚŘǰśŗŖȱ ȬŖǯŘȱ ŗŜǰŚśǰŗŘŖȱ Ŗǯŝȱ ŘǰŜřǰŜŜŗȱ Ȭŗǯŝȱ ŘǰŚŖǰŝşşȱ ŝǯŖȱ řǰśŞǰŝŚŞȱ Ȭřǯş ȬŗŘȱ ŜŚǰřŗǰŜśśȱ ŞǯŘȱ ŗŞǰŖŗǰŚşŗȱ şǯśȱ ŘǰşŜǰşŖŖȱ ŗŘǯŜȱ ŘǰśřǰşŗŜȱ śǯŚȱ ŚǰŗŗǰśŜřȱ ŗŚǯŝ ȬŗŘȱ ŜřǰřŝǰŜŝŜȱ Ȭŗǯśȱ ŗŝǰŝśǰŖşŚȱ Ȭŗǯśȱ ŘǰşřǰşŜŚȱ ȬŗǯŖȱ ŘǰŚŚǰŞŘşȱ ȬřǯŜȱ ŚǰŖŚǰŞŗŖȱ ȬŗǯŜ ȬŗŘȱ ŜŜǰŖřǰŖŖśȱ ŚǯŘȱ ŗŞǰŜśǰśśŚȱ śǯŗȱ řǰŖŝǰśŝŝȱ ŚǯŜȱ ŘǰśřǰŞŚŞȱ řǯŝȱ ŚǰřŞǰřśśȱ Şǯř ȬŗŘȱ ŜŝǰŜřǰŝŞŗȱ ŘǯŚȱ ŗŞǰŝŚǰŗśŘȱ Ŗǯśȱ řǰŘŘǰśřşȱ Śǯşȱ ŘǰŚŚǰŘŗřȱ ȬřǯŞȱ ŚǰśŘǰŗŚŚȱ řǯŗ Ȭŗřȱ ŜŞǰśŞǰŜśřȱ ŗǯŚȱ ŗşǰŗśǰŚřŗȱ ŘǯŘȱ řǰŗŝǰřŘŜȱ ȬŗǯŜȱ ŘǰŝŚǰŞŜŖȱ ŗŘǯśȱ ŚǰŜŖǰŞŜřȱ ŗǯş Ȭŗřȱ ŜřǰŞśǰŘşŗȱ ȬŜǯşȱ ŗŞǰŗŚǰřŗřȱ Ȭśǯřȱ ŘǰşŗǰŖŜřȱ ȬŞǯřȱ ŘǰŞşǰŞŗŗȱ śǯŚȱ ŚǰŘřǰŜŚŘȱ ȬŞǯŗ Ȭŗřȱ ŜŘǰřşǰŖřśȱ ȬŘǯřȱ ŗŞǰŘŘǰşŜśȱ Ŗǯśȱ ŘǰŞŚǰŝŘŗȱ ȬŘǯŘȱ ŘǰşŚǰŚřśȱ ŗǯŜȱ ŚǰŗşǰŘŘŖȱ ȬŗǯŖ Ǳȱ

V. Stock Market Indicators ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ǻȱ ȱȱȱȱȱȱ ŘǯŘŖǼǯȱȱȱȱȱȱŘŖŗřǰȱȱȦȱȱ ȱ ȱ ǻȬȱ Ǽǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ǭȱ ȱ ¢ȱ ȱ ǻȱ ȱ Ǽȱ ȱ ȱ ȱ ȱ ŗŜǯşȱ ȱ ŗŝǯŜȱ ¢ȱ ȱ ȱ ȱ ȱȱǻȦȱǼȱȱȱȱȱ ŗŝǯŞȱ ȱ ŗŞǯŝȱ ¢ȱ ȱ ȱ ȱ řŗǰȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ǯȱ ŘŖŗŘǯȱȬ ȱȱȱȦȱȱȱ ȱ ȱ ȱ ¢ȱ ȱ ŘŖŖşȬŗŖǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘŖŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ǯȱ ȱ ȱ ȱ £ȱ ȱ ȱȱȱȱȱ¢£ǯȱȦȱȱȱ ȱȱȱȱȱŞŝǯŝȱȱȱ ȱ ȱ ȱȱȱȱȱȱ ŘŖŗŖȬŗŗȱȱŜşǯŘȱȱȱŘŖŗŗȬŗŘȱȱȱ and mid-cap indices. ȱ Ŝřǯŝȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ¢ǰȱ ȱ ȱ ȱȱȱȱȱȱŞŜǯŖȱȱ ȱ ȱ ȱ ȱ ȱ ǻȦǼȱ ȱ ȱ ȱ Ŝŝǯşȱ ȱ ȱ ȱ ȱ ŜŘǯŘȱ ȱ ȱȱȱ ȱȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯŗşǼǯȱ ȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ¢ǯȱȱȦȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ řŘǯśȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱřŞǯŞȱȱȱŘŖŗŗȬŗŘǯȱ ǰȱȱȱ ȱ śǯŞǰȱ ȱ ¢ȱ ȱ ¢ȱ ȱ řǯŖǰȱ ȱ ȱǰȱȱ ȱȱȱȱ ¡ȱȱŘǯşǰȱȱȱŗŖŖȱȱŘǯśǰȱ¢ ȱȬ ȱȱȱřśŞǯřȱȱȱ ǻȱŘǯŘŗǼǯ ŘŖŗŗȬŗŘȱȱřŞśǯşȱȱȱŘŖŗŘȬŗřǯ ȱ ȱ ȱ Ȧȱ ȱ

70 Part Two: Trends and Operations in Securities Markets

ȱȱ ȱȱȱ¢ȱ ȱ ¡ȱ ȱ ǰȱ ȱ ¡ȱ ȱ ȱȱȱȱȱȱ ȱ ȱ ȱ řŖȱ ¡ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ǯȱ ȱ ȱ ȱ ȱ

Table 2.19: Select Ratios Relating to Stock Market ǻǼ BSE Market NSE Market Total Turnover to GDP Ratio Year Capitalisation to Capitalisation to GDP Ratio GDP Ratio Cash Segment Derivatives Segment (All-India) (BSE+NSE) 12345

ŘŖŖřȬŖŚȱ ŚřǯŚȱ ŚŖǯśȱ śŞǯŝȱ ŝŝǯŜ ŘŖŖŚȬŖśȱ śŚǯřȱ śŖǯŝȱ śřǯŚȱ ŞŘǯŗ ŘŖŖśȬŖŜȱ ŞŚǯŚȱ ŝŞǯŜȱ ŜŜǯŞȱ ŗřŚǯŝ ŘŖŖŜȬŖŝȱ Şśǯśȱ ŞŗǯŘȱ ŝŖǯŖȱ ŗŝŞǯş ŘŖŖŝȬŖŞȱ ŗŖşǯśȱ ŗŖřǯśȱ ŗŖşǯřȱ ŘŞŚǯŗ ŘŖŖŞȬŖşȱ śśǯřȱ śŗǯşȱ ŜşǯŖȱ ŗşŝǯŚ ŘŖŖşȬŗŖȱ şśǯśȱ şřǯŗȱ ŞśǯŚȱ Řŝřǯś ŘŖŗŖȬŗŗȱ Şŝǯŝȱ ŞŜǯŖȱ ŜŖǯŗȱ řŝśǯŘ ŘŖŗŗȬŗŘȱ ŜşǯŘȱ Ŝŝǯşȱ řŞǯŞȱ řśŞǯř ŘŖŗŘȬŗřȱ Ŝřǯŝȱ ŜŘǯŘȱ řŘǯśȱ řŞśǯş

Ǳȱȱȱ¡ǰȱ

Table 2.20: Price to Earnings Ratio

Year/ BSE Sensex BSE 100 S&P CNX CNX IT CNX Bank CNX PSE Month CNX Nifty Mid Cap 12345678 2008-09 13.7 15.3 14.3 9.8 11.5 7.7 18.1 2009-10 21.3 21.1 22.3 15.0 23.5 17.7 15.3 2010-11 21.2 20.7 22.1 17.7 26.6 18.5 15.0 2011-12 17.8 18.8 18.7 18.1 20.9 15.3 15.4 2012-13 16.9 16.0 17.6 16.7 19.3 13.6 9.9 ȬŗŘȱ ŗŝǯŜȱ ŗŞǯŜȱ ŗŞǯŗȱ ŗŜǯřȱ ŗŞǯŝȱ ŗśǯŚȱ ŗśǯŖ ¢ȬŗŘȱ ŗśǯşȱ ŗŝǯŖȱ ŗŜǯŝȱ ŗśǯŜȱ ŗŞǯřȱ ŗŘǯşȱ ŗŚǯŖ ȬŗŘȱ ŗŝǯŖȱ ŗŝǯŖȱ ŗŝǯśȱ ŗśǯřȱ ŗŞǯŜȱ ŗŚǯŗȱ ŗŗǯŞ ȬŗŘȱ ŗŜǯŜȱ ŗŜǯŜȱ ŗŝǯŗȱ ŗŚǯşȱ ŗŜǯŘȱ ŗřǯŜȱ ŗŗǯŜ ȬŗŘȱ ŗŜǯśȱ ŗŞǯŞȱ ŗŝǯŜȱ ŗŞǯŝȱ ŗŝǯřȱ ŗŘǯŝȱ ŗśǯś ȬŗŘȱ ŗŝǯśȱ ŘŖǯřȱ ŗşǯŘȱ ŗşǯřȱ ŗŞǯŘȱ ŗŚǯŜȱ ŗŜǯŘ ȬŗŘȱ ŗŜǯŞȱ ŗşǯśȱ ŗŞǯŚȱ ŗŞǯşȱ ŗŜǯŞȱ ŗřǯşȱ ŗśǯŜ ȬŗŘȱ ŗŝǯśȱ ŗŝǯŞȱ ŗŞǯŜȱ ŗŜǯŞȱ ŗŝǯŗȱ ŗŚǯşȱ şǯŜ ȬŗŘȱ ŗŝǯśȱ ŗŝǯŜȱ ŗŞǯŝȱ ŗŝǯŝȱ ŗŜǯŚȱ ŗśǯŚȱ şǯŜ Ȭŗřȱ ŗŝǯŝȱ ŗŝǯŝȱ ŗŞǯśȱ ŗŝǯŘȱ ŗŞǯŘȱ ŗśǯŖȱ ŗŖǯŘ Ȭŗřȱ ŗŝǯŖȱ ŗŜǯŘȱ ŗŝǯŝȱ ŗŜǯŝȱ ŗşǯŖȱ ŗřǯŝȱ ŗŖǯř Ȭŗřȱ ŗŜǯşȱ ŗŜǯŖȱ ŗŝǯŜȱ ŗŜǯŝȱ ŗşǯřȱ ŗřǯŜȱ şǯş

Ǳȱǰȱ

71 Annual Report 2012-13

¢ǰȱ ȱ ¡ȱ ȱ ȱ ǰȱ ¢ǯȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¡ȱ ȱ ¢ȱ ȱ ȱ ¡ȱ ȱ ¡ǰȱ ȱ ¢ȱ ȱ ȱ ȱ ȱȱȱȱȦȱȱǻȱŘǯŞǼǯ ȱǰȱȱȱŗŘǯśȱȱȱŘŖŗŘȬ ŗřȱ ȱ ŘŖǯŘȱ ȱ ȱ ȱ ȱ ¢ǯȱ VI. Volatility in Stock Markets ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŗŘǯşȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ŘŖǯŚȱȱȱȱȱǯȱȬ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ¢ȱȱȱȱȱȱ ¢ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱȱȱ ŘŖŗŘȱ ǻȱ ŘǯŘŘǼǯȱ ȱ ȱ ¢ȱ ȱ ę¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ

Table 2.21: Price to Book-Value Ratio Year/ BSE Sensex BSE 100 CNX CNX CNX IT CNX Bank CNX PSE Month Nifty Mid Cap 12345678 2008-09 2.7 2.5 2.5 1.3 3.5 1.2 2.2 2009-10 3.9 4.0 3.7 2.7 7.2 2.5 3.1 2010-11 3.7 3.7 3.7 2.3 7.4 2.8 2.8 2011-12 3.5 3.1 3.0 1.9 5.9 2.3 2.1 2012-13 2.9 2.5 3.0 1.7 5.8 2.3 1.8 ȬŗŘȱ řǯŘȱ Řǯŝȱ řǯŗȱ ŗǯŝȱ śǯŜȱ ŘǯŚȱ Řǯŗ ¢ȬŗŘȱ řǯŖȱ Řǯśȱ Řǯşȱ ŗǯŜȱ śǯŚȱ ŘǯŘȱ ŘǯŖ ȬŗŘȱ řǯŘȱ Řǯŝȱ řǯŖȱ ŗǯŝȱ śǯŖȱ ŘǯŚȱ Řǯŗ ȬŗŘȱ Řǯŝȱ ŘǯŚȱ řǯŖȱ ŗǯŝȱ ŚǯŜȱ Řǯřȱ Řǯŗ ȬŗŘȱ Řǯŝȱ ŘǯŚȱ Řǯşȱ ŗǯŜȱ Śǯşȱ ŘǯŖȱ Řǯŗ ȬŗŘȱ Řǯşȱ Řǯśȱ řǯŘȱ ŗǯŞȱ śǯřȱ Řǯřȱ ŘǯŘ ȬŗŘȱ Řǯşȱ Řǯśȱ řǯŖȱ ŗǯŝȱ śǯŖȱ Řǯřȱ ŘǯŖ ȬŗŘȱ řǯŖȱ ŘǯŜȱ řǯŗȱ ŗǯŞȱ śǯŖȱ Řǯśȱ ŗǯş ȬŗŘȱ řǯŖȱ ŘǯŜȱ řǯŗȱ ŗǯşȱ Śǯşȱ Řǯśȱ ŗǯş Ȭŗřȱ řǯŗȱ Řǯŝȱ řǯŘȱ ŗǯşȱ śǯśȱ ŘǯŜȱ Řǯŗ Ȭŗřȱ Řǯşȱ Řǯśȱ řǯŖȱ ŗǯŝȱ śǯŝȱ ŘǯŚȱ ŗǯş Ȭŗřȱ Řǯşȱ Řǯśȱ řǯŖȱ ŗǯŝȱ śǯŞȱ Řǯřȱ ŗǯŞ Ǳȱǰȱ

72 Part Two: Trends and Operations in Securities Markets

¢ȱŘŖŗřǯȱȱȱȱ¡ȱȱȱ ȱȱȱ¢ȱǻŘŚǯŝȱǼǰȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ¢ȱ ǻŘřǯśȱ Ǽȱ ȱ £ȱ ȱ ȱ ŘŖŗřǯȱ ȱ ȱ ȱ ǰȱ ǻŘŖǯŞȱ Ǽǯȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ throughout the year. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱǯȱȱȱȱǰȱȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ¢ȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻŘŖǯŝȱ Ǽȱ ȱ ¢ȱ ȱ ȱ ǻŘŖǯŜȱ ȱ ȱ ȱ ȱ ȱ ŘǯŘřȱ ȱ ȱ Ǽȱȱ ȱǻŗşǯŖȱǼǯ Řǯşǯȱ ȱ ȱ ȱ ǰȱ ȱ

Table 2.22: Average Daily Volatility of Benchmark Indices

Month BSE Sensex CNX Nifty BSE 100 BSE Small CNX 500 CNX Nifty CNX Cap Junior BANK 12345678 ȬŗŘȱ ŖǯŞŖȱ ŖǯŞŚȱ ŖǯŞŖȱ Ŗǯŝśȱ ŖǯŞŖȱ ŖǯŝŞȱ ŗǯŖś ¢ȬŗŘȱ ŖǯşŜȱ ŖǯşŞȱ Ŗǯşśȱ ŖǯŞŖȱ ŖǯşŘȱ ŖǯşŜȱ ŗǯśŞ ȬŗŘȱ ŗǯŗŘȱ ŗǯŗŚȱ ŗǯŗřȱ ŖǯŜŗȱ ŗǯŖŚȱ ŗǯŖŖȱ ŗǯŝŘ ȬŗŘȱ ŖǯŞŝȱ ŖǯŞşȱ ŖǯŞŜȱ ŖǯşŘȱ ŖǯŞŚȱ ŖǯŞŜȱ ŗǯŖŚ ȬŗŘȱ ŖǯśŜȱ ŖǯŜŘȱ Ŗǯśśȱ ŖǯŜŘȱ ŖǯśŚȱ ŖǯśŚȱ ŖǯŞŜ ȬŗŘȱ Ŗǯşŗȱ Ŗǯşśȱ ŖǯŞŞȱ ŖǯśŖȱ ŖǯŞŖȱ ŖǯŜŝȱ ŗǯśŜ ȬŗŘȱ ŖǯŜşȱ Ŗǯŝŗȱ ŖǯŝŘȱ Ŗǯŝŝȱ ŖǯŝŖȱ ŖǯŝŜȱ ŗǯŗŖ ȬŗŘȱ ŖǯŝŘȱ Ŗǯŝřȱ ŖǯŝŘȱ ŖǯŜŜȱ ŖǯŜŞȱ ŖǯŞŗȱ ŗǯŖŝ ȬŗŘȱ ŗǯŖŜȱ ŖǯśŘȱ ŗǯŘřȱ ŖǯŜřȱ ŖǯśŚȱ ŖǯŜŜȱ ŖǯŜŝ Ȭŗřȱ Ŗǯśśȱ Ŗǯśśȱ ŖǯŜŖȱ ŖǯŞŞȱ ŖǯŜŘȱ ŖǯŞśȱ Ŗǯŝş Ȭŗřȱ ŖǯŜşȱ ŖǯŜşȱ ŖǯŝŚȱ ŖǯşŚȱ ŖǯŝŚȱ Ŗǯşřȱ ŗǯŖŞ Ȭŗřȱ ŖǯŞŘȱ ŖǯŞŚȱ ŖǯŞşȱ ŗǯŗŖȱ ŖǯŞşȱ ŗǯŖŞȱ ŗǯřş Annualised 12.5 12.9 12.7 12.8 12.4 13.6 19.2 Volatility Ǳȱȱ¢ȱ¢ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱǯ

73 Annual Report 2012-13

Table 2.23: Trends in Daily Volatility of International Stock Market Indices during 2012-13

Country Index Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Volatility Annualised 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 DEVELOPED MARKETS ȱ ȱ Ŗǯşȱ Ŗǯŝȱ ŗǯŘȱ ŖǯŞȱ ŖǯŜȱ Ŗǯŝȱ Ŗǯŝȱ ŗǯŖȱ Ŗǯŝȱ ŖǯŜȱ Ŗǯŝȱ ŖǯŚȱ ŗŗǯŞ ȱ ȱ ŗǯŗȱ ŗǯŖȱ ŗǯśȱ ŗǯŖȱ ŖǯŜȱ Ŗǯşȱ ŖǯŞȱ ŗǯŗȱ Ŗǯşȱ Ŗǯŝȱ Ŗǯşȱ Ŗǯśȱ ŗŚǯş ȱ ȱŗŖŖȱ ŗǯŘȱ ŗǯŘȱ ŗǯŖȱ Ŗǯşȱ ŖǯŞȱ Ŗǯşȱ Ŗǯŝȱ Ŗǯşȱ Ŗǯřȱ ŖǯŜȱ Ŗǯşȱ Ŗǯśȱ ŗřǯś ȱ ȱ¡¡ȱ ŗǯŞȱ ŗǯřȱ ŗǯŜȱ ŗǯŝȱ ŗǯśȱ ŗǯŚȱ ŗǯŘȱ ŗǯŗȱ Ŗǯśȱ ŖǯŞȱ ŗǯśȱ ŗǯŖȱ ŘŖǯŝ ȱ ȱ ŗǯşȱ ŗǯŚȱ ŗǯŜȱ ŗǯŜȱ ŗǯřȱ ŗǯŚȱ ŗǯŘȱ ŗǯŗȱ Ŗǯśȱ Ŗǯŝȱ ŗǯśȱ Ŗǯşȱ ŘŖǯŜ ¢ȱ ȱ ŗǯŝȱ ŗǯŘȱ ŗǯŜȱ ŗǯŚȱ ŗǯŘȱ ŗǯŗȱ Ŗǯşȱ Ŗǯşȱ ŖǯŚȱ Ŗǯŝȱ ŗǯŘȱ ŖǯŞȱ ŗŞǯŖ ȱ řŖȱ ŖǯŜȱ ŗǯŗȱ ŗǯŖȱ ŖǯŞȱ ŖǯŜȱ Ŗǯśȱ Ŗǯśȱ Ŗǯŝȱ ŖǯŚȱ Ŗǯśȱ ŖǯŞȱ Ŗǯşȱ ŗŗǯś ȱ ȱ ŗǯŖȱ ŗǯŘȱ ŗǯŘȱ Ŗǯşȱ Ŗǯşȱ ŗǯŗȱ ŗǯŖȱ ŗǯŖȱ Ŗǯşȱ ŗǯŜȱ ŗǯŞȱ ŗǯŚȱ ŗşǯŖ ȱ ȱ ȱ ŗǯŖȱ ŗǯŗȱ ŗǯřȱ ŗǯřȱ ŖǯŞȱ ŗǯŗȱ ŖǯŜȱ ŗǯŖȱ Ŗǯŝȱ Ŗǯŝȱ ŗǯŖȱ Ŗǯşȱ ŗśǯŜ ȱ ȱ ŖǯŜȱ Ŗǯşȱ Ŗǯşȱ ŖǯŞȱ Ŗǯśȱ Ŗǯśȱ Ŗǯśȱ ŖǯŜȱ ŖǯŚȱ Ŗǯśȱ Ŗǯśȱ ŖǯŜȱ şǯŞ

EMERGING MARKETS

ȱ ȱ ŗǯŖȱ ŗǯŚȱ ŗǯřȱ ŗǯŖȱ ŖǯŜȱ ŖǯŞȱ Ŗǯŝȱ Ŗǯşȱ Ŗǯŝȱ Ŗǯŝȱ Ŗǯŝȱ ŖǯŜȱ ŗŚǯř ȱ ȱ ŗǯŜȱ ŘǯŚȱ Řǯŗȱ ŘǯŖȱ ŗǯŚȱ Řǯŗȱ ŗǯŘȱ ŗǯŘȱ ŖǯŞȱ Ŗǯşȱ ŗǯŖȱ ŗǯŖȱ ŘŚǯŝ ¢ȱ ȱ Ŗǯřȱ ŖǯŜȱ Ŗǯśȱ Ŗǯřȱ ŖǯŘȱ Ŗǯŝȱ Ŗǯřȱ ŖǯŚȱ ŖǯŚȱ ŖǯŜȱ Ŗǯśȱ Ŗǯśȱ ŝǯŘ ȱ ȱ ȱ ŖǯŞȱ ŗǯřȱ ŗǯŚȱ ŗǯřȱ Ŗǯşȱ ŗǯŗȱ Ŗǯŝȱ ŖǯŞȱ Ŗǯśȱ Ŗǯŝȱ Ŗǯŝȱ ŖǯŜȱ ŗŚǯŜ ȱ ȱ ŗǯŖȱ ŗǯŘȱ ŗǯŗȱ ŗǯŖȱ Ŗǯśȱ ŖǯŜȱ ŖǯŜȱ Ŗǯśȱ Ŗǯśȱ ŖǯŜȱ ŖǯŞȱ ŗǯřȱ ŗřǯř ȱ ȱ Ŗǯşȱ Ŗǯşȱ ŗǯŖȱ ŖǯŞȱ ŖǯŞȱ ŗǯŚȱ ŖǯŞȱ Ŗǯşȱ ŗǯřȱ ŗǯŗȱ ŗǯřȱ ŗǯśȱ ŗŜǯş ǯȱȱ ȱ Ŗǯşȱ Ŗǯşȱ ŖǯŞȱ Ŗǯŝȱ ŖǯŜȱ Ŗǯşȱ ŖǯŜȱ ŖǯŜȱ ŖǯŚȱ ŖǯŜȱ ŖǯŜȱ Ŗǯŝȱ ŗŗǯŖ £ȱ ȱ ŗǯŘȱ ŗǯŝȱ ŗǯŞȱ ŗǯşȱ ŗǯřȱ ŗǯŚȱ Ŗǯşȱ ŗǯśȱ ŖǯŞȱ ŗǯŗȱ ŖǯŞȱ ŗǯŘȱ ŘŖǯŞ ȱ ȱ ŖǯŜȱ ŗǯŗȱ ŗǯŚȱ ŗǯŗȱ ŗǯŖȱ ŗǯŗȱ ŖǯŞȱ ŗǯŖȱ ŖǯŚȱ Ŗǯśȱ Ŗǯśȱ ŖǯŜȱ ŗřǯş ¢ȱ ȱ ŗǯśȱ ŗǯřȱ ŗǯŜȱ ŗǯŗȱ ŗǯŖȱ ŗǯŘȱ ŖǯŞȱ ŗǯŗȱ Ŗǯŝȱ Ŗǯşȱ ŗǯŗȱ Ŗǯşȱ ŗŝǯŜ ¢ȱ ȱ ŗǯřȱ ŗǯŗȱ Řǯŗȱ ŗǯśȱ ŖǯŜȱ ŗǯŖȱ ŗǯśȱ ŘǯŜȱ ŗǯŞȱ ŗǯŘȱ Ŗǯŝȱ ŗǯŗȱ Řřǯś ȱ ȱ Ŗǯŝȱ ŗǯŖȱ ŗǯśȱ Ŗǯşȱ Ŗǯŝȱ Ŗǯşȱ Ŗǯśȱ ŖǯŜȱ Ŗǯśȱ Ŗǯŝȱ ŖǯŜȱ Ŗǯşȱ ŗřǯŘ ȱ ȱ ŗǯŗȱ ŗǯŚȱ ŗǯŚȱ ŗǯŗȱ ŖǯŞȱ ŗǯŖȱ ŗǯŗȱ ŗǯŖȱ ŗǯŗȱ Ŗǯşȱ ŗǯśȱ ŗǯŖȱ ŗŞǯŗ ȱ ȱ ŖǯŜȱ Ŗǯŝȱ Ŗǯşȱ Ŗǯśȱ ŖǯŞȱ Ŗǯśȱ Ŗǯśȱ Ŗǯřȱ ŖǯŚȱ Ŗǯśȱ Ŗǯśȱ ŖǯŜȱ şǯř ¡ȱ ȱ ŖǯŜȱ Ŗǯşȱ ŖǯŞȱ ŖǯŞȱ Ŗǯśȱ ŖǯŜȱ ŖǯŜȱ Ŗǯŝȱ Ŗǯśȱ Ŗǯśȱ ŖǯŞȱ Ŗǯşȱ ŗŗǯŖ

India BSE Sensexȱ ŖǯŞȱ ŗǯŖȱ ŗǯŗȱ Ŗǯşȱ ŖǯŜȱ Ŗǯşȱ Ŗǯŝȱ Ŗǯŝȱ Ŗǯśȱ ŖǯŜȱ Ŗǯŝȱ ŖǯŞȱ ŗŘǯś ȱ ȱ¢ȱ ŖǯŞȱ ŗǯŖȱ ŗǯŗȱ Ŗǯşȱ ŖǯŜȱ ŗǯŖȱ Ŗǯŝŗȱ Ŗǯŝřȱ Ŗǯśȱ ŖǯŜȱ Ŗǯŝȱ ŖǯŞȱ ŗŘǯş

ǱȱȱȱǱȱ¢ȱ¢ȱȱȱȱȱȱȱȱ¢ȱȱȱȱȱȱ ȱȱȱȱǯȱȱ¢ȱȱȱȱ¢ȱ¢ȱȱȱęȱ¢ȱȱ ¢ȱȱȱȱȱȱȱȱ¢ȱȱȱǯ

74 Part Two: Trends and Operations in Securities Markets

VII. Trading Frequency ȱ ŘŖŗŗȬŗŘȱ ȱ şśǯŚȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱŗŖȱ¢ȱ ȱŞǯŝȱȱȱȱȱŘǯŖȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ percent at NSE in 2012-13. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗřȱ ȱ ȱ ȱ ȱ ŗŖȱ ȱ ȱ ȱ ȱ śǰŘŗŗǯȱ ȱ ǰȱ ȱ ȱ ȱ ȱ market turnover in 2012-13 at NSE and BSE ȱ ȱ ŗǰŜŜŜȱ ȱ ȱ ȱ řŗǰȱ ŘŖŗřǯȱ ȱŘŚǯŝȱȱŘŘǯřȱȱ¢ȱǻȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŘǯŘśǼǯȱ ȱ ȱ ȱ ŗŖȱ ȱ ȱ ȱ stock exchanges in 2012-13 over the previous cash market turnover in 2012-13 at NSE and ęȱ ¢ǯȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ŘŜǯŘȱ ȱ ŘŖǯŜȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ŚǰŗŚŜȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ řǰşŘřȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ŘǯŘŚǼǯȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ¢ȱ ¢ǰȱȱȱȱȱȱȱ ǰȱ ȱ ȱ ǻ¡ȱ ȱ ȱȱȱŗǰŜřŝȱȱŘŖŗŘȬŗřȱȱ ȱ Ǽǰȱ ǰȱ ȱ ȱ ȱ ȱ ŗǰŜŘŝȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ Řřǯřȱ ǰȱ śǯŖȱ ǰȱ ŘŖǯŜȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŖŖȱ ¢ȱ ȱȱŚǯŚȱȱ¢ȱ ȱ ¢ȱ ȱ ȱ Şŗǯřȱ ȱ ȱ ȱ ǻȱ ǰȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ŝŞǯŖȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ǰȱ ęǰȱ ǰȱ ǰȱ ǰȱ Ǽȱ ȱ ȱ ȱ ȱ ȱ şŚǯŖȱ ȱ ŚŜǯŞȱ ǯȱ ¢ȱ ȱ ȱ ȱ ȱ

Table 2.24: Trading Frequency of Listed Stocks

2011-12 2012-13 Trading Frequency BSE NSE BSE NSE (Range of No. of Percentage No. of Percentage No. of Percentage No. of Percentage Days) Shares of Shares of Shares of Shares of Traded Total Traded Total Traded Total Traded Total 1 2 3 456789 Above 100ȱ řǰŗşŖȱ Şŗǯřȱ ŗǰśřŖȱ şŚǯŖȱ řǰŘřŘȱ ŝŞǯŖȱ ŗǰśŜŗȱ şśǯŚ 91-100ȱ řŝȱ Ŗǯşȱ śȱ Ŗǯřȱ ŚŞȱ ŗǯŘȱ řȱ ŖǯŘ 81-90ȱ Śřȱ ŗǯŗȱ Şȱ Ŗǯśȱ ŚŜȱ ŗǯŗȱ Ŝȱ ŖǯŚ 71-80ȱ řşȱ ŗǯŖȱ ŝȱ ŖǯŚȱ Ŝŝȱ ŗǯŜȱ śȱ Ŗǯř 61-70ȱ řśȱ Ŗǯşȱ śȱ Ŗǯřȱ ŝŘȱ ŗǯŝȱ śȱ Ŗǯř 51-60ȱ Śśȱ ŗǯŗȱ Ŝȱ ŖǯŚȱ śśȱ ŗǯřȱ şȱ Ŗǯś 41-50ȱ śŜȱ ŗǯŚȱ řȱ ŖǯŘȱ ŝřȱ ŗǯŞȱ řȱ ŖǯŘ 31-40ȱ śřȱ ŗǯŚȱ řȱ ŖǯŘȱ Ŝśȱ ŗǯŜȱ řȱ ŖǯŘ 21-30ȱ śřȱ ŗǯŚȱ Şȱ Ŗǯśȱ śŞȱ ŗǯŚȱ Ŝȱ ŖǯŚ 11-20ȱ śŖȱ ŗǯřȱ Şȱ Ŗǯśȱ ŝŖȱ ŗǯŝȱ Śȱ ŖǯŘ 1-10ȱ řŘŘȱ ŞǯŘȱ ŚŚȱ Řǯŝȱ řŜŖȱ Şǯŝȱ řŘȱ ŘǯŖ Total 3,923 100.0 1,627 100.0 4,146 100.0 1,637 100.0 Ǳȱǰȱ

75 Annual Report 2012-13

Table 2.25: Share of Brokers, Securities and Participants in Cash Market Turnover (2012-13)

Percentage Share S. No. Particulars NSE BSE

ŗȱ ȱȱȱŗŖȱȱȱȱȱȱȱ ŘŚǯŝȱ ŘŘǯř ȱ Řȱ ȱȱȱŗŖȱȦȱȱȱȱȱȱ ŘŜǯŘȱ ŘŖǯŜ ȱ řȱ ȱȱȱȱȱȱȱ ȱ ȱ Ǽȱ ¢ȱȱ Řřǯřȱ ŘŚǯŖ ȱ ȱ Ǽȱ ȱ ȱǻ¡ȱǼȱ śǯŖȱ ŘǯŚ ȱ ȱ Ǽȱ ȱ ŘŖǯŜȱ şǯŘ ȱ ȱ Ǽȱ ȱ ŚǯŚȱ Řǯś ȱ ȱ Ǽȱ ȱ ŚŜǯŞȱ ŜŘǯŗ Total of (i) to (v) 100.0 100.0

Ǳȱ ȱ ȱǻ¡ȱȱǼȱȱǰȱ ǰȱȱȱȱ ȱȱǯȱ ȱ ȱǰȱ ȱȱ ǯ Ǳȱǰȱ

ȱȱȱȱŘŖŗŘȬŗřȱ ȱȱ Ĵȱ ȱ ¡ǰȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ¡ȱ ȱ Ǽǰȱ ǰȱ ȱ ȱ ęȱ¢ǯȱȱȱȱ¢ȱȱȱ ȱ ȱ ŘŚǯŖȱ ǰȱ ŘǯŚȱ ǰȱ ǰȱȱȱȱȂȱȱȱŝŚǯŚȱǰȱ şǯŘȱ ȱ ȱ Řǯśȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ǻŘśǯśȱ Ǽǯȱ ȱ ȱ ȱ ȱ ȱ ǻȱ ǰȱ ȱȱŜśǯŘȱȱȱȱ¢ȱȱȱ ȱ ęǰȱ ǰȱ ǰȱ ǰȱ Ǽȱ ȱ ȱ ¢ȱ ȱ ǻřŚǯśȱ Ǽǯȱ ȱ ȱŜŘǯŗȱǯȱǻȱŘǯŘŗǼ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ŞŘǯřȱ ǰȱ ȱ ¢ȱ ȱ ȱ VIII. Activities of Stock Exchanges ŗŝǯŚȱǯ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ¢ȱȱȱȱȱǰȱȱ ȱȱȱȬ ȱȱ¡ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ şşȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱǯȱȱȱȱ ȱȱȱȱǯȱȱŘŖŗŘȬŗřǰȱ ȱ ǰȱ ¢ȱ Ĵȱ ȱ ¡ȱ ȱ ¢ȱȱȱȱȱȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ǰȱ ȱ ŘŖŗŘȬŗřȱǻȱŘǯŘŜǼǯ ȱȱȱȱȱȱȱ ȱ ȱ ȱ ŝǯśȱ ȱ ȱ ` ŘǰŘŘǰŖŗşȱ ȱ ȱŘŖŗŘȬŗřǰȱȱȱ ȱȱȱ ȱŘŖŗŘȬŗřȱȱ` ŘǰŖŜǰŚŝŘȱȱȱ ȱ ȱ ¡ȱ ȱ ¢ȱ ŜǯŚȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ŘǯŘŝǼǯȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘśǯŜȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱ¢ȱȦȱ ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯǰȱȦȱ ȱȱȱȱǯǰȱȦȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ¢ǰȱ ȱȱǯȱȱȦȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱǯ

76 Part Two: Trends and Operations in Securities Markets

Table 2.26: Trading Statistics of Stock Exchanges

Stock Shares Value of Shares Delivered Exchange Traded (lakh) Delivered (lakh) (` crore) 2011-12 2012-13 2011-12 2012-13 2011-12 2012-13 1 234567 Recognized Stock Exchanges ȱ ȱ ȱ ȱ ȱ ȱ ȱȱ ŜǰśŚǰŗřŝȱ śǰŜřǰŞŞřȱ Řǰśśǰşşşȱ ŘǰŚřǰŘŗŝȱ ŗǰŞŗǰśŜŖȱ ŗǰŜŞǰŚşŖ ȱ ǻŘŞǯşǼȱ ǻŘśǯśǼȱ ǻřŜǯśŚǼȱ ǻřŚǯśŚǼȱ ǻŗŞǯŝŚǼȱ ǻŗŝǯŚŖǼ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ŗǰŜŞŗȱ ŗǰŝŝŜȱ ŗǰřŞŖȱ ŗǰŜŘŞȱ řǰŗŗşȱ ŘǰŞŝŜ ȱ ǻŖǯŖŝǼȱ ǻŖǯŖŞǼȱ ǻŖǯŘŖǼȱ ǻŖǯŘřǼȱ ǻŖǯřŘǼȱ ǻŖǯřŖǼ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȯȱ ŗŝǯŗŘȱ Ȯȱ Ŗǯřȱ Ȯȱ ŘŖś 0.00 0.00 0.00 ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŜǰŖśǰŘŖśȱ ŗŜǰŚŚǰŘśşȱ ŚǰŚřǰŘřŘȱ ŚǰśşǰřŚşȱ ŝǰŞŚǰŚŖŝȱ ŝǰşŜǰŝŞŚ ǻŝŖǯşşǼȱ ǻŝŚǯŚŖǼȱ ǻŜřǯŘŜǼȱ ǻŜśǯŘřǼȱ ǻŞŖǯşŚǼȱ ǻŞŘǯřŖǼ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Total 22,61,023 22,09,936 7,00,611 7,04,195 9,69,086 9,68,355 Ǳȱȱȱ¡ Ǳȱȱȱȱȱȱȱȱǯ

IX. Dematerialisation ȱ ȱ ȱ ȱ ȱ ŘŖŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŘŝȱ ȱ ȱ ȱ ȱ ȱ ȱ Şřȱ ȱ ȱ ŗşşŜȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱȱ ȱ ȱ £ȱ ¢ȱ ȱ ȱ ȱ řŗǰȱ ŘŖŗřǰȱ ŗŖǰŞŚŚȱ ȱ ȱ ȱ ȱ ǯȱ £ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŞǰřŘşȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯŘŞǼǯȱ ȱ ǰȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŗŞǯŚȱ ȱ ȱ ȱ ęȱ ȱ ȱ ŜŞǰŜŚǰŝśŞȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ǰȱ ȱ ȱ ȱ śŝǰşŞǰŖŗŖȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ǰȱ ȱ preservation. ¢ȱȱȱȱȱ

77 Annual Report 2012-13

Table 2.27: Turnover of Subsidiaries of Stock Exchanges

Stock No. of Turnover of Subsidiary Percentage Exchange Subsidiary/Name of the Subsidiary (` crore) Variation ies 2011-12 2012-13 12 3 456 Recognised Stock Exchanges ȱ ŗȱ ȱȱȱǯȱ ŘŚǰŜŝŗȱ ŗŞǰŞŖŗȱ ȬŘřǯŞ ȱ ŗȱ ȱȱǯȱ ŗřǰŗşŝȱ řŚǰřŜşȱ ŗŜŖǯŚ ȱ ŗȱ ȱȱȱǯȱ ŚǰŖŚśȱ řǰřřŚȱ ȬŗŝǯŜ ȱ ŗȱ ȱȱȱǯȱ ŜǰŞŗŝȱ ŚǰŜśśȱ Ȭřŗǯŝ ȱ ŗȱ ȱȱȱȱǯȱ řŗǰşŜŘȱ ŜŚǰŝŞŗȱ ŗŖŘǯŝ ȱ ŗȱ ȱȱǯȱ řǰŞŗŘȱ ŘǰşşŚȱ ȬŘŗǯś ȱ ŗȱ ȱȱǯȱ şŝǰśŖŚȱ ŝŝǰŗŝŜȱ ȬŘŖǯŞ ȱ ŗȱ ȱȱȱǯȱ śŝŚȱ śşşȱ ŚǯŚ ȱ ŗȱ ȱȱǯȱ řǰŜŞŗȱ Ŗȱ Ȯ ȱ ŗȱ ȱȱǯȱ řřŗȱ şŝȱ ȬŝŖǯŞ ȱ ŗȱ ȱȱǯȱ Řǰŗśşȱ ŘǰŗŘŖȱ ȬŗǯŞ ȱ ŗȱ ȱȱǯȱ ŘǰŝŚşȱ řǰśřŝȱ ŘŞǯŝ ȱ ŗȱ ȱȱȱǯȱ ŗŚǰşŝŗȱ şǰśśŞȱ ȬřŜǯŘ Total 2,06,472 2,22,019 7.5 Ǳȱȱȱ¡

Table 2.28: Depository Statistics

NSDL CDSL Particulars 2011-12 2012-13 2011-12 2012-13 12345 ǯȱȱ ȱȱǻǼȱ ŗŘŗȱ ŗŘŝȱ ŝşȱ Şř ǯȱȱȱȱȱǻȱȱǼȱ şǰŝŚŗȱ ŗŖǰŞŚŚȱ ŞǰřŘşȱ ŞǰŖŜŘ ǯȱȱȱȱȱȱ şǰŝŚŗȱ ŗŖǰŞŚŚȱ ŞǰřŘşȱ ŞǰŖŜŘ ǻȱȱǼ ȱ¢ȱȱȘȱǻǼȱ śŝǰşŞǰŖŗŖȱ ŜŞǰŜŚǰŝśŞȱ ŗřǰřśǰŝŖŖȱ ŗśǰŗŝǰşŘŜ ǯȱȱȱĴȱȱȱǻǼȱ ŝǰŘŖǰŜśŜȱ ŝǰřŝǰŝŝřȱ řǰŝŞǰřŘśȱ ŚǰŘŝǰřśŘ ȱȱȱĴȱȱȱǻ` Ǽȱ ŗŘǰŚŝǰŘŚşȱ ŗŘǰŝŘǰśřŗȱ ŘǰşŖǰśŝŘȱ řǰŗşǰŚşŗ ȱȱȱ ŜŘǰŜśǰŗśŝȱ ŜŚǰřşǰŗŗśȱ ŜřǰŗŖǰśřŖȱ ŜśǰŘŗǰŝŜŘ ȱȱȱǻ` Ǽ ȱȱ£ȱ¢ȱȱȱ ŞŗǯŚȱ ŞŘǯśȱ ŗŜǯřȱ ŗŚǯś ȱȱȱǻǼ Ǳȱ ŗǼȱ ȱȱȱ¢ȱǰȱȱǰȱȱȱǰȱȱȱȱǯȱ ȱȱȱȱȱȱȱȱǯ Ǳȱǰȱ

¢ȱ ŘŜǯŞȱ ȱ ȱ ŗřǰřśǰŝŖŖȱ ȱ ȱ ŘŖŗŗȬ Ĵȱȱȱǯȱȱȱȱȱ ŗŘȱ ȱ ŗśǰŗŝǰşŘŜȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ǯȱ ȱ ȱ ȱȱǰȱȱ¢ȱȱȱȱȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ¢ȱ

78 Part Two: Trends and Operations in Securities Markets

ȱ ŘǯŖȱ ȱ ȱ ` ŗŘǰŚŝǰŘŚşȱ ȱ ȱȱȱȱȱȱȱ in 2011-12 to ` ŗŘǰŝŘǰśřŗȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ` ŗǰŘşşȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ` ŝŖřȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱŘŖŗŘȬŗřǯȱȱȱȱȱȱ ¢ȱ ŗŖǯŖȱ ȱ ȱ ` ŘǰşŖǰśŝŘȱ ȱ ȱ ȱȱȱȱȦȱ 2011-12 to ` řǰŗşǰŚşŗȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱȱȱȱȱȱŘŖŗŘȬŗřȱȱ ȱȱȱ¢ȱȱȱȱ 2011-12. ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŞŘǯśȱ ȱ ȱ ȱ ȱ ŗŚǯśȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱŘŖŗŘȬŗřǯ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱǯȱȱȱȱ ȱ ¢ȱ ȱ ȱ ěȱ ȱ ȱ¢ȱȱǻǼȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱŘŖŗŘȬŗřǯȱȱȱȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗǰśŞŗȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱȱȱȱŗǰśśŚȱȱȱŘŖŗŗȬŗŘȱ ȱ ȱ ȱ ǻȱ ŘǯŘşǼǯȱ ȱ ǰȱ ǻȱŘǯřŖǼǯȱȱȱȱǰȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱ¢ȱȱȱ ȱȱ` şŖǰŖŗşȱȱȱŘŖŗŗȬŗŘȱȱŗǰŖŞǰŝśŞȱ ȱŘǰŗŖŚȱȱŘŖŗŗȬŗŘȱȱŗǰśşŚȱȱŘŖŗŘȬŗřǯ ȱȱŘŖŗŘȬŗřǯȱ ǰȱȱȱ

Table 2.29: Depository Statistics: Debentures / Bonds and Commercial Paper

Debentures / Bonds Commercial Papers Particulars 2011-12 2012-13 2011-12 2012-13 NSDL CDSL NSDL CDSL NSDL CDSL NSDL CDSL 1 234567 89

ǯȱȱ ȱ ŜŖŜȱ ŚŗŖȱ ŝŚŘȱ Śŝŝȱ ŗşŝȱ ŗşȱ ŗŞŜȱ ŗŘ ǯȱȱȱ ŝŝŚŜȱ śǰŜŞŝȱ Şǰşşřȱ Ŝǰşŗŗȱ ŗǰŘŜřȱ ŝśȱ ŗǰŗŜŝȱ Şś Instruments ȱȱȱ ŗŖǰŘşǰřŞşȱ ŘŞǰŚŚřȱ ŗŘǰŝŚǰŗşřȱ řŜǰŗşŝȱ şŖǰŖŗşȱ ŗǰŘşşȱ ŗǰŖŞǰŝśŞȱ ŝŖř ǻ` Ǽ

Ǳȱǰȱ

Table 2.30: Cities according to Number of DP Locations: Geographical Spread

NSDL CDSL No. of DP Locations 2011-12 2012-13 2011-12 2012-13 12345 ŖȱǁȱŗŖȱ ŗǰřŜŗȱ ŗǰřŞŜȱ ŗǰşŖŜȱ ŗǰŚŘŚ ŗŖȬŘŖȱ ŞŜȱ Şŝȱ ŞŜȱ ŝŞ ŘŗȬśŖȱ ŜŜȱ Ŝŝȱ ŝŚȱ śŜ śŗȬŗŖŖȱ ŘŚȱ Řřȱ ŘŖȱ Řŗ ǁȱŗŖŖȱ ŗŝȱ ŗŞȱ ŗŞȱ ŗś Total 1,554 1,581 2,104 1,594

ǱȱȱȱȱȱȱȱǰȱȱȱȱȱȱĜȱȱȱȱȱǯ Ǳȱǰȱ

79 Annual Report 2012-13

X. Derivatives Segment ¢ȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ȱ ȱ ȱ ȱ ȱ ǯȱȱȱȱȱȱ ¢Ȃȱ ȱ ǯȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱȱ ȱŗŘǯŜȱȱȱȱĴȱ ȱ ȱ ȱ ȱ ǯȱ ǻȱ ŘǯŗŖǼǯȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Şŗǯśȱ ȱ ȱ ȱ ȱ ȱęȱȱ ȱȱȱ ǯȱȬȱȱȱȱȱ ȱȱȱȱ¢ȱȱȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ěȱ markets. ȱ¢ȱŗŗǰȱŘŖŗřǯ ȱȱȱȱȱȱȱ A. Equity Derivatives Segment ȱȱȱȱȱȱ¢ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ Ŝǯŗȱ ȱ ȱ ŗŗřǰŗŚǰŜŝǰŚŗŞȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ŗŘŖǰśŖǰŚśǰŚŜŚȱ ȱ ŘŖŗŗȬŗŘǰȱ ǰȱ ȱ ǰȱ in the Indian securities market. Over the ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ŝŗŚǯśȱ ȱ ȱ řǰŘŘǰŘŘǰŞŘśȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ŘŜǰŘŚǰŚřǰřŜŜȱȱŘŖŗŘȬŗřǯȱ ȱǰȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ¢ȱ¢ȱȱȱěȱ¢ȱȱ ȱ ǯȱ ȱ ȱ ȱ ęȱ ¡ǯȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǯȱ¢ǰȱ Ȃȱǰȱȱ ȱ ŖǯŜȱ ȱ ȱ ` řǰŗśǰřřǰŖŖŚȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ` řǰŗřǰŚşǰŝřŘȱȱȱŘŖŗŗȬŗŘǰȱ ȱ řŖȱ ȱ ¡ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ

80 Part Two: Trends and Operations in Securities Markets

ȱ ȱ ¢ȱ ŝŞŜǯŗȱ ȱ ȱ ŝŗǰŜřǰśŗşȱ ǻŗŗǯŞȱǼǯȱȱȱ¢ȱȱȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ` ŞǰŖŞǰŚŝŜȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ¢ȱ ¢ȱ ŖǯŜȱ 2011-12. The open interest in the derivative percent to ` ŗǰȱ ŘŜǰŜřşȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ řǯśȱ ȱ ȱ ` ŗǰȱŘśǰşŖřȱȱȱŘŖŗŗȬŗŘǯ ` ŞśǰşśŘȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ` ŞşǰŖŚşȱȱȱȱȱȱŘŖŗŗȬŗŘ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱ¢ȱȱȱȱȱ ŗŗǰȱŘŖŗřǯȱ ȱȱȱȱ¢Ȭȱ segment at NSE recorded a mixed trend ŘŖŗřǰȱŘǯŝśȱȱȱ ȱȱȱ ` ȱ ŘŖŗŘȬŗřȱ ǻȱ ŘǯřŗǼǯȱ ȱ ȱ ȱȱȱ ŞǰŖŚşȱǯ ȱ ȱ ȱ ȱ ȱ ŘŖŗřȱ ȱ ¢ȱ ȱ ȱ ȱ ǻ` řŗǰŘŝǰŚŚŜȱǼȱ ȱ¢ȱ ¢ȱŘŖŗřȱ ¡ȱȱȱȱȱȱ ǻ` ŘşǰśŖǰşŝśǼȱȱ¢ȱŘŖŗŘȱǻ` ŘŝǰŗşǰŞŚřȱ ȱ ȱ ȱ ȱ ¢ȱ ǻȱ ŘǯřŘǼǯȱ ȱ Ǽǯȱ ȱ ȱ ȱ ȱ ȱ ŘŖŖŜȬŖŝǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘŖŗŘȱ ȱ ȱȱȱ ǯȱȱŘŖŗŘȬŗřǰȱȱ ȱ ȱ ¢ȱ ŘřǯŘȱ ǰȱ ȱ ¢ȱ ȱȱȱȱȱȱȱ ȱ ŘŖŗřȱ ǻŘŗǯŚȱ Ǽȱ ȱ ¢ȱ ŘŖŗřȱ ȱ ȱ ȱ ¢ȱ ¡ȱ ȱ ȱ

Table 2.31: Trends in Turnover and Open Interest in Equity Derivatives Segment

Turnover Open Interest at the End of the Year / Month ` Year/Month No. of Contracts ( crore) No. of Notional Turnover Contracts (` crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3456789 2008-09 65,73,90,497 4,96,502 1,10,10,482 11,775 32,27,759 22 57,705 0 2009-10 67,92,93,922 9,026 1,76,63,665 234 34,89,790 0 97,978 0 2010-11 103,42,12,062 5,623 2,92,48,221 154 36,90,373 4 1,01,816 0 2011-12 120,50,45,464 3,22,22,825 3,13,49,732 8,08,476 33,44,473 28,176 89,049 736 2012-13 113,14,67,418 26,24,43,366 3,15,33,004 71,63,519 30,41,192 90,075 85,952 2,299 ȬŗŘȱ ŞǰŘŞǰŗŘǰŗŞŚȱ ŗǰŚŗǰŗśǰŜŜŜȱ ŘŘǰŖŝǰřŗŝȱ řǰŜşǰŝŗŝȱ řŚǰśşǰŚśśȱ ŚŚǰřŗŗȱ ŞşǰŖŖŘȱ ŗǰŗśŗ ¢ȬŗŘȱ ŗŗǰŖŗǰśŘǰŝŖŞȱ ŘǰśŗǰŗşǰśśŖȱ ŘŝǰŗşǰŞŚřȱ ŜǰŘŚǰŘşŜȱ řřǰŝśǰŜřśȱ śşǰŚřŚȱ ŞŖǰŝřŜȱ ŗǰŚŚŜ ȬŗŘȱ ŗŖǰśŖǰŗŘǰŚřřȱ ŘǰŞşǰŞŜǰŝŜŝȱ ŘŜǰŚŖǰŝŖŜȱ ŝǰřŘǰŚŞřȱ řŞǰŝŜǰŚřśȱ ŞŚǰşŞŞȱ ŗǰŖŘǰŖŚŖȱ ŗǰŝŚŗ ȬŗŘȱ şǰřŗǰŞŗǰśŞŖȱ řǰŝşǰŗŘǰŞŗŞȱ ŘŚǰśřǰŖŞřȱ şǰŝŞǰŗŚřȱ ŚŘǰŜŗǰŘşŝȱ ŞŞǰŝŖŞȱ ŗǰŗŖǰŞŞŞȱ ŘǰŘşŚ ȬŗŘȱ şǰŖşǰşŗǰşŘśȱ řǰŘŞǰŘŜǰřŚŜȱ ŘŚǰřŘǰŗŜşȱ ŞǰŝŚǰřśśȱ řŞǰśŗǰřŝŞȱ şŖǰŞŜŗȱ şşǰşśşȱ Řǰřşŝ ȬŗŘȱ şǰřřǰŜřǰşşŜȱ ŗǰŗŗǰŖşǰŜŞśȱ ŘśǰşŗǰşŚŞȱ řǰŖśǰřŗşȱ ŚŗǰŖŚǰŚŚŖȱ ŝŞǰşŚŜȱ ŗǰŗŝǰřŜŝȱ ŘǰŘřŝ ȬŗŘȱ şǰřŝǰşŝǰŗŝśȱ ŗǰŚŚǰŖŚǰŗŝŜȱ ŘŝǰŗŚǰŘŖşȱ ŚǰŗŖǰŞŚśȱ ŚśǰŖŚǰŝŚśȱ şşǰŝśśȱ ŗǰŘřǰŖŘŝȱ ŘǰŝŞş ȬŗŘȱ ŞǰŜśǰŝřǰŘŝŚȱ ŗǰşřǰŝśǰŗśŚȱ ŘŚǰŝşǰŞŗŝȱ śǰŚŜǰśŞŘȱ ŚŗǰŚřǰśŗşȱ ŚŞǰŝşŘȱ ŗǰŗşǰşŚśȱ ŗǰŚřŞ ȬŗŘȱ ŞǰŞřǰŝşǰŜŞŚȱ řǰŖŝǰŚŝǰŗřŜȱ ŘŜǰŚŖǰřşřȱ ŞǰşşǰŞśřȱ řŜǰŞŚǰŖŜŜȱ ŜŞǰřŝŖȱ ŗǰŗŗǰŞŗśȱ ŘǰŖŘŞ Ȭŗřȱ şǰŚŜǰśŚǰřśŜȱ řǰŖśǰŘŜǰřřŚȱ ŘşǰśŖǰşŝśȱ şǰŘřǰŚŚŗȱ řŗǰŚŘǰŜŜŘȱ ŝǰřŚŗȱ şŝǰŘŚśȱ Řŗş Ȭŗřȱ ŞǰśŚǰŞśǰŚşŞȱ ŝŞǰŜŗǰřřŖȱ ŘśǰŝśǰŖşŝȱ ŘǰŘşǰŚŝŖȱ řřǰŜŜǰŗŖşȱ ŞŜǰŖŝşȱ şŜǰŘşŗȱ ŘǰŚŖŘ Ȭŗřȱ ŗŖǰŝŖǰŜŘǰŜŖśȱ şŚǰśŞǰŚŖŚȱ řŗǰŘŝǰŚŚŜȱ ŘǰŜşǰŖŗŚȱ řŖǰŚŗǰŗşŘȱ şŖǰŖŝśȱ ŞśǰşśŘȱ ŘǰŘşş Ǳȱǰȱ

81 Annual Report 2012-13

Table 2.32: Product-wise Derivatives Turnover at NSE and BSE ǻǼ Year / Month Index Futures Index Options Single Stock Single Stock Total Options Futures 1 23456 2008-09 32.4 33.9 2.1 31.6 100.0 2009-10 22.3 45.5 2.9 29.4 100.0 2010-11 14.9 62.8 3.5 18.8 100.0 2011-12 11.7 72.6 3.0 12.7 100.0 2012-13 6.8 77.0 5.2 10.9 100.0 ȬŗŘȱ ŗŖǯŗȱ ŝŚǯŘȱ řǯşȱ ŗŗǯŞȱ ŗŖŖǯŖ ¢ȬŗŘȱ ŞǯŜȱ ŝşǯŖȱ řǯŚȱ şǯŗȱ ŗŖŖǯŖ ȬŗŘȱ Şǯśȱ ŝşǯřȱ řǯŘȱ şǯŖȱ ŗŖŖǯŖ ȬŗŘȱ ŝǯŗȱ ŝşǯŘȱ ŚǯŖȱ şǯŞȱ ŗŖŖǯŖ ȬŗŘȱ Ŝǯřȱ ŝşǯŞȱ ŚǯŚȱ şǯśȱ ŗŖŖǯŖ ȬŗŘȱ ŝǯřȱ ŝŚǯşȱ śǯŝȱ ŗŘǯŗȱ ŗŖŖǯŖ ȬŗŘȱ ŝǯŖȱ ŝŚǯŗȱ Ŝǯśȱ ŗŘǯŚȱ ŗŖŖǯŖ ȬŗŘȱ śǯŝȱ ŝŜǯŞȱ śǯşȱ ŗŗǯśȱ ŗŖŖǯŖ ȬŗŘȱ śǯŗȱ ŝŞǯŞȱ śǯŖȱ ŗŗǯŗȱ ŗŖŖǯŖ Ȭŗřȱ śǯŖȱ ŝŚǯśȱ ŝǯŝȱ ŗŘǯŞȱ ŗŖŖǯŖ Ȭŗřȱ Ŝǯśȱ ŝřǯŜȱ ŝǯŖȱ ŗŘǯşȱ ŗŖŖǯŖ Ȭŗřȱ Ŝǯŗȱ ŝŞǯŝȱ śǯśȱ şǯŜȱ ŗŖŖǯŖ Ǳȱǰȱ

ŝŝǯŖȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱŘŖŗŘȬŗřǯȱ ȱȱ¢ȱȱȱ¢ȱȱ ȱȱȱȱȱȱȱřǯŖȱ ȱȱȱȱŗŖǯşȱȱȱŘŖŗŘȬŗřǯȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ȱ śǯŘȱ ȱ ȱ ŘŖŗŘȬŗřȱ ¡ȱȱȱȱŜǯŞȱȱȱ ǻȱŘǯŗŗǼǯ

82 Part Two: Trends and Operations in Securities Markets

Table 2.33: Trends in Index Futures at NSE and BSE

Open Interest at the End of Year/ No. of Contracts Notional Turnover the Year / Month Month (` crore) No. of Notional Turnover Contracts (` crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2008-09 21,04,28,103 4,95,830 35,70,111 11,757 8,28,369 22 12,060 0.3 2009-10 17,83,06,889 3,744 39,34,389 96 5,81,510 0 14,979 0 2010-11 16,50,23,653 5,613 43,56,755 154 6,18,576 4 16,941 0.1 2011-12 14,61,88,740 70,73,334 35,77,998 1,78,449 5,71,933 11,693 14,341 305 2012-13 9,61,00,385 47,04,602 25,27,131 1,22,374 2,97,198 2,080 8,503 59 ȬŗŘȱ şŘǰŗŞǰŝŘśȱ ŗŘǰŗŘǰřŞśȱ ŘǰŘŞǰşŞşȱ řŗǰśŞşȱ śǰŘŚǰŖřŖȱ ŗŝǰŜśśȱ ŗŘǰşśśȱ Śśş ¢ȬŗŘȱ ŗǰŗŚǰŚŚǰřŗŖȱ ŞǰŝŖǰŜśŘȱ ŘǰŜŜǰŖŖŘȱ ŘŖǰŞśşȱ ŚǰřŗǰŗŗŚȱ ŘŞǰŘŞŞȱ şǰşŗŚȱ ŜŞŞ ȬŗŘȱ ŗǰŗŖǰŜŜǰŝŘşȱ ŞǰřŘǰŘřŗȱ ŘǰŜŚǰřŖŚȱ ŘŖǰŝŝŜȱ ŜǰŗŚǰŜşşȱ ŚŝǰşşŜȱ ŗśǰśřŖȱ ŗǰŘśś ȬŗŘȱ şŖǰŚşǰŞřŝȱ ŜǰŝŖǰŗśśȱ ŘǰŘŚǰśŖŚȱ ŗŝǰśŝśȱ ŜǰŗŚǰřŘŜȱ śŝǰřŘŞȱ ŗśǰřŞŘȱ ŗǰŚŞŘ ȬŗŘȱ ŝŞǰŞŗǰşśŜȱ řǰřŘǰŗŚŜȱ ŗǰşşǰŜŘŞȱ ŞǰŞŗŞȱ śǰŗŚǰśŜŜȱ śŚǰŘŝŝȱ ŗřǰŖŜřȱ ŗǰŚŘŗ ȬŗŘȱ ŝŞǰŗśǰŜŘŚȱ ŗǰŜřǰŝŚŖȱ ŘǰŖŜǰşŗŖȱ ŚǰśŗŜȱ ŜǰŖşǰśŚşȱ śŜǰśŚşȱ ŗŜǰŜřŚȱ ŗǰŜŖŖ ȬŗŘȱ ŝşǰŘśǰśřśȱ ŗǰŘŝǰŝŞŞȱ ŘǰŗŜǰŖŖŚȱ řǰŜřŜȱ ŚǰşřǰŖŜŝȱ řŘǰŚŝřȱ ŗŘǰŜŚŞȱ şŗŘ ȬŗŘȱ ŜŗǰŜşǰŝŚŗȱ ŝşǰŞŘřȱ ŗǰŜşǰŝśŝȱ ŘǰŘŝŚȱ śǰŖŘǰŗŜśȱ řŗǰśŝŗȱ ŗŚǰŘŖŝȱ şřŘ ȬŗŘȱ ŜŖǰŞŗǰŞşśȱ ŞŖǰśśŗȱ ŗǰŝŜǰŚşŘȱ ŘǰŚŖŖȱ ŚǰŖŜǰŞśşȱ řŗǰřŞŖȱ ŗŗǰŝŘśȱ şřŝ Ȭŗřȱ ŜřǰřŝǰŚŗŘȱ ŗǰŘŖǰŚřŚȱ ŗǰşŖǰŖşŚȱ řǰŜŝŚȱ řǰŖşǰśŝŜȱ ŗǰŘřŖȱ şǰŚřŗȱ řŝ Ȭŗřȱ ŜŖǰśŗǰŜśŚȱ ŗǰŗŞǰśřşȱ ŗǰŝşǰŜŞŘȱ řǰŚŞŚȱ řǰśŘǰřŝŗȱ ŘŝǰŖŜşȱ ŗŖǰŖŞŞȱ ŝŜś Ȭŗřȱ ŝŖǰśŜǰşŜŝȱ şŜǰŗśŞȱ ŘǰŖŚǰŝŜřȱ Řǰŝŝřȱ ŘǰşŝǰŗşŞȱ ŘǰŖŞŖȱ ŞǰśŖřȱ śş Ǳȱǰȱ

ȱ ȱ ¡ȱ ȱ ȱ ȱ ǰȱ£ǯǰȱ ȱ¡ǰȱ ȱ¡ǰȱȦ ǰȱȱȱěȱȱȱ ȱ ȱŚŖȱȱȱ¡ǯ Ȭȱ ¢ǰȱ ¢ȱ ȱ śŖǰȱ ȱ ¢ǰȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ǯȱ ¡ȱ ȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ £ǯǰȱ ȱ ȱ ¡ǰȱ ǭȱ śŖŖȱ ȱ ǻ` śřǰśŖŚȱ Ǽȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŗŖŖȱ ¡ǯȱ ȱ ȱ ǰȱ ȱ ȱ ǻ` ŘŘǰŗŝŖȱ Ǽǰȱ ¡ȱ ȱ ŘŖŗŘȬŗřǰȱ¢ȱȱȱȱȱ ǻ` ŞǰśŜŘȱ Ǽǰȱ ȱ ȱ ȱ ǻ` ŚǰŖŖśȱ ȱ ȱ ȱ şŖȱ ȱ ȱ ȱ ȱ ¡ȱ Ǽǯȱ ȱ ȱ Řǯřřȱ ȱ ŘǯřŜȱ ȱ ȱ ȱǯȱȱ¢ȱȱȱ Ȭ ȱȱȱȱȱȱ ȱȱȱȱȱřȱȱŞȱȱȱŘŖŗŘȬ in India during the recent years. ŗřǯȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ŖǯŞȱ ȱ ȱ ȱȱȱȱȱȱ ŗŖŖȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱȱȱŗŖŖȱ¡ȱȱĚȱ ¢ȱ ȬȬȱ ȱ ȱ ȱȱȱȱŖǯŖŗȱȬşşǯşȱǯȱ ȱ śŗǯŝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǭȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ

83 Annual Report 2012-13

Table 2.34: Trends in Single Stock Futures at NSE and BSE

Open Interest at the End of the Year/ No. of Stocks No. of Notional Turnover Year / Month Month Traded Contracts (` crore) No. of Notional Turnover Contracts (` crore) NSE BSE NSE BSE NSE BSE NSE BSE NSE BSE 1234 5 67891011 2008-09 250 3 22,15,77,980 299 34,79,642 9 5,11,334 0 15,722 0.0 2009-10 190 0 14,55,91,240 6 51,95,247 0 9,90,917 0 32,053 0.0 2010-11 223 0 18,60,41,459 0 54,95,757 0 11,26,190 0 28,354 0.0 2011-12 217 219 15,83,44,617 3,26,342 40,74,671 10,216 8,86,326 19 24,663 1 2012-13 146 122 14,77,11,691 1,16,933 42,23,872 3,418 7,90,886 417 22,168 12 ȬŗŘȱ Řŗśȱ ŗşȱ ŗǰŖŝǰřşǰşşŞȱ ŗǰŘşşȱ řǰŖřǰŞśřȱ řŜȱ ŗŖǰŘŖǰŜŜŞȱ Ŗȱ ŘśǰşŖśȱ Ŗ ¢ȬŗŘȱ ŘŗŖȱ ŗŚȱ ŗǰŘŝǰŚŞǰŞŜŝȱ ŗŘřȱ řǰŖřǰŖŖŞȱ řȱ şǰŚśǰşŚŝȱ Ŗȱ ŘŗǰŝřŜȱ Ŗ ȬŗŘȱ ŘŗŖȱ ŗŞȱ ŗǰŘŚǰŞŘǰŜŘŜȱ Ŗȱ řǰŖŚǰŝşŜȱ Ŗȱ ŗŖǰŘřǰŞřŞȱ Ŗȱ ŘŝǰŘşşȱ Ŗ ȬŗŘȱ ŘŖŞȱ śŞȱ ŗǰŘŚǰřŜǰŖşŞȱ ŚŖŚȱ řǰřśǰŝŞśȱ ŗŖȱ ŗŖǰŜŗǰŞŚŘȱ Ŗȱ ŘŝǰŞŚśȱ Ŗ ȬŗŘȱ ŘŖŞȱ Şŝȱ ŗǰŗŜǰŝśǰŚşŗȱ ŗǰŖśşȱ řǰŗśǰŜşşȱ Řşȱ ŗŖǰŚŖǰŘŗŘȱ Řȱ ŘŜǰśŝŖȱ Ŗ ȬŗŘȱ ŘŖŝȱ ŗřŖȱ ŗǰŘŚǰŚŗǰśŖşȱ ŗǰŝşşȱ řǰŚşǰŞŝŝȱ ŚŜȱ ŗŖǰŜŜǰŜŚşȱ řȱ řŗǰřŗŗȱŖ ȬŗŘȱ ŗśŜȱ ŞŞȱ ŗǰŘşǰşŘǰŚŚşȱ ŗǰřŘŘȱ řǰŞŞǰŗŖřȱ ŚŖȱ ŗŗǰŞŗǰşśŖȱ Ŗȱ řŗǰŗŞşȱ Ŗ ȬŗŘȱ ŗśŘȱ Ŝŝȱ ŗǰŘŘǰŖřǰŚŞřȱ Śśşȱ řǰŚşǰŚřŗȱ ŗřȱ ŗŗǰŜřǰŞŖŚȱ Ŗȱ řŘǰŞŞŜȱ Ŗ ȬŗŘȱ ŗśŗȱ ŝŘȱ ŗǰŘŞǰŝŚǰŞŚŜȱ ŞřŜȱ řǰşŘǰřŘŝȱ Řśȱ ŗŖǰşřǰŘŘŞȱ Ŗȱ řśǰŗŚŚȱ Ŗ Ȭŗřȱ ŗŚşȱ ŗŗŚȱ ŗǰŚŜǰŚŞǰŘŝşȱ ŘŗǰŘŝŘȱ ŚǰşśǰřŜŜȱ ŜŝŖȱ ŗŖǰŗŝǰŜřŗȱ Řȱ řŘǰŝŗŞȱ Ŗ Ȭŗřȱ ŗŚŞȱ ŗŗřȱ ŗǰŗśǰŖŖǰŞŘśȱ ŘŖǰŜŗśȱ řǰŜŗǰŘşŚȱ śşŖȱ ŞǰşřǰŝŖŚȱ Řŗŝȱ ŘśǰŞŗŖȱ ŝ Ȭŗřȱ ŗŚŜȱ ŗŘŘȱ ŗǰŖşǰŜŝǰŘŘŖȱ ŜŝǰŝŚśȱ řǰŘŚǰřřŘȱ ŗǰşśŜȱ ŝǰşŖǰŞŞŜȱ Śŗŝȱ ŘŘǰŗŜŞȱ ŗŘ Ǳȱǰȱ

Table 2.35: Trends in Index Options at NSE and BSE

Open Interest at the End of Year/ No. of Contracts Notional Turnover the Year / Month Month (` crore) No. of Notional Turnover Contracts (` crore) NSE BSE NSE BSE NSE BSE NSE BSE 1 2 3 456789 2008-09 21,20,88,444 373 37,31,502 9 18,09,483 0 27,402 0.0 2009-10 34,13,79,523 5,276 80,27,964 138 18,19,841 0 47,808 0.0 2010-11 65,06,38,557 0 1,83,65,366 0 18,90,463 0 55,022 0.0 2011-12 86,40,17,736 2,47,75,644 2,27,20,032 6,18,342 17,96,546 16,464 47,540 430 2012-13 82,08,77,149 25,72,33,961 2,27,81,574 70,27,481 18,48,581 34,729 52,523 981 ȬŗŘȱ śǰşřǰşŜǰśşŖȱ ŗǰŘşǰŖŗǰşŞŘȱ ŗśǰŝřǰŞŜŖȱ řǰřŞǰŖşŘȱ ŗŝǰŜşǰŝŞśȱ ŘŜǰŜśŜȱ ŚŜǰŚŖŞȱ ŜşŘ ¢ȬŗŘȱ ŞǰŗŚǰśŘǰŖŜşȱ ŘǰŚŘǰŚŞǰŜŘŞȱ ŘŖǰřŝǰşřŝȱ ŜǰŖřǰŚřŘȱ ŗşǰŗŜǰŞŝŞȱ řŗǰŗŚŜȱ ŚŝǰŗŜŗȱ ŝśŞ ȬŗŘȱ ŝǰŝŘǰŜŗǰŚŜŗȱ ŘǰŞŗǰśŚǰŘşśȱ ŗşǰŜřǰŚŝŝȱ ŝǰŗŗǰŝŖŘȱ ŘŗǰŘŝǰřŜřȱ Řřǰşśśȱ śŜǰŗŘśȱ ŜŘŜ ȬŗŘȱ ŜǰŜşǰŞŘǰŞŖŝȱ řǰŝŘǰŚŗǰŝśŗȱ ŗŝǰśŝǰŗşŖȱ şǰŜŖǰśŚśȱ ŘřǰşşǰřŗŜȱ řŗǰřŞŖȱ ŜŘǰŝŖŘȱ Şŗŗ ȬŗŘȱ ŜǰŜřǰśşǰŚŚŗȱ řǰŘŚǰşŗǰřŖŜȱ ŗŝǰŝřǰŖŖŖȱ ŞǰŜśǰŚŜŝȱ ŘŗǰřŝǰśŚřȱ řŜǰŚśŜȱ śŜǰŗŖśȱ şŜř ȬŗŘȱ ŜǰŝŚǰśŞǰŚŜŞȱ ŗǰŖşǰřŝǰřśŝȱ ŗŞǰŝŖǰśşŘȱ řǰŖŖǰŜŗŘȱ ŘŘǰŜŝǰşŜŞȱ ŘŘǰŘşŗȱ ŜŚǰŜŜŜȱ ŜřŚ ȬŗŘȱ ŜǰŜŚǰşśǰŘŖŖȱ ŗǰŚŘǰŜŞǰřŝŘȱ ŗşǰŖŝǰśşŜȱ ŚǰŖŝǰŖŗşȱ ŘśǰŝŜǰŝřşȱ ŜŜǰŝŝŖȱ ŝŘǰřşřȱ ŗǰŞŜŜ ȬŗŘȱ ŜǰŘŘǰŘśǰşśśȱ ŗǰşŘǰŞşǰŗřŖȱ ŗŝǰŞŗǰŖśşȱ śǰŚŚǰŗŝŖȱ ŘřǰŖśǰŜŜŚȱ ŗŝǰŗŗŜȱ ŜŝǰŞŘśȱ śŖř ȬŗŘȱ ŜǰřŜǰŞřǰśŚřȱ řǰŖŜǰśŘǰŜśŞȱ ŗŞǰşřǰşŝřȱ ŞǰşŝǰŗŗŖȱ ŘŖǰŖŜǰřŘŘȱ řśǰŞŝŝȱ śşǰřřŜȱ ŗǰŖśş Ȭŗřȱ ŜǰŚŝǰŜŜǰŚŗŜȱ řǰŖřǰśŚǰřŚśȱ ŗşǰŜŜǰşŗŞȱ şǰŗŞǰŗŞŚȱ ŗŜǰŝŗǰŜśŗȱ ŜǰŗŖşȱ śŖǰśřŞȱ ŗŞŘ Ȭŗřȱ ŜǰŗŞǰŖŗǰřŘŗȱ ŝŜǰśřǰŝŝŞȱ ŗŞǰřşǰřŚŜȱ ŘǰŘřǰśŖśȱ ŗşǰŞŗǰŚŗŞȱ Śśǰśśşȱ śŜǰŚŗŞȱ ŗǰŘşŖ Ȭŗřȱ ŞǰŘşǰşřǰŞŝŞȱ şŖǰŚŖǰřśşȱ ŘŚǰŗŜǰŜŘŝȱ ŘǰśŝǰŜŚŚȱ ŗŞǰŚŞǰśŞŗȱ řŚǰŝŘşȱ śŘǰśŘřȱ şŞŗ Ǳȱǰȱ

84 Part Two: Trends and Operations in Securities Markets

Table 2.36: Trends in Stock Options at NSE and BSE

Open Interest at the End of Year / No. of No. of Notional Turnover the Year / Month Month Stocks Contracts (` crore) No. of Notional Turnover Contracts (` crore) NSE BSE NSE BSE NSE BSE NSE BSE NSE BSE 1234 5 67891011 2008-09 250 115 1,32,95,970 0 2,29,227 0 78,573 0 2,521 0.0 2009-10 190 98 1,40,16,270 0 5,06,065 0 97,522 0 3,137 0.0 2010-11 223 89 3,25,08,393 0 10,30,344 0 55,144 0 1,499 0.0 2011-12 216 217 3,64,94,371 47,505 9,77,031 1,469 89,668 0 2,504 0 2012-13 146 146 6,67,78,193 3,87,870 20,00,427 10,246 1,04,527 52,849 2,758 1,247 ȬŗŘȱ Řŗśȱ ŘŗŜȱ řŚǰśŜǰŞŝŗȱ Ŗȱ ŗǰŖŖǰŜŗśȱ Ŗȱ ŗǰŚŚǰşŝŘȱ Ŗȱ řǰŝřŚȱ Ŗ ¢ȬŗŘȱ ŘŗŖȱ ŘŗŘȱ ŚśǰŖŝǰŚŜŘȱ ŗŚŝȱ ŗǰŗŘǰŞşŝȱ řȱ ŞŗǰŜşŜȱ Ŗȱ ŗǰşŘŜȱ Ŗ ȬŗŘȱ ŘŗŖȱ Řŗŗȱ ŚŘǰŖŗǰŜŗŝȱ ŘŚŗȱ ŗǰŖŞǰŗŘşȱ śȱ ŗǰŗŖǰśřśȱ Ŗȱ řǰŖŞŜȱ Ŗ ȬŗŘȱ ŘŖŞȱ ŘŖşȱ ŚŝǰŗŘǰŞřŞȱ śŖŞȱ ŗǰřśǰŜŖřȱ ŗřȱ ŗǰŞśǰŞŗřȱ Ŗȱ Śǰşśşȱ Ŗ ȬŗŘȱ ŘŖŞȱ ŘŖşȱ śŖǰŝśǰŖřŝȱ ŗǰŞřśȱ ŗǰŚřǰŞŚŗȱ ŚŘȱ ŗǰśşǰŖśŝȱ ŗŘŜȱ ŚǰŘŘŗȱ ř ȬŗŘȱ ŘŖŝȱ ŘŖŞȱ śŜǰŚŞǰřşśȱ ŜǰŝŞşȱ ŗǰŜŚǰśŜşȱ ŗŚŜȱ ŗǰŜŖǰŘŝŚȱ ŗŖřȱ Śǰŝśŝȱ Ř ȬŗŘȱ ŗśŜȱ ŗśŜȱ ŜřǰŞřǰşşŗȱ ŜǰŜşŚȱ ŘǰŖŘǰśŖŜȱ ŗśŖȱ ŘǰśŘǰşŞşȱ śŗŘȱ Ŝǰŝşŝȱ ŗŗ ȬŗŘȱ ŗśŘȱ ŗśŘȱ śşǰŝŚǰŖşśȱ śǰŝŚŘȱ ŗǰŝşǰśŝŖȱ ŗŘśȱ ŗǰŝŗǰŞŞŜȱ ŗŖśȱ śǰŖŘŝȱ ř ȬŗŘȱ ŗśŗȱ ŗśŗȱ śŝǰřşǰŚŖŖȱ ŗřǰŖşŗȱ ŗǰŝŝǰŜŖŖȱ řŗŝȱ ŗǰŝŝǰŜśŝȱ ŗǰŗŗřȱ śǰŜŗŖȱ řŘ Ȭŗřȱ ŗŚşȱ ŗŚşȱ ŞşǰŖŘǰŘŚşȱ řŖǰŘŞřȱ ŘǰşŞǰśşŝȱ şŗŚȱ ŗǰŚřǰŞŖŚȱ Ŗȱ ŚǰśśŞȱ Ŗ Ȭŗřȱ ŗŚŞȱ ŗŚŞȱ ŜŗǰřŗǰŜşŞȱ ŜŞǰřşŞȱ ŗǰşŚǰŝŝśȱ ŗǰŞşŖȱ ŗǰřŞǰŜŗŜȱ ŗřǰŘřŚȱ řǰşŝŜȱ řŚŖ Ȭŗřȱ ŗŚŜȱ ŗŚŜȱ ŜŖǰŚŚǰśŚŖȱ ŘǰśŚǰŗŚŘȱ ŗǰŞŗǰŝŘŚȱ ŜǰŜŚŗȱ ŗǰŖŚǰśŘŝȱ śŘǰŞŚşȱ ŘǰŝśŞȱ ŗǰŘŚŝ Ǳȱǰȱ ȱȱȱȱȱȱȱ¢ȱ ȱ ȱ řřǯŗȱ ȱ ȱ ŗśǯŘȱ ǰȱ ȬȬȱ ȱ ȱ ȱ ȱ ¢ȱǻȱŘǯřŝǼǯ Table 2.37: Shares of Various Classes of Members in Derivative Turnover at NSE and BSE Turnover (` crore) Percentage Share Year / Month Trading Trading Trading Total Trading Trading Trading Members cum cum Self Members cum cum Self Clearing Clearing Clearing Clearing Members Members Members Members 12345678 2008-09 33,99,848 1,24,60,554 61,84,083 2,20,44,486 15.4 56.5 28.1 2009-10 48,99,892 2,02,12,013 1,02,15,902 3,53,27,807 13.9 57.2 28.9 2010-11 75,50,080 3,35,63,069 1,74,04,062 5,85,17,211 12.9 57.4 29.7 2011-12 79,81,555 3,45,47,595 2,05,54,043 6,30,83,193 12.7 54.8 32.6 2012-13 96,14,647 2,08,51,487 3,25,99,875 6,30,66,008 15.2 33.1 51.7 ȬŗŘȱ ŜǰŘŞǰŖŞřȱ ŗŚǰŜŖǰŞřŚȱ ŘřǰŘśǰŝŗŝȱ ŚŚǰŗŚǰŜřŚȱ ŗŚǯŘȱ řřǯŗȱ śŘǯŝ ¢ȬŗŘȱ ŝǰŞŘǰŚŝřȱ ŗŝǰŞŝǰřśŝȱ ŘŞǰŜşǰŞśŜȱ śŚǰřşǰŜŞŜȱ ŗŚǯŚȱ řŘǯşȱ śŘǯŞ ȬŗŘȱ ŝǰŗŗǰŚşřȱ ŗŝǰśŚǰŗřŞȱ ŘŞǰŗśǰŝŞŘȱ śŘǰŞŗǰŚŗřȱ ŗřǯśȱ řřǯŘȱ śřǯř ȬŗŘȱ ŝǰŗŘǰřşśȱ ŗŝǰŘŝǰŖŜŘȱ ŘŚǰŜŜǰŝŖşȱ ŚşǰŖŜǰŗŜŜȱ ŗŚǯśȱ řśǯŘȱ śŖǯř ȬŗŘȱ ŝǰřŚǰŖŝŖȱ ŗŜǰŚśǰśŗŞȱ ŘŚǰŞŚǰŝŚşȱ ŚŞǰŜŚǰřřŝȱ ŗśǯŗȱ řřǯŞȱ śŗǯŗ ȬŗŘȱ ŝǰŜŖǰŘŗŘȱ ŗŝǰŗŗǰŞŘŜȱ ŘŝǰŗŗǰŞśŞȱ śŗǰŞřǰŞşŝȱ ŗŚǯŝȱ řřǯŖȱ śŘǯř ȬŗŘȱ ŞǰŘŖǰśŚŞȱ ŗŝǰşŝǰśşŝȱ ŘŞǰŗŖǰŘŝŚȱ śŚǰŘŞǰŚŗşȱ ŗśǯŗȱ řřǯŗȱ śŗǯŞ ȬŗŘȱ ŝǰşşǰŘřŜȱ ŗŜǰŗŜǰŖŞśȱ ŘśǰŚŚǰřŗřȱ ŚşǰśşǰŜřřȱ ŗŜǯŗȱ řŘǯŜȱ śŗǯř ȬŗŘȱ ŞǰŚŝǰşŝŚȱ ŗŝǰŘŗǰşŝŚȱ ŘŝǰŗŖǰŞřŞȱ śŘǰŞŖǰŝŞŜȱ ŗŜǯŗȱ řŘǯŜȱ śŗǯř Ȭŗřȱ şǰŞśǰŘŖŘȱ ŗŞǰśŘǰŞŖśȱ řŖǰŜřǰşŚřȱ śşǰŖŗǰşśŖȱ ŗŜǯŝȱ řŗǯŚȱ śŗǯş Ȭŗřȱ ŞǰŘŚǰŘŜřȱ ŗŜǰşŗǰŜŜřȱ ŘŜǰřŚǰŘŜşȱ śŗǰśŖǰŗşśȱ ŗŜǯŖȱ řŘǯŞȱ śŗǯŗ Ȭŗřȱ ŗŖǰŖŞǰŜşŝȱ ŘŖǰŞŚǰŜŘŞȱ řŗǰŜŗǰśŜŝȱ ŜŘǰśŚǰŞşŘȱ ŗŜǯŗȱ řřǯřȱ śŖǯś Ǳȱǰȱ

85 Annual Report 2012-13

Ȭ ȱ ȱ ȱ ȱ ǭȱ ǰȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ řŞȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŚŜȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ǭȱ ǰȱ ȱȱȱȱȱǻȱŘǯŗŘǼǯȱȱ ¢ȱ ȱ ȱ ȱ ŝŜȱ ȱ ȱȱȱȱȱȱŗŜȱȱȱȱ ȱ ȱ ¢ȱ ȱ ȱ Řřȱ ȱ ȱ ȱ ǰȱ ȱ ¢ȱ ȱ ȱȱȱǯ

ȱ Ȭ ȱ ȱ ȱ ȱ ȱȱŘŖŗřȱȱ ȱȱȱȱŘǯŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ǳ

86 Part Two: Trends and Operations in Securities Markets

B. Trend in Currency Derivatives Market ȱ ȱ ȱ ¡ȱ ȱ ȱ ¢ȱȱȱȱȱ ȱ ȱ Ǳȱ ǰȱ Ǳȱ ȱ ȱ ȱȱȱŘşǰȱŘŖŖŞȱȱǯȱǰȱȬ Ǳȱ ǯȱ ȱ ȱ ǰȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŝǰȱ ŘŖŖŞȱ ȱ ȱ Şǰȱ ŘŖŖŞȱ ȱ Řşǰȱ ŘŖŗŖǯȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ Ȭ ȱ ǯȱ ǻȱ ǯȱ ¢ǰȱ ȱ ȱ ȱ ŘǯřŞǼ its operations in the currency derivatives ȱ Ȭ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ŝǰȱ ŘŖŗŖǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭ ȱ ǰȱ ȱ ȱ ¡ǰȱ ȱ ȱ ȱ ȱȱ ȱŝŜǯŚȱȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŘŖǰȱ ¢ȱ Ȭ ȱ ȱ ǻŘŖǯŘȱ Ǽȱ ǯȱ ȱ ŘŖŗŖǯȱȱŘŖŗŘȬŗřǰȱȱȱ ȱȱ ȱ ȱ ȱ ȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱ ǻ` śŘǰŝŚǰŚŜśȱ Ǽȱ ȱ ŗǯŝȱȱ ȱ¢ȱ Ȭ ȱȱȱŖǯşȱ ¢ȱ Ȭȱ ǻ` řřǰŖřǰŗŝşȱ Ǽȱ ȱ ȱ ȱȱ Ȭ ȱȱȱŖǯŞȱǯȱ ǻ` ŗǰřŘǰŞŜŗȱ Ǽȱ ȱ ȱ ¢ȱ ¢ȱ ǻȱŘǯřşǼ Ȭ ȱ ȱ ȱ ǰȱ ¢ȱ

Table 2.38: Trends in the Currency Derivatives Segment

MCX-SX NSE USE Month / No. of Turnover Open No. of Turnover Open No. of Turnover Open Year Contracts (` crore) interest Contracts (` crore) interest Contracts (` crore) interest Traded at the Traded at the Traded at the end of end of end of Month Month Month (` crore) (` crore) (` crore) 12345678910 2008-09 2,98,47,569 1,48,826 990 3,27,38,566 1,62,563 1,313 Na Na Na 2009-10 40,81,66,278 19,44,654 1,951 37,86,06,983 17,82,608 1,964 Na Na Na 2010-11 90,31,85,639 41,94,017 3,706 74,96,02,075 34,49,788 13,690 16,77,72,367 7,62,501 109 2011-12 77,03,25,229 37,32,446 4,494 97,33,44,132 46,74,990 15,328 31,53,95,543 14,88,978 125 2012-13 59,73,10,766 33,03,179 7,389 95,92,43,448 52,74,465 20,101 2,37,66,846 1,32,861 292 ȬŗŘȱ řǰŝŚǰŚŗǰŜŚŝȱ ŗǰşŝǰŝŖŞȱ ŞǰŞŝŘȱ ŚǰşŜǰŞŚǰśŜşȱ ŘǰŜŖǰŚśŗȱ ŗŝǰŝřŝȱ ŗǰśřǰŞŗřȱ ŞŖśȱ ŞŚ ¢ȬŗŘȱ ŜǰŗŖǰŝŝǰŞşŖȱ řǰřŝǰŜŝŝȱ ŝǰŝŝŝȱ ŞǰŘŚǰşŖǰśŗşȱ ŚǰśřǰşŚŜȱ ŗşǰşŗřȱ ŘǰŗŝǰŘŞŖȱ ŗǰŗşřȱ śŘ ȬŗŘȱ ŚǰŝŝǰŗşǰśřŜȱ ŘǰŝŗǰŚŞŚȱ ŝǰŝŞŞȱ ŜǰşŜǰŘŚǰřśřȱ řǰşřǰŜŗşȱ ŗşǰşŗŞȱ ŘǰŗŗǰŝŚŗȱ ŗǰŗşŗȱ Ŝŗ ȬŗŘȱ śǰřŖǰŗŝǰŚŗŝȱ ŘǰşŝǰŜŝŖȱ ŜǰŝśŚȱ ŞǰřŜǰŗŗǰşŞşȱ ŚǰŜŝǰŘŝŚȱ ŗŞǰřŞŞȱ řǰŖŞǰśŗŞȱ ŗǰŝŜŞȱ śŜ ȬŗŘȱ řǰŝŘǰşŞǰŘŜşȱ ŘǰŖşǰşŗŜȱ ŝǰřŝřȱ śǰŞŝǰŗśǰŗŝŚȱ řǰŘŞǰşŖŝȱ ŗŞǰŜşŚȱ ŘǰŘřǰŚŚŘȱ ŗǰŘşŖȱ ŚŚ ȬŗŘȱ ŚǰśŞǰŜŘǰŘŗŝȱ ŘǰśŘǰŜŘŝȱ ŜǰŗŘŗȱ ŝǰŘśǰśŗǰśřřȱ řǰşŝǰśşŘȱ ŗŞǰŚśŗȱ řǰŘŖǰŞŜŜȱ ŗǰŞŞŞȱ ŗŝ ȬŗŘȱ śǰŚŘǰśŞǰŗŝŝȱ ŘǰşŗǰŝŝŘȱ ŝǰŖşŗȱ şǰŚŞǰŜŖǰŝŚŜȱ śǰŖŝǰŚŘŜȱ ŗŞǰŞŘśȱ śǰřřǰŝŞŞȱ ŘǰşśŖȱ ŚŖ ȬŗŘȱ ŚǰŝŗǰŗşǰŖşśȱ ŘǰŜŘǰŝşŖȱ ŝǰşŞşȱ ŞǰŚśǰŗśǰśşŖȱ ŚǰŜŝǰŞŝśȱ ŘśǰŗŝŜȱ ŚǰŝŞǰŖŞŜȱ ŘǰŜřşȱ śŖ ȬŗŘȱ ŚǰřŚǰŘŞǰŝśřȱ ŘǰŚŘǰŗŝŜȱ ŝǰŞŜŗȱ ŞǰŗŗǰŜŚǰşŗśȱ ŚǰŚŞǰŝśřȱ ŘŘǰŞŝŘȱ řřǰŖřǰśŜśȱ ŗŞǰřŞśȱ ŜŚ Ȭŗřȱ ŜǰŖřǰřŚǰŚŜŜȱ řǰřřǰřśřȱ ŝǰŜŚŝȱ ŗŖǰŜŝǰŖśǰŞşŗȱ śǰŞŜǰŖŘśȱ Řśǰŗśśȱ ŚŞǰŚŗǰŖŗŖȱ ŘŜǰŝŘŘȱ ŝř Ȭŗřȱ śǰŘŗǰŜŖǰŚŝŗȱ ŘǰŞŝǰŖŖŘȱ ŞǰŗŖŝȱ şǰŗŖǰŗŝǰŞŚŞȱ ŚǰşŝǰŘŝŝȱ ŘŜǰřşşȱ śŖǰŗşǰśŝşȱ ŘŝǰřŝŚȱ řŗş Ȭŗřȱ śǰŝśǰşŘǰŞŘŞȱ řǰŗşǰŖŖŚȱ ŝǰřŞşȱ ŞǰŚřǰŖŖǰřŘŗȱ ŚǰŜśǰřŘŖȱ ŘŖǰŗŖŗȱ ŞŗǰśśǰŗśŞȱ ŚŜǰŜśŝȱ ŘşŘ ǱȱȬǰȱǰȱ

87 Annual Report 2012-13

Table 2.39: Product-wise market share in Currency Derivatives Volume ǻǼ

USD-INR EURO-INR GBP-INR JPY-INR USD-INR Futures Futures Futures Futures Options 2011-12 82.0 2.7 0.9 0.7 13.7 2012-13 76.4 1.7 0.8 0.9 20.2 ȬŗŘȱ ŞŘǯŜȱ ŗǯŜȱ ŗǯŖȱ Ŗǯŝȱ ŗŚǯŘ ¢ȬŗŘȱ ŞŘǯşȱ ŗǯřȱ Ŗǯŝȱ ŖǯŚȱ ŗŚǯŝ ȬŗŘȱ ŞřǯŖȱ ŗǯřȱ Ŗǯŝȱ ŖǯŜȱ ŗŚǯŚ ȬŗŘȱ ŞŖǯśȱ ŗǯŘȱ ŖǯŜȱ ŖǯŜȱ ŗŝǯŗ ȬŗŘȱ ŞŖǯřȱ ŗǯŖȱ Ŗǯşȱ ŖǯŞȱ ŗŝǯŖ ȬŗŘȱ ŝŜǯŞȱ ŗǯŚȱ Ŗǯşȱ Ŗǯŝȱ ŘŖǯŘ ȬŗŘȱ ŝŜǯŞȱ ŗǯřȱ Ŗǯŝȱ Ŗǯŝȱ ŘŖǯś ȬŗŘȱ ŝŚǯŞȱ ŗǯśȱ ŖǯŞȱ Ŗǯŝȱ ŘŘǯŘ ȬŗŘȱ ŝśǯśȱ ŘǯŘȱ ŗǯŖȱ Ŗǯşȱ ŘŖǯŚ Ȭŗřȱ ŝŗǯŚȱ Řǯřȱ Ŗǯşȱ ŗǯŘȱ ŘŚǯŘ Ȭŗřȱ ŝŖǯŖȱ Řǯŝȱ ŗǯřȱ ŗǯśȱ ŘŚǯŜ Ȭŗřȱ ŜŞǯŖȱ ŘǯŘȱ ŗǯřȱ ŗǯŚȱ ŘŝǯŖ ǱȱȬǰȱǰȱ

C. Trends in Interest Rates Derivatives trends in turnover and open interest in ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ǻŗŖȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ȱ ȱ ȱ şŗȱ ¢ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ řŗǰȱ ŘŖŖşǯȱ Ǽȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘǯŚŖǯȱ ǰȱ ȱ ȱ ȱ ȱ şŗȱ ¢ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǻȬǼȱ ȱ ȱ ȱ ȱ ¢ȱ Śǰȱ ŘŖŗŗǯȱ ȱ to 0.2 crore in 2012-13.

Table 2.40: Trends in Interest Rate Derivatives at NSE

Total Open Interest at the end of the year / month Year/ Month No. of Contracts Turnover (` crore) No. of Contracts Turnover (` crore) ȱŗȱŘȱřȱŚȱś 2009-10 1,60,894 2,975 758 14 2010-11 3,348 62 1 0 2011-12 2,15,200 3,959 0 0 2012-13 12 0.22 0 0 ȬŗŘȱ ŗŗȱ Ŗȱ Ŗȱ Ŗ ¢ȬŗŘȱ ŗȱ Ŗȱ Ŗȱ Ŗ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗ ȬŗŘȱ Ŗȱ Ŗȱ Ŗȱ Ŗ Sep-12 0 0 0 0 Oct-12 0 0 0 0 Nov-12 0 0 0 0 Dec-12 0 0 0 0 Ȭŗřȱ Ŗȱ Ŗȱ Ŗȱ Ŗ Ȭŗřȱ Ŗȱ Ŗȱ Ŗȱ Ŗ Ȭŗřȱ Ŗȱ Ŗȱ Ŗȱ Ŗ Ǳȱ

88 Part Two: Trends and Operations in Securities Markets

3. TRENDS IN THE BOND MARKET ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ I. Corporate Bond Market ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ ȱȱǯȱȱȱȱȱ ȱȱȱȱȱ¢ȱȱ ȱ ȱȱ ȱȱȱȱŘŖŗŘȬŗřȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ řŜǰŜŖřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ¢ȱŘŜǯşȱȱȱ` ŚǰŚŚǰşŖŚȱȱȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱȱ¢ȱřǯŜȱȱȱ` śŗǰŜŘŘȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` ŚşǰŞŚŘȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ǰȱ ȱ ȱ ȱȱ¢ȱȱȱ ǯȱ ǰȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ¢ȱ ŘśǯŘȱ ȱ ȱ Indian debt markets are dominated by the ` ŘǰŚŘǰŗŖśȱȱȱ` ŗǰşřǰŚřśȱȱȱŘŖŗŗȬ government securities markets. In the recent ŗŘȱǻȱŘǯŚŗǼǯ ¢ǰȱ ęȱ ¢ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗǰȱ ŘŖŖşǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȦȬǰȱ ȱ ȱ ǰȱ ¡ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱȱ ȱȱ¢ȱȱȬ ǰȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱȱȱȱ ȱȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱȱȱȱǯ ȱ ȱ ¡ȱ ȱ ǰȱ ¢ȱȱȱȱȱȱȱ ȱȱ ǯȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ǯȱȱȱȱȱȱȱ

89 Annual Report 2012-13

Ĵȱȱȱȱȱȱ ȱ ŘŖŗŘȬŗřȱ ȱ ` ŚǰŖŗǰŞŗŖȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ȱ¢ȱŗşǯŖȱȱȱ` ŚǰŝŞǰŖşŖȱȱ ǻȱŘǯŚŘǼǯ

Table 2.41: Secondary Market: Corporate Bond Trades

Month / BSE NSE FIMMDA Total Year No. of Amount No. of Amount No. of Amount No. of Amount Trades (` crore) Trades (` crore) Trades (` crore) Trades (` crore) 1 234567 89 2008-09 8,327 37,320 4,902 49,505 9,501 61,535 22,730 1,48,361 2009-10 7,408 53,323 12,522 1,51,920 18,300 1,95,955 38,230 4,01,198 2010-11 4,465 39,581 8,006 1,55,951 31,589 4,09,742 44,060 6,05,274 2011-12 6,424 49,842 11,973 1,93,435 33,136 3,50,506 51,533 5,93,783 2012-13 8,639 51,622 21,141 2,42,105 36,603 4,44,904 66,383 7,38,632 ȬŗŘȱ ŚŝŘȱ ŘǰŜŜŚȱ ŗǰŘřŘȱ ŗŘǰŗśśȱ ŗǰşŝŝȱ ŘŗǰŘŗşȱ řǰŜŞŗȱ řŜǰŖřŞ ¢ȬŗŘȱ ŜřŘȱ ŗǰşŖŚȱ ŗǰřŚŘȱ ŗŚǰŘŘŖȱ ŘǰŗŚŖȱ ŘŘǰřŞşȱ ŚǰŗŗŚȱ řŞǰśŗŘ ȬŗŘȱ ŞŞŖȱ śǰŖřŜȱ ŗǰŜŘŚȱ ŗŞǰşŗŞȱ řǰŖşŘȱ řŞǰŖŖŘȱ śǰśşŜȱ ŜŗǰşśŜ ȬŗŘȱ ŞŘŚȱ ŚǰŞŘşȱ ŗǰşŜŞȱ ŗşǰŚşşȱ řǰřşŗȱ řŝǰŝŚŖȱ ŜǰŗŞřȱ ŜŘǰŖŜŞ ȬŗŘȱ Ŝşŝȱ ŚǰŗŚŝȱ ŗǰŞşŗȱ ŗŞǰřŝŚȱ řǰŖřŚȱ řśǰŞŗŚȱ śǰŜŘŘȱ śŞǰřřś ȬŗŘȱ ŝŘŖȱ ŚǰŞŖŘȱ ŘǰŖśŗȱ Řřǰřŝřȱ řǰŘŚŚȱ ŚŗǰŖŘşȱ ŜǰŖŗśȱ ŜşǰŘŖś ȬŗŘȱ şŜŜȱ ŚǰŝşŘȱ ŗǰŞśŖȱ ŘśǰŜśşȱ řǰŞśřȱ ŚŝǰŚŘŚȱ ŜǰŜŜşȱ ŝŝǰŞŝś ȬŗŘȱ ŜŞŖȱ Řǰřŗŝȱ ŗǰŚśśȱ ŗŞǰŖşŖȱ ŘǰŚśŚȱ ŘŝǰŝŝŚȱ ŚǰśŞşȱ ŚŞǰŗŞŘ ȬŗŘȱ śşşȱ ŘǰşŖŖȱ ŗǰŜŞŜȱ ŗşǰřŗşȱ Řǰŝŗśȱ řřǰřŗřȱ śǰŖŖŖȱ śśǰśřŘ Ȭŗřȱ ŞřŞȱ Ŝǰśřřȱ ŘǰŝŖŘȱ řŗǰřŚşȱ Śǰśŗŝȱ śŜǰŞŝřȱ ŞǰŖśŝȱ şŚǰŝśś Ȭŗřȱ śŜŘȱ ŘǰŞŘşȱ ŗǰŚŖŝȱ ŗşǰŘŚŖȱ Řǰśŗŗȱ řŘǰŗŘŖȱ ŚǰŚŞŖȱ śŚǰŗşŖ Ȭŗřȱ ŝŜşȱ ŞǰŞŜşȱ ŗǰşřřȱ ŘŗǰşŖŞȱ řǰŜŝśȱ śŗǰŘŖŞȱ Ŝǰřŝŝȱ ŞŗǰşŞś

ȱŘǯŚŘǱȱĴȱȱȱ NSE BSE Total ȱ ȱ ǯȱȱȱ Ĵȱȱ ǯȱȱȱ Ĵȱȱ ǯȱȱȱ Ĵȱ ȱ ȱ Ĵȱ ǻ` Ǽȱ Ĵȱ ǻ` Ǽȱ Ĵȱ ǻ` crore) 1 234567 2009-10$ 8,922 1,20,006 464 5,482 9,386 1,25,488 2010-11 30,948 4,32,632 1,714 17,492 32,662 4,50,123 2011-12 34,697 3,91,120 2,916 10,680 37,613 4,01,800 2012-13 36,902 4,35,114 7,415 42,977 44,317 4,78,090 ȬŗŘȱ ŘǰŗśŜȱ ŘŗǰŞŖŖȱ řśŗȱ ŗǰŖřŜȱ ŘǰśŖŝȱ ŘŘǰŞřŜ ¢ȬŗŘȱ ŘǰŘşŘȱ ŘŘǰŞŗŞȱ ŚśŞȱ ŗǰŖŗŞȱ ŘǰŝśŖȱ ŘřǰŞřŝ ȬŗŘȱ řǰřŗśȱ řşǰŞŖŖȱ ŚśŘȱ ŗǰŖŞŝȱ řǰŝŜŝȱ ŚŖǰŞŞŞ ȬŗŘȱ řǰŜŝŜȱ řŞǰŗŚŖȱ ŚřŘȱ ŘǰŖśřȱ ŚǰŗŖŞȱ ŚŖǰŗşŚ ȬŗŘȱ ŘǰşŝŘȱ řŚǰŚŜřȱ śśŚȱ řǰŖŞŗȱ řǰśŘŜȱ řŝǰśŚŚ ȬŗŘȱ řǰŗŘŚȱ řŞǰŖşŖȱ ŝŖşȱ ŚǰŚřŗȱ řǰŞřřȱ ŚŘǰśŘŗ ȬŗŘȱ řǰŝŖŞȱ ŚŝǰŗŚŚȱ Şşŗȱ ŚǰŘśŖȱ Śǰśşşȱ śŗǰřşŚ ȬŗŘȱ ŘǰŚŜŞȱ ŘŜǰřŚşȱ ŜśŜȱ ŘǰŞŚśȱ řǰŗŘŚȱ Řşǰŗşś ȬŗŘȱ ŘǰŜřŞȱ řŘǰŗŜřȱ ŜşŜȱ ŚǰŖśŖȱ řǰřřŚȱ řŜǰŘŗř Ȭŗřȱ ŚǰřŞŝȱ śŚǰŞŖŝȱ ŞŘŜȱ śǰşŝŗȱ śǰŘŗřȱ ŜŖǰŝŝŞ Ȭŗřȱ ŘǰśśŞȱ řŗǰŝŞřȱ śřŜȱ řǰŜřŚȱ řǰŖşŚȱ řśǰŚŗŞ Ȭŗřȱ řǰŜŖŞȱ Śŝǰŝśśȱ ŞśŚȱ şǰśŗŞȱ ŚǰŚŜŘȱ śŝǰŘŝř ǞȱȱǻȱŘŖŖşȬȱȱŘŖŗŖǼ 90 Part Two: Trends and Operations in Securities Markets

II. Wholesale Debt Market Table 2.43: Business Growth on the Wholesale Debt Market ȱŘŖŗŘȬŗřǰȱȱȱȱȱ Segment of NSE ȱ ȱ ǻǼȱ ȱ ȱ ȱ ` ŝǰşŘǰŘŗŚȱȱȱ` ŜǰřřǰŗŝşȱȱȱŘŖŗŗȬ No. of Net Traded Average ŗŘǯȱȱȱȱȱȱȱȱȱ Month/Year Trades Value Daily (`ȲǼȱ ȱ ȱ¢ȱŘśǯŗȱȱȱȱęȱ¢ǯȱ Value ǰȱȱȱȱȱȱ (`ȲǼ ¢ȱŗśǯŗȱȱǻȱŘǯŚřǼǯȱǰȱȱȱ 1 234 ȱȱȱ¢ȱŜŝǯśȱȱȱřşǰŘŞŖȱȱ 2008-09 16,129 3,35,950 1,419 2009-10 24,069 5,63,816 2,359 ŘŖŗŘȬŗřȱȱŘřǰŚŚŝȱȱŘŖŗŗȬŗŘǯȱȱȱȱ 2010-11 20,383 5,59,447 2,256 ȱȱ¢ȱȱȱȱȱ 2011-12 23,447 6,33,179 2,649 ȱȱęȱ¢ǯȱȱȱȱ ȱ 2012-13 39,280 7,92,214 2,248 ȱ ȱ ¢ȱ ŘŖŗřȱ ǻ` ŗǰŖřǰŚŘŜȱ Ǽȱ ȬŗŘȱ ŘǰŜśŘȱ ŚŝǰŝŚřȱ ŗǰŝŖŖ ȱ¢ȱȱŘŖŗřȱǻ` ŝŜǰŗřŜȱǼȱȱ ¢ȬŗŘȱ Řǰřŗśȱ śŖǰşŚŗȱ ŘǰŖŝŞ ȱŘŖŗŘȱǻ` ŝŘǰřŚŞȱǼǯȱȱȱȱ ȬŗŘȱ řǰŚŚśȱ ŝŘǰřŚŞȱ ŘǰśŝŜ ȱȱȱȱ ¢ȱŘŖŗřȱ ȱ¢ȱ ȬŗŘȱ řǰŖŖşȱ ŜŜǰŗŞŝȱ ŘǰŚŗŜ ȬŗŘȱ ŘǰřŗŜȱ ŚŞǰŜŘŜȱ ŗǰşřŖ ȱŘŖŗřǯ ȬŗŘȱ řǰŝśŚȱ ŝŗǰřŘŝȱ ŘǰŜŚŞ ȱȱȱȱ ȬŗŘȱ řǰřŚşȱ ŜŜǰşŞŜȱ ŘǰřŝŜ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ȬŗŘȱ ŘǰŝŖřȱ śŗǰřŜŗȱ ŗǰŝŘŗ ȬŗŘȱ řǰśşşȱ ŝŗǰşŞŖȱ ŘǰŘŖŞ ǰȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ Ȭŗřȱ ŚǰŝŖŗȱ ŗǰŖřǰŚŘŜȱ řǰśŞŚ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ Ȭŗřȱ řǰŚŘşȱ ŜśǰŗśŚȱ ŗǰŞŗş Ȭȱȱȱȱȱ ȱśŗǯŜȱȱȱ Ȭŗřȱ ŚǰŖŖŝȱ ŝŜǰŗřŜȱ ŗǰşŗŞ ŘŖŗŘȬŗřȱ ǻȱ ŘǯŚŚǼǯȱ ȱ ȱ ȱ ¢ȱ Ǳȱ

Table 2.44: Instrument-wise Share of Securities Traded in the Wholesale Debt Market Segment of NSE ǻǼ Month/ Year Govt. Dated Securities Treasury Bills PSU / Institutional Bonds Others ȱŗȱŘȱřȱŚȱś 2008-09 69.7 16.9 8.9 4.4 2009-10 58.2 16.5 15.4 10.0 2010-11 54.5 17.6 19.6 8.3 2011-12 50.4 22.0 19.6 8.0 2012-13 51.6 23.7 16.3 8.3 ȬŗŘȱ ŚŚǯŝȱ řŜǯŗȱ ŗŗǯřȱ ŝǯş ¢ȬŗŘȱ śŗǯřȱ ŘŝǯŖȱ ŗŚǯŞȱ Ŝǯş ȬŗŘȱ śśǯŘȱ ŘŚǯŖȱ ŗŚǯřȱ Ŝǯś ȬŗŘȱ śŘǯŚȱ ŘŚǯŗȱ ŗŜǯŗȱ ŝǯś ȬŗŘȱ řŞǯŚȱ řŖǯśȱ ŘŘǯŘȱ Şǯş ȬŗŘȱ ŚşǯŞȱ Řŗǯŝȱ ŘŖǯřȱ ŞǯŘ ȬŗŘȱ śřǯŘȱ ŗŚǯŝȱ ŘŖǯşȱ ŗŗǯř ȬŗŘȱ Śŗǯŝȱ Řşǯśȱ ŗşǯŚȱ şǯŚ ȬŗŘȱ śśǯşȱ ŘŘǯŞȱ ŗřǯřȱ ŞǯŖ Ȭŗřȱ śşǯŞȱ ŗśǯŘȱ ŗŚǯŞȱ ŗŖǯŘ Ȭŗřȱ Ŝŗǯşȱ ŗśǯśȱ ŗśǯŖȱ ŝǯŜ Ȭŗřȱ śśǯśȱ Řřǯŝȱ ŗřǯřȱ ŝǯŜ Ǳȱ

91 Annual Report 2012-13

4. MUTUAL FUNDS ȱȱȱŘŘǯŖȱȱȱŘŖŗŗȬŗŘȱȱ ŘřǯŝȱȱȱŘŖŗŘȬŗřǯȱȱȱȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱȦȱȱȱȱȁȂȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ¢ǯȱ ȱȱȱȱȱȱȱȱ ȱ ȱ ǰȱ ȱ ȱ ¢ȱ ȱ ęȱ¢ǰȱȱŗŜǯřȱȱȱŞǯřȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ǯ ǯȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱǰȱǰȱ ȱǯȱ ȱ ǰȱȱ ȱȱȱȱȱ ȱȱȱę¢ȱȱȱȱ ȱ ȱȱȱȱśřǯŚȱȱȱȱ ǯȱ¢ȱȱȱȱȱȱȱȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ śřǯřȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱŘǯŚśǼǯȱ ȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ ęȱȦȱȦȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ Śǯřȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ŚǯŘȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ Ȭ ¢ȱȱȱŗŜǯśȱȱȱŘŖŗŘȬŗřǰȱ ¢ȱ ȱ ȱ Ȭ ȱ ȱ ȱǰȱȱȱȱȱŘŘǯŗȱȱ ǻȱŘǯŗśǼǯ over the previous year.

Table 2.45: Share of Participants in Turnover of Wholesale Debt Market Segment of NSE ǻǼ Month Trading Fls / MFs / Primary Indian Foreign Members Corporates Dealers Banks Banks 1 23456 2008-09 44.7 3.4 6.6 18.1 27.3 2009-10 49.2 2.6 4.6 19.8 23.7 2010-11 53.5 2.4 4.2 13.1 26.8 2011-12 53.3 4.2 3.7 16.4 22.5 2012-13 53.4 4.3 3.7 16.5 22.1 ȬŗŘȱ śŖǯŖȱ řǯŖȱ ŚǯŚȱ ŗşǯŖȱ ŘřǯŜ ¢ȬŗŘȱ śŗǯşȱ ŚǯŚȱ Śǯśȱ ŗŞǯŘȱ ŘŗǯŖ ȬŗŘȱ śŗǯŗȱ śǯśȱ ŚǯŜȱ ŗŜǯŖȱ ŘŘǯŞ ȬŗŘȱ śŚǯŜȱ Śǯŗȱ ŘǯŞȱ ŗśǯŜȱ ŘŘǯŞ ȬŗŘȱ śŚǯśȱ řǯŘȱ Řǯŝȱ ŗŘǯŝȱ ŘŝǯŖ ȬŗŘȱ śŘǯŗȱ ŚǯŘȱ řǯŖȱ ŗŞǯŜȱ ŘŘǯŘ ȬŗŘȱ śřǯŞȱ Śǯśȱ řǯŞȱ ŗřǯŗȱ ŘŚǯŞ ȬŗŘȱ śŗǯŚȱ Śǯśȱ řǯŞȱ ŗśǯşȱ ŘŚǯŚ ȬŗŘȱ śśǯŖȱ Śǯŗȱ řǯşȱ ŗśǯŗȱ Řŗǯş Ȭŗřȱ śŘǯŝȱ ŝǯŘȱ Śǯŗȱ ŗŝǯŞȱ ŗŞǯŘ Ȭŗřȱ śśǯşȱ ŘǯŞȱ řǯŚȱ ŗŜǯşȱ ŘŗǯŖ Ȭŗřȱ śŜǯŗȱ Řǯŝȱ řǯŚȱ ŗŞǯŖȱ ŗşǯŝ

Ǳȱ

92 Part Two: Trends and Operations in Securities Markets

ȱ ȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ` ŝŘǰŜŝǰŞŞśȱ ȱ ȱ ȱ ` ŜŞǰŗşǰŜŝŞȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ crore during the previous year indicating an ȱ ȱ ȱ ȱ ȱ ȱ ȱȱŜǯŜȱȱȱȱȱ¢ȱ ȱ ȱ ǯȱ ȱ ŘŖŖşȬŗŖǰȱ ǻȱ ŘǯŚŜǼǯȱ ¢ǰȱ ȱ ȱ ȱ Ě ȱ ȱȱ ȱ ¢ȱ ȱ ȱ ¢ȱ śǯŗȱ ȱ ȱ ` ŝŗǰşŗǰřŚŜȱ ǯȱȱȱȱȱȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ` ŜŞǰŚŗǰŝŖŘȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ

Table 2.46: Mobilisation of Resources by Mutual Funds (` Ǽ ȱ ȱȱ ȱ ȱ Ě ȱ ȱȱȱȱȱ period ȱŗȱŘȱřȱŚȱś ŗşşşȬŖŖȱ ŜŗǰŘŚŗȱ ŚŘǰŘŝŗȱ ŗŞǰşŝŖȱ ŗǰŖŝǰşŚŜ ŘŖŖŖȬŖŗȱ şŘǰşśŝȱ ŞřǰŞŘşȱ şǰŗŘŞȱ şŖǰśŞŝ ŘŖŖŗȬŖŘȱ ŗǰŜŚǰśŘřȱ ŗǰśŝǰřŚŞȱ ŝǰŗŝśȱ ŗǰŖŖǰśşŚ ŘŖŖŘȬŖřȱ řǰŗŚǰŝŖŜȱ řǰŗŖǰśŗŖȱ ŚǰŗşŜȱ ŗǰŖşǰŘşş ŘŖŖřȬŖŚȱ śǰşŖǰŗşŖȱ śǰŚřǰřŞŗȱ ŚŜǰŞŖŞȱ ŗǰřşǰŜŗŜ ŘŖŖŚȬŖśȱ ŞǰřşǰŝŖŞȱ ŞǰřŝǰśŖŞȱ ŘǰŘŖŖȱ ŗǰŚşǰŜŖŖ ŘŖŖśȬŖŜȱ ŗŖǰşŞǰŗŚşȱ ŗŖǰŚśǰřŝŖȱ śŘǰŝŝşȱ ŘǰřŗǰŞŜŘ ŘŖŖŜȬŖŝȱ ŗşǰřŞǰŚşřȱ ŗŞǰŚŚǰśŖŞȱ şřǰşŞśȱ řǰŘŜǰŘşŘ ŘŖŖŝȬŖŞȱ ŚŚǰŜŚǰřŝŜȱ ŚřǰŗŖǰśŝśȱ ŗǰśřǰŞŖŘȱ śǰŖśǰŗśŘ ŘŖŖŞȬŖşȱ śŚǰŘŜǰřśřȱ śŚǰśŚǰŜśŖȱ ȬŘŞǰŘşŜȱ ŚǰŗŝǰřŖŖ ŘŖŖşȬŗŖȱ ŗǰŖŖǰŗşǰŖŘŘȱ şşǰřśǰşŚŘȱ ŞřǰŖŞŖȱ Ŝǰřŗǰşŝş ŘŖŗŖȬŗŗȱ ŞŞǰśşǰśŗśȱ ŞşǰŖŞǰşŘŗȱ ȬŚşǰŚŖŜȱ śǰşŘǰŘśŖ ŘŖŗŗȬŗŘȱ ŜŞǰŗşǰŜŝŞȱ ŜŞǰŚŗǰŝŖŘȱ ȬŘŘǰŖŘŚȱ śǰŞŝǰŘŗŝ ŘŖŗŘȬŗřȱ ŝŘǰŜŝǰŞŞśȱ ŝŗǰşŗǰřŚŜȱ ŝŜǰśřşȱ ŝǰŖŗǰŚŚř

93 Annual Report 2012-13

ȱ ȱ ȱ ȱ ȱ ` ŝŜǰśřşȱ ¢ȱ ȱȱȱȱȱȱȱ ȱȱŘŖŗŘȬŗřȱȱȱȱĚ ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ` ŚǰŜŘşȱ ` ŘŘǰŖŘŚȱȱȱŘŖŗŗȬŗŘǯ crore and ` ŜǰŞŖŞȱ ȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŚśǯŚȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗřǰȱ ȱ ȱ ȱ řŖŖǯŜȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ previous year. ȱ ȱ ȱ ȱ ` ŝǰŖŗǰŚŚřȱ ȱ ȱ against ` śǰŞŝǰŘŗŝȱȱȱȱȱȱȱ ȱ Ȭȱ ȱ ȱ ȱ ŘŖŗŘǰȱȱȱȱŗşǯśȱǯ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ¢ǯȱ ǰȱ Sector-wise Resource Mobilisation ȱ Ȭȱ ȱ ȱ ȱ ȱ ȳȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱŖǯşşȱ ȱ ¢ȱ ȱ ŞŗǯŜȱ ȱ ȱ ȱ ȱȱŗǯŘȱȱ¢ǯ ȱ ȱ ȱ ȱ ȱ Şśǯŗȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱǯȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ Ȧ¢ȱ ȱ ȱȱȱȱȱȱ ȱŞǯŝȱ ǰȱ ȱ ȱ ȱ ȱ ǯȱ ȱȱşǯŝȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱŜȱȱȱŞǯşȱȱȱ ȱȱȱȱȱȱĚ ȱ ȱȱȱǯ amounting to ` ŗŚǰśŞŝȱȱȱȱ¢ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ǻȱŘǯŚŞǼǯȱ¡ȱȱȱȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱȱȱĚ ȱȱȱ` şŖǰŗŞřȱ ȱ ¢ȱ Śǯřȱ ȱ ȱ ` śşǰŘŝǰşŚŝȱ ȱ ȱ ȱȱȱȱŚśŗǯśȱȱȱ ŘŖŗŘȬŗřȱ ȱ ` śŜǰŞřǰŝŚŚȱ ȱ ȱ ŘŖŗŗȬŗŘȱ the previous year. The highest percentage ǻȱ ŘǯŚŝǼǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱȱȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ śŘŗǯśȱ ȱ ȱ ` ŜśǰŗŖŘȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ` řǰşŝśȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ` ŗśǰŚŚŜȱ ȱ Ě ȱ ȱ ` 20 crore in the previous year. recorded in 2011-12. The net resources raised ȱȱĚ ȱȱȱȱȱ

Table 2.47: Sector-wise Resource Mobilisation by Mutual Funds during 2012-13 (` Ǽ Private Sector MFs Public Sector MFs UTI MF Grand Particulars Open- Close- Interval Total Open- Close- Interval Total Open- Close- Interval Total Total ended ended ended ended ended ended 1 234567891011121314 Mobilisationȱ śŞǰŜŘǰŝŚşȱ śŞǰŗŝśȱ ŝǰŖŘŘȱ śşǰŘŝǰşŚŝȱ ŜǰşŞǰřśŞȱ ŞǰŘřŖȱ Ŗȱ ŝǰŖŜǰśŞşȱ ŜǰŘŜǰŞŘŗȱ śǰŜŚŗȱ ŞŞŞȱ ŜǰřřǰřśŖȱ ŝŘǰŜŝǰŞŞś of Fundsȱ ǻśśǰśşǰśśŞǼȱ ǻŗǰŗśǰŗŗŜǼȱ ǻşǰŖŜşǼȱ ǻśŜǰŞřǰŝŚŚǼȱ ǻśǰşŜǰŜşŜǼȱ ǻŗśǰŜşśǼȱ ǻŗǰŖşŗǼȱ ǻŜǰŗřǰŚŞŘǼȱ ǻśǰŗŚǰŘŝŘǼȱ ǻŚǰŝŖŘǼȱ ǻřǰŚŝşǼȱ ǻśǰŘŘǰŚśřǼȱ ǻŜŞǰŗşǰŜŝşǼ Repurchases /ȱ śŝǰŝŜǰŗŜŗȱ ŞŖǰřŞŝȱ ŜǰŘşŝȱ śŞǰŜŘǰŞŚśȱ ŜǰŞŜǰŚŞřȱ ŗřǰŗřŗȱ ŗŜŜȱ ŜǰşşǰŝŞŗȱ ŜǰŘŗǰśŜŘȱ śǰŖŜŝȱ ŘǰŖşŘȱ ŜǰŘŞǰŝŘŖȱ ŝŗǰşŗǰřŚŜ Redemptionȱ ǻśśǰŜŝǰşŗŚǼȱ ǻŗǰŗřǰřŗŞǼȱ ǻŗŝǰşśŝǼȱ ǻśŜǰşşǰŗŞşǼȱ ǻŜǰŖŗǰŜŜŘǼȱ ǻŗřǰşŘŜǼȱ ǻŗǰŘŞşǼȱ ǻŜǰŗŜǰŞŝŝǼȱ ǻśǰŗśǰşŚŝǼȱ ǻŚǰŞŘşǼȱ ǻŚŞŜŗǼȱ ǻśǰŘśǰŜřŝǼȱ ǻŜŞǰŚŗǰŝŖŘǼ ȱ Ě ȱȦȱȱ ŞŜǰśŞŞȱ ȬŘŘǰŘŗŘȱ ŝŘśȱ ŜśǰŗŖŘȱ ŗŗǰŞŝśȱ ȬŚǰşŖŗȱ ȬŗŜŜȱ ŜǰŞŖŞȱ śǰŘśşȱ śŝŚȱ ȬŗǰŘŖŚȱ ŚǰŜŘşȱ ŝŜǰśřş Ě ȱȱ ǻȬŞǰřśŜǼȱ ǻŗǰŝşşǼȱ ǻȬŞǰŞŞŞǼȱ ǻȬŗśǰŚŚŜǼȱ ǻȬŚǰşŜśǼȱ ǻŗǰŝŜşǼȱ ǻȬŗşŞǼȱ ǻȬřǰřşŚǼȱ ǻȬŗǰŜŝśǼȱ ǻȬŗŘŜǼȱ ǻȬŗǰřŞŘǼȱ ǻȬřǰŗŞŚǼȱ ǻȬŘŘǰŖŘŚǼ Funds ǱȱȱȱȱȱȱęȱȱŘŖŗŗȬŗŘ

94 Part Two: Trends and Operations in Securities Markets

Table 2.48: Scheme-wise Resource Mobilisation and Assets under Management by Mutual Funds as on March 29, 2013

ȱ ǯȱȱ ȱȱ Ȧȱ ȱ Ě Ȧȱ ȱȱ ȱ ȱ ȱ ȱ ȱ Ě ȱȱ ȱ Schemes (` crore) (` crore) Funds as on March over March (` crore) 31, 2013 30, 2012 (` crore) 1234567 A. Income/ Debt Oriented Schemes ȱ Ǽȱ Ȧ¢ȱȱ śśȱ ŜřǰŜśǰŚŘŖȱ ŜřǰŜŘǰŗşŚȱ řǰŘŘŜȱ şřǰřşŘȱ ŗŜǯŘ ȱ Ǽȱ ȱ ŚŘȱ ŗŘǰŞŞŜȱ ŞǰşŗŖȱ řǰşŝśȱ ŞǰŖŝŚȱ ŗŘŖǯŝ ȱ Ǽȱ ȱǻȱȱ ŝŜŖȱ ŞǰřśǰŘŝřȱ ŝǰśŘǰŘşŘȱ ŞŘǰşŞŗȱ řǰşśǰşŞśȱ řŜǯŘ ȱ ȱ ȱǼ Subtotal (i+ii+iii) 857 72,13,578 71,23,396 90,183 4,97,451 32.7 B. Growth/ Equity Oriented Schemes ȱ Ǽȱ ȱ śŖȱ ŘǰŜŚŗȱ ŚǰŘŞŘȱ ȬŗǰŜŚŗȱ ŘŘǰŝŚŜȱ ȬřǯŞ ȱ Ǽȱ ȱ Řşŝȱ ŚŖǰŝŘřȱ śřǰŜŜşȱ ȬŗŘǰşŚŜȱ ŗǰŚşǰŝŜŘȱ Ȭśǯś Subtotal (i+ii) 347 43,364 57,951 -14,587 1,72,508 -5.3 C. Balanced Schemes ȱ ȱȱ řŘȱ śǰŘŖśȱ ŚǰşŞşȱ ŘŗŜȱ ŗŜǰřŖŝȱ Ŗǯř D. Exchange Traded Fund ȱ Ǽȱ ȱȱ ŗŚȱ ŘǰŝŜŝȱ ŗǰřśřȱ ŗǰŚŗŚȱ ŗŗǰŜŚŞȱ ŗŝǯŞ ȱ Ǽȱ ȱȱ Řřȱ ŘǰŘŞśȱ ŘǰŚşŝȱ ȬŘŗŘȱ ŗǰŚŝŝȱ ȬŞǯŗ Subtotal (i+ii) 37 5,052 3,850 1,202 13,124 14.2 E. Fund of Funds Investing Overseas ȱ ȱȱȱ Řŗȱ ŜŞŜȱ ŗǰŗŜŖȱ ȬŚŝŚȱ ŘǰŖśřȱ ȬŗŞǯş investing overseas TOTAL (A+B+C+D+E) 1,294 72,67,885 71,91,346 76,539 7,01,443 19.45 Ǳȱ ȱȱȱȱ` ŜřřŘǯŜşȱȱȱȱȱȱȱǻǼȱȱȱȱŘşǰȱŘŖŗřȱȱȱȱȱȱȱ ǯ ȱȂȱȱȱşŘǯŖȱȱȱȱĚ ȱ ȱ ` śǰŞŝǰŘŗŝȱ ȱ ȱ ¢ȱ ǯȱ ȱȱ ȱę¡ȱȱǯȱȱȱȱ ȱ ȱ ȱ ȱ Ȧȱ ȱ ȱȱȱȱȱȱȱȱ schemes at ` ŚǰşŝǰŚśŗȱ ȱ ȱ ȱ ȱ ȱȱŘŖŖŞǰȱ ȱȱ¡ȱȱ ȱ Ȧ¢ȱ ȱ ȱ ȱ ȱȱȱȱĚ ȱȱȱȱȱŜŗǯŘȱ ` ŗǰŝŘǰśŖŞȱǯȱ ȱȱȱ ȱȱǰȱ percent compared to the previous year. This ȱ ȱ ǻŗŘŖǯŝȱ Ǽȱ ȱ ȱ ȱ ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ŗŝǯŞȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ǻřŜǯŘȱ Ǽȱ ȱ ȱ ȱ ǻŗŝǯŞȱ ȱȱęȱ¢ǯ Ǽȱ ȱ ȱ ¢ǯȱ ȱ ȱ ȱȱĚ ǰȱ ȱȱȱ ȱȱ ȱ ȱ ȱ ȱ ǻǼȱ ȱȱ ȱǰȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ŘŖŖşȬŗŖǯȱȱȱȱ¢ȱŗşǯśȱȱ ȱȱȱȱȱȱȱ to ` ŝǰŖŗǰŚŚřȱȱȱȱȱȱȱŘŖŗřȱ ȱȱŗŞǯşȱǯ

95 Annual Report 2012-13

ȱȱȱŘşǰȱŘŖŗřǰȱȱ ȱŗǰŘşŚȱ ǯȱ¢Ȭ ȱȱ ȱŝśŗȱȬ ȱ ȱ ȱ ȱ ǰȱ Şśŝȱ ȱ ȱȱȱśŖŗȱȬȱȱ Ȧȱ ȱ ǰȱ řŚŝȱ ȱ ȱ ȱ ȱ Řşǰȱ ŘŖŗřǯȱ ȱ ȱ Ȧȱ Ȧ¢ȱȱȱȱřŘȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ǻȱ ŘǯŚşǼǯȱ ȱ ǰȱ Ȭȱ ȱ ¡ȱ Ȭȱ ȱ ȱ řŝȱ ¡ȱ ȱ ǰȱ ȱ schemes. ȱŗŚȱ ȱ ȱȱȱŘřȱȱǯȱ ǰȱ ȱ ȱ Řŗȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ dominant investors in the debt market than

Table 2.49: Number of Schemes by Investment Objective as on March 29, 2013 Schemes Open-ended Close-ended Interval Total 1 2345 A. Income/ Debt Oriented Schemes ȱ Ǽȱ Ȧȱ¢ȱȱ śśȱ Ŗȱ Ŗȱ śś ȱ ȱ ȱ ǻśśǼȱ ǻŖǼȱ ǻŖǼȱ ǻśśǼȱ ȱ Ǽȱ ȱ ŚŘȱ Ŗȱ Ŗȱ ŚŘ ȱ ȱ ȱ ǻŚŘǼȱ ǻŖǼȱ ǻŖǼȱ ǻŚŘǼ ȱ Ǽȱ ȱǻȱȱȱǼȱ Řřŝȱ ŚŞŗȱ ŚŘȱ ŝŜŖ ȱ ȱ ȱ ǻŘŘşǼȱ ǻśŗŘǼȱ ǻřŚǼȱ ǻŝŝśǼ ȱ Ǽȱ ȱǻȱǼȱ Ŗȱ Ŗȱ Ŗȱ Ŗ Subtotal (i+ii+iii) 334 481 42 857 (326) (512) (34) (872) B. Growth/ Equity Oriented Schemes ȱ Ǽȱ ȱ řŜȱ ŗŚȱ Ŗȱ śŖ ȱ ȱ ȱ ǻřŜǼȱ ǻŗřǼȱ ǻŖǼȱ ǻŚşǼ ȱ Ǽȱ ȱ ŘşŘȱ śȱ Ŗȱ Řşŝ ȱ ȱ ȱ ǻŘşşǼȱ ǻŚǼȱ ǻŖǼȱ ǻřŖřǼ Subtotal (i+ii) 328 19 0 347 (335) (17) (0) (352) C. Balanced Schemes ȱ ȱȱ řŗȱ ŗȱ Ŗȱ řŘ ȱ ȱ ȱ ǻŘşǼȱ ǻŗǼȱ ǻŖǼȱ ǻřŖǼ D. Exchange Traded Fund ȱ Ǽȱ ȱȱ ŗŚȱ Ŗȱ Ŗȱ ŗŚ ȱ ȱ ȱ ǻŗŚǼȱ ǻŖǼȱ ǻŖǼȱ ǻŗŚǼ ȱ Ǽȱ ȱȱ Řřȱ Ŗȱ Ŗȱ Řř ȱ ȱ ȱ ǻŘŗǼȱ ǻŖǼȱ ǻŖǼȱ ǻŘŗǼ Subtotal (i+ii) 37 0 0 37 (35) (0) (0) (35) E. Fund of Funds Investing Overseas ȱ ȱȱȱȱȱ Řŗȱ Ŗȱ Ŗȱ Řŗ ȱ ȱ ȱ ǻŘŖǼȱ ǻŖǼȱ ǻŖǼȱ ǻŘŖǼ TOTAL (A+B+C+D+E) 751 501 42 1294 (745) (530) (34) (1309) ǱȱȱȱȱȱȱęȱȱŘŖŗŗȬŗŘ

96 Part Two: Trends and Operations in Securities Markets

¢ȱǯȱȱŘŖŗŘȬŗřǰȱȱȱ ȱȱĴ ȱȱ¢ȱȱȱȱȱȱ ȱȱȱȱȱȱǯȱ ` ȱ ¢ȱ ȱ ŚǰśŖǰŝŗŗȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ` to řǰřřǰŚŜřȱȱȱŘŖŗŗȬŗŘǰȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ £ȱ ȱ ȱ řśǯŘȱ ȱ ǻȱŘǯśŖǼǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ securities market. ȱ ȱ ȱ ȱ ` ŘŘǰŝŚşȱ ǰȱ ǰȱ ȱ net investments in the debt segment rose ȱȱȱřŗǰȱŘŖŗřǰȱ ȱȱ to ` ŚǰŝřǰŚŜŖȱ ȱ ȱ ȱ ȱ ǯȱ ȱşŜǯşȱȱȱȱȱǰȱȱ ȱ ŘŖŖşȬŗŖǰȱ ȱ ȱ ¢¢ȱ ȱ ȱ ȱ ȱȱȱȱȱȱ ȱŚśǯŝȱȱ ȱ ĝȱ ȱ ȱ ¢ȱ ȱ ǻȱ ŘǯśŗǼǯȱ ȱ ȱ ȱ ǰȱ Ȧ ȱ ȱ ȱ ¢ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗǯŘȱ ȱȱȱȱ ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ŘŖŗŘȱǻ` ŝŞǰŚŜśȱǼȱ ȱ¢ȱȱŘŖŗřȱ ȱȱȱȱȱȱ ȱȱ£ȱŚŞǯŜȱ ǻ` ŜŞǰŗŗŚȱǼǯȱȱȱȱȱ ǯȱ ȱȱȱŘŖŗŗȬŗŘǰȱȱȱ ȱȱȱȱ ȱȱȱȱȱ ȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ¢ȱ ȱȱȱȱȱȱǯȱ Ȧ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱŗǯŞȱȱȱȱȱȱŚǯŝȱ ȱŘŖŗŘǯ ȱȱȱȱȱǯ

Table 2.50: Trends in Transactions on Stock Exchanges by Mutual Funds (` Ǽ Equity Debt Total Period Gross Gross Net Gross Gross Net Gross Gross Net Purchase Sales Purchase/ Purchase Sales Purchase/ Purchase Sales Purchase/ Sales Sales Sales 1 2 34567 8910 2008-09 1,44,069 1,37,085 6,985 3,27,744 2,45,942 81,803 4,71,814 3,83,026 88,787 2009-10 1,95,662 2,06,173 -10,512 6,24,314 4,43,728 1,80,588 8,19,976 6,49,901 1,70,076 2010-11 1,54,217 1,74,018 -19,802 7,62,644 5,13,493 2,49,153 9,16,861 6,87,511 2,29,352 2011-12 1,32,137 1,33,494 -1,358 11,16,760 7,81,940 3,34,820 12,48,897 9,15,434 3,33,463 2012-13 1,13,758 1,36,507 -22,749 15,23,393 10,49,934 4,73,460 16,37,150 11,86,440 4,50,711 ȬŗŘȱ şǰŖśŚȱ şǰśşřȱ Ȭśřşȱ ŗǰŖŚǰŝŚŝȱ ŜŝǰŜŗŞȱ řŝǰŗŘşȱ ŗǰŗřǰŞŖŗȱ ŝŝǰŘŗŗȱ řŜǰśşŖ ¢ȬŗŘȱ ŞǰŞŝŘȱ şǰŘŝŖȱ ȬřşŞȱ şŚǰśŖŖȱ ŝŖǰşŚŗȱ Řřǰśśşȱ ŗǰŖřǰřŝŗȱ ŞŖǰŘŗŖȱ ŘřǰŗŜŗ ȬŗŘȱ şǰŘŜŞȱ ŞǰşŝŘȱ ŘşŜȱ ŗǰśŖǰŝŖŗȱ ŝŘǰŘřśȱ ŝŞǰŚŜśȱ ŗǰśşǰşŜşȱ ŞŗǰŘŖŞȱ ŝŞǰŝŜŗ ȬŗŘȱ şǰŖŖŞȱ ŗŖǰşşŝȱ ȬŗǰşŞŞȱ ŗǰŖřǰŝŖşȱ ŗǰŖŖǰŝŘśȱ ŘǰşŞśȱ ŗǰŗŘǰŝŗŝȱ ŗǰŗŗǰŝŘŗȱ şşŝ ȬŗŘȱ şǰŜŝŗȱ ŗŗǰřŖŘȱ ȬŗǰŜřŗȱ ŗǰŖśǰŘŚŞȱ ŝŜǰřŞśȱ ŘŞǰŞŜřȱ ŗǰŗŚǰşŗşȱ ŞŝǰŜŞŝȱ ŘŝǰŘřŘ ȬŗŘȱ ŗŖǰŚŘŝȱ ŗřǰŜŘŜȱ Ȭřǰŗşşȱ ŗǰŘśǰŘŖśȱ ŝśǰŖşŜȱ śŖǰŗŗŖȱ ŗǰřśǰŜřřȱ ŞŞǰŝŘŘȱ ŚŜǰşŗŗ ȬŗŘȱ şǰŖśşȱ ŗŗǰśŝşȱ ȬŘǰśŘŖȱ şŚǰśŖřȱ ŝŝǰśŖśȱ ŗŜǰşşŞȱ ŗǰŖřǰśŜŗȱ ŞşǰŖŞřȱ ŗŚǰŚŝŞ ȬŗŘȱ ŞǰŘŚşȱ ŗŖǰŜŚŜȱ ȬŘǰřşŝȱ ŗǰŖşǰśŜŖȱ ŜŜǰŜşŘȱ ŚŘǰŞŜŞȱ ŗǰŗŝǰŞŖşȱ ŝŝǰřřŞȱ ŚŖǰŚŝŗ ȬŗŘȱ şǰşŝŞȱ ŗŘǰŜŝŝȱ ȬŘǰŜşşȱ ŗǰřśǰŗŗśȱ şŗǰŚşŖȱ ŚřǰŜŘśȱ ŗǰŚśǰŖşřȱ ŗǰŖŚǰŗŜŝȱ ŚŖǰşŘŜ Ȭŗřȱ ŗŘǰŖŗŖȱ ŗŝǰŘŘřȱ ȬśǰŘŗŘȱ ŗǰŚŜǰŚśşȱ ŗǰŖśǰŞŖŝȱ ŚŖǰŜśŘȱ ŗǰśŞǰŚŜşȱ ŗǰŘřǰŖřŖȱ řśǰŚřş Ȭŗřȱ ŗŖǰŘŞŜȱ ŗŗǰŗřŚȱ ȬŞŚŞȱ ŗǰŘŞǰřŗŝȱ ŞŞǰŘŘśȱ ŚŖǰŖşŘȱ ŗǰřŞǰŜŖřȱ şşǰřśşȱ řşǰŘŚŚ Ȭŗřȱ ŝǰŞŝŜȱ şǰŚşŖȱ ȬŗǰŜŗŚȱ ŘǰŘśǰřřŖȱ ŗǰśŝǰŘŗŝȱ ŜŞǰŗŗŚȱ ŘǰřřǰŘŖŝȱ ŗǰŜŜǰŝŖŜȱ ŜŜǰśŖŗ

97 Annual Report 2012-13

ȱŘǯśŗǱȱȱȱĴȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ mutual funds as on March 31, ȱ ȱ ŗŝǯŚȱ ȱ ȱ ȱ ȱ 2013 ȱǯȳ Percentage Percentage Category to Total to Total Folios Net Assets 5. PORTFOLIO MANAGEMENT 123ȱ ȱ ¢ȱ ȱ ȱ ȱ şŜǯşŚȱ Śśǯŝř ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻşŚǯśǼȱ ǻŚŞǯŘǼ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ŗǯŞŚȱ ŚǯŝŖ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻŗǯşǼȱ ǻŜǼ ȱ ¢ǯȱ ǰȱ ȱ ȱ ȱ ŖǯŖŖȱ ŖǯşŜ ȱ ǻŖǯŖǼȱ ǻŖǯşǼ ȱ ȱȱȱȱȱȱ Ȧ Ȧȱ ŗǯŘŘȱ ŚŞǯŜŗ ȱȱȱȱǯ ȱ ǻřǯŜǼȱ ǻŚŚǯşǼ Total 100.00 100.00 ȱȱȱȱȱȱȱ ȱ ŜŜǰśŞśȱ ȱ ŘŖŗŘȬŗřȱ ȱ ŞŖǰŜŖŞȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ŘǯśřǼǯȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱ taking discretionary and non-discretionary ȱȱȱȱȱȱȱ ȱ ǰȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ǯȱȱȱȱȱȱȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŜśǯŘȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ŝŜǯśȱȱȱȱȱȱȱǯ ȱȱȱȱȱȱ ȱ ȱřŚǯŞȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗřȱǻȱŘǯśŘǼǯȱȱȱȱȱȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŞŘǯŜȱ ȱ ¢ȱ ŗŝǯřȱ ȱ ȱ ` ŜǰŖśǰşşŖȱ ȱ ȱ

ȱŘǯśŘǱȱȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ March 31, 2013

Category Percentage to Percentage to Total Folios Total Net Assets 123 1 Private Sector Mutual Fund 65.21 82.60 ȱ ȱ ŜŘǯśşȱ řŝǯŘŖ ȱ Ȧȱ ŗǯśřȱ Śǯŗś ȱ ȱȱ ŖǯŖŖȱ ŖǯşŜ ȱ Ȧ Ȧȱ ŗǯŖşȱ ŚŖǯŘş 2 Public Sector Mutual Funds 34.79 17.40 (including UTI Mutual Fund) ȱ ȱ řŚǯřŜȱ Şǯśř ȱ Ȧȱ ŖǯřŖȱ ŖǯśŚ ȱ ȱȱ ŖǯŖŖȱ ŖǯŖŖ ȱ Ȧ Ȧȱ Ŗǯŗřȱ ŞǯřŘ Total (1+2) 100 100

98 Part Two: Trends and Operations in Securities Markets

Table 2.53: Assets Managed by Portfolio Managers No. of Clients AUM (` crore) Discretio- Non- Advisory Total Discretio- Discretio- Non- Advisory Total nary Discretio- nary nary Discretio- nary (EPFO/ (Non nary PFs) EPFO/PFs) ŘŖŖşȬŗŖȱ śŚǰśŘŖȱ řǰŝŝŗȱ śǰŝřŚȱ ŜŚǰŖŘśȱ ȱ ŘǰŝřǰŚŘŖȱ şǰřŖŗȱ ȱ ŘŖŗŖȬŗŗȱ ŜşǰŜşŗȱ řǰŝŚŞȱ ŞǰŝŝŖȱ ŞŘǰŘŖşȱ ȱ ŘǰŞŚǰşŞŖȱ ŗŖǰŚśŜȱ ŞŜǰŖŗŜȱ ŘŖŗŗȬŗŘȱ ŜśǰŜŖŖȱ śǰŝŗŘȱ şǰŘşŜȱ ŞŖǰŜŖŞȱ řǰŞŜǰŚŗŖȱ řŝǰřŜśȱ ŗŞǰŝśşȱ ŝřǰşŗŚȱ śǰŗŜǰŚŚŞ ŘŖŗŘȬŗřȱ śŖǰşřŝȱ ŚǰŚŜŗȱ ŗŗǰŗŞŝȱ ŜŜǰśŞśȱ ŚǰşşǰŞśŗȱ řŜǰŞŜŚȱ ŘŜǰŘşŞȱ ŝşǰŞŚŗȱ ŜǰŖśǰşşŖ

ŘŖŗŘȬŗřȱȱ` śǰŗŜǰŚŚŞȱȱȱŘŖŗŗȬŗŘǯȱȱ ȱ ȱ ȱ ȱ ŝşǯŜȱ ǯȱ ȱ ȱ ȱ ¢ȱȱȱȱȦȱ ȱȱ ȱĚ ȱȱȱȱȱ¢ȱ ȱ ŞŘǯśȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱǰȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ¢ȱ¢ȱȱȱŗřǯŘȱǯȱ ȱ Ě ȱ ȱ ȱ Ǟȱ řŗǰŖŚŝȱ ȱ ȱȱȱ¢ȱȱȱ in 2012-13. The combined gross purchases ȱ Ȧȱ ȱ ȱ ¢ȱ ŘşǯŚȱ ȱ ȱ ȱ ¢ȱ ¢ȱ ȱ ȱ ¢ȱ ŗǯŞȱ percent in 2012-13 over the previous year. The percent to ` şǰŖŚǰŞŚśȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ Ȧ ȱ ȱ ȱ ȱ ȱ ȱ ` şǰŘŗǰŘŞśȱ ȱ ȱ ŘŖŗŗȬŗŘȱ ǻȱ ŘǯśŚǼǯȱ ȱ ŜǯŖŚȱȱȱŘŖŗŘȬŗřȱ ȱȱȱȱ ȱȱȱ¢ȱ ȱȱ¢ȱŗŗǯŖȱ ȱ ȱ ¢ȱ ȱ ŝǯŖȱ ǰȱ ȱ percent to ` ŝǰřŜǰŚŞŗȱ ȱ ȱ ` ŞǰŘŝǰśŜŘȱ ȱȱȱȱȱȱȱ crore during the same period in previous by both sectors. ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱŗŝŗǰśŘşȱ 6. FOREIGN INSTITUTIONAL ȱȱȱȱȱȱȱŘŖŗřȱȱ INVESTMENT ȱȱŗŚŖǰŚŞŘȱȱȱŘŖŗŗȬŗŘǰȱȱ ȱȱȱŘŘǯŗȱǯ ȱ ȱ Ě ȱȬȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ¢ǯȱ ȱȱȱȱ ȱĚ ȱ ȱ ȱȱȱȱȱȱęȱ ȱ ¢ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱ ȱ ¢ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ě ǯȱ ȱ ȱ ȱ ȱȱ¢ȱ¡ȱŘŖŗŗȬŗŘǯȱ ȱŘŖŗŘȬŗřǰȱȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱĚ ȱȱ¢ȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ by 220.1 percent to ` ŗǰŚŖǰŖřřȱ ȱ ȱ ¢ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ` ŚřǰŝřŞȱȱȱŘŖŗŗȬŗŘȱǻȱŘǯśśǼǯȱ ȱȱ ¢ȱ ȱ ȱ ȱ ȱ ȱǰȱȱȱ ȱĚ ȱȱ¢ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ǰȱ Śřǯřȱȱȱ` ŘŞǰřřŚȱȱȱŘŖŗŘȬŗřȱȱ ȱȱȱȱȱȱȱ ` ŚşǰşŞŞȱȱȱŘŖŗŗȬŗŘǯ ȱ ȱ ȱ ȱ ȱ ȱȱ ȱȱ ȱȱȱȱ investments needs. ȱȱȱȱȱęȱ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘŖŗřȱ ¢ȱ ȱ ŘŖŖşȬŗŖǯȱ ȱ ŘŖŗŘȬŗřǰȱ ȱ ǻ` ŘŞǰŚŚŗȱ Ǽȱ ȱ ¢ȱ ȱ ŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ` ŗǰŜŞǰřŜŝȱ ǻ` ŘŜǰŝşŘȱ Ǽȱ ȱ ¢ȱ ŘŖŗřǻ` ŘśǰŖŖŜȱ crore compared to ` şřǰŝŘśȱȱȱŘŖŗŗȬŗŘǰȱ Ǽǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ

99 Annual Report 2012-13

Table 2.54: Investment by Foreign Institutional lnvestors Gross Purchase Gross Sales Net Net Cumulative Year (` crore) (` crore) Investment Investment Investment (` crore) (USD mn.) (USD mn.) 1 23 456 ŗşşŘȬşřȱ ŗŞȱ Śȱ ŗřȱ Śȱ Ś ŗşşřȬşŚȱ śǰśşřȱ ŚŜŝȱ śǰŗŘŝȱ ŗǰŜřŚȱ ŗǰŜřŞ ŗşşŚȬşśȱ ŝǰŜřŗȱ ŘǰŞřśȱ ŚǰŝşŜȱ ŗǰśŘŞȱ řǰŗŜŝ ŗşşśȬşŜȱ şǰŜşŚȱ ŘǰŝśŘȱ ŜǰşŚŘȱ ŘǰŖřŜȱ śǰŘŖŘ ŗşşŜȬşŝȱ ŗśǰśśŚȱ ŜǰşŞŖȱ Şǰśŝśȱ ŘǰŚřŘȱ ŝǰŜřś ŗşşŝȬşŞȱ ŗŞǰŜşśȱ ŗŘǰŝřŝȱ śǰşśŞȱ ŗǰŜśŖȱ şǰŘŞś ŗşşŞȬşşȱ ŗŜǰŗŗŜȱ ŗŝǰŜşşȱ ȬŗǰśŞŚȱ ȬřŞŜȱ ŞǰŞşş ŗşşşȬŖŖȱ śŜǰŞśŝȱ ŚŜǰŝřśȱ ŗŖǰŗŘŘȱ ŘǰŚŝŚȱ ŗŗǰřŝř ŘŖŖŖȬŖŗȱ ŝŚǰŖśŗȱ ŜŚǰŗŗŞȱ şǰşřřȱ ŘǰŗŜŖȱ ŗřǰśřŘ ŘŖŖŗȬŖŘȱ śŖǰŖŝŗȱ ŚŗǰřŖŞȱ ŞǰŝŜřȱ ŗǰŞřşȱ ŗśǰřŝŘ ŘŖŖŘȬŖřȱ ŚŝǰŖŜŘȱ ŚŚǰřŝŘȱ ŘǰŜŞşȱ śŜŜȱ ŗśǰşřŝ ŘŖŖřȬŖŚȱ ŗǰŚŚǰŞśśȱ şşǰŖşŗȱ ŚśǰŝŜŚȱ ŗŖǰŖŖśȱ ŘśǰşŚř ŘŖŖŚȬŖśȱ ŘǰŗŜǰşśŗȱ ŗǰŝŗǰŖŝŗȱ ŚśǰŞŞŖȱ ŗŖǰřśŘȱ řŜǰŘşŚ ŘŖŖśȬŖŜȱ řǰŚŜǰşŝŜȱ řǰŖśǰśŖşȱ ŚŗǰŚŜŝȱ şǰřŜřȱ ŚśǰŜśŝ ŘŖŖŜȬŖŝȱ śǰŘŖǰśŖŜȱ ŚǰŞşǰŜŜśȱ řŖǰŞŚŗȱ ŜǰŞŘŖȱ śŘǰŚŝŝ ŘŖŖŝȬŖŞȱ şǰŚŞǰŖŗŞȱ ŞǰŞŗǰŞřşȱ ŜŜǰŗŝşȱ ŗŜǰŚŚŘȱ ŜŞǰşŗş ŘŖŖŞȬŖşȱ ŜǰŗŚǰśŝŜȱ ŜǰŜŖǰřŞŜȱ ȬŚśǰŞŗŗȱ ȬşǰŞřŝȱ śşǰŖŞŗ ŘŖŖşȬŗŖȱ ŞǰŚŜǰŚřŞȱ ŝǰŖřǰŝŞŖȱ ŗǰŚŘǰŜśŞȱ řŖǰŘśŗȱ Şşǰřřř ŘŖŗŖȬŗŗȱ şǰşŘǰśşşȱ ŞǰŚŜǰŗŜŗȱ ŗǰŚŜǰŚřŞȱ řŘǰŘŘŜȱ ŗǰŘŗǰśśş ŘŖŗŗȬŗŘȱ şǰŘŗǰŘŞśȱ ŞǰŘŝǰśŜŘȱ şřǰŝŘśȱ ŗŞǰşŘřȱ ŗǰŚŖǰŚŞŘ ŘŖŗŘȬŗřȱ şǰŖŚǰŞŚśȱ ŝǰřŜǰŚŞŗȱ ŗǰŜŞǰřŜŝȱ řŗǰŖŚŝȱ ŗǰŝŗǰśŘş

Table 2.55: Investments by Mutual Funds and Foreign Institutional lnvestors (` Ǽ Net Investment by Mutual Funds Net Investment by Flls Year / Month Equity Debt Total Equity Debt Total 1 234567 2008-09 6,984 81,803 88,787 -47,706 1,895 -45,811 2009-10 -10,512 1,80,588 1,70,076 1,10,220 32,438 1,42,658 2010-11 -19,802 2,49,153 2,29,352 1,10,121 36,317 1,46,438 2011-12 -1,358 3,34,820 3,33,463 43,738 49,988 93,725 2012-13 -22,749 4,73,460 4,50,711 1,40,033 28,334 1,68,367 ȬŗŘȱ Ȭśřşȱ řŝǰŗŘşȱ řŜǰśşŖȱ ȬŗǰŗŖşȱ ȬřǰŝŞŞȱ ȬŚǰŞşŝ ¢ȬŗŘȱ ȬřşŞȱ Řřǰśśşȱ ŘřǰŗŜŗȱ ȬřŚŝȱ řǰśŜşȱ řǰŘŘŘ ȬŗŘȱ ŘşŜȱ ŝŞǰŚŜśȱ ŝŞǰŝŜŗȱ ȬśŖŗȱ ŗǰŜŞŘȱ ŗǰŗŞŗ ȬŗŘȱ ȬŗǰşŞŞȱ ŘǰşŞśȱ şşŝȱ ŗŖǰŘŝřȱ řǰřşŘȱ ŗřǰŜŜŚ ȬŗŘȱ ȬŗǰŜřŗȱ ŘŞǰŞŜřȱ ŘŝǰŘřŘȱ ŗŖǰŞŖŚȱ ŘŜśȱ ŗŗǰŖŜş ȬŗŘȱ Ȭřǰŗşşȱ śŖǰŗŗŖȱ ŚŜǰşŗŗȱ ŗşǰŘŜŘȱ ŜŘřȱ ŗşǰŞŞŚ ȬŗŘȱ ȬŘǰśŘŖȱ ŗŜǰşşŞȱ ŗŚǰŚŝŞȱ ŗŗǰřŜŚȱ ŝǰŞśŘȱ ŗşǰŘŗŜ ȬŗŘȱ ȬŘǰřşŝȱ ŚŘǰŞŜŞȱ ŚŖǰŚŝŗȱ şǰśŝŝȱ ŘşŘȱ şǰŞŜş ȬŗŘȱ ȬŘǰŜşşȱ ŚřǰŜŘśȱ ŚŖǰşŘŜȱ ŘŚǰŚŜŚȱ ŗǰŝŖŚȱ ŘŜǰŝşŘ Ȭŗřȱ ȬśǰŘŗŘȱ ŚŖǰŜśŘȱ řśǰŚřşȱ ŘŘǰŖśşȱ ŘǰşŚŝȱ ŘśǰŖŖŜ Ȭŗřȱ ȬŞŚŞȱ ŚŖǰŖşŘȱ řşǰŘŚŚȱ ŘŚǰŚřşȱ ŚǰŖŖŗȱ ŘŞǰŚŚŗ Ȭŗřȱ ȬŗǰŜŗŚȱ ŜŞǰŗŗŚȱ ŜŜǰśŖŗȱ şǰŗŘŚȱ śǰŝşśȱ ŗŚǰşŗş

100 Part Two: Trends and Operations in Securities Markets

ȱȱ ȱȱ ȱȱ¢ȱȱ ȱȱ ȱȱȱ ȱȱ £ǯǰȱ Şśǯşȱ ǰȱ şŗǯřȱ ȱ ȱ ŞŞǯŘȱ ȱǯȱ ȱȱȱȱȱȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ǻ ȱ ¢ȱ Ȭȱ ȱ ȱ ǰȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ Ǽȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ Ȭ ǰȱ ȱ ȱ ȱ ȱ ȱ ŗȱ ǯȱ ȱ ęȱ Ě ȱȱȱȱȱ ȱȱȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȱ ǻ` ŝǰŞśŘȱ Ǽȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗřȱ ǻ` śǰŝşśȱ Ǽǰȱ ȱ ¢ȱ Ȭȱ ȱ ǻ Ǽȱ ȱ ȱ ŘŖŗřȱǻ` ŚǰŖŖŗȱǼ ǯ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ȱ ǰȱ ȱ ` ŜşŘȱ ȱ ȱȱ ȱȱȱȱ and ` Śŝřȱ ȱ ¢ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ǯȱ ȱ ȱ ¢ȱ ȱ ȱ Ǟȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ŗŘŝȱȱȱȱŞŝȱȱ¢ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ǯȱ ȱ ǻȱŘǯśŜǼǯ ȱȱ ȱȱȱŘǯśśǯ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱŘŖŗŘȬŗřȱȱȱ ŘŖŗŘȬŗřǰȱ ęȱ ȱ ȱ ǻ Ǽȱ ȱȱŘǯśŝǱ

Table 2.56: QFI Investments during 2012-13

Gross Gross Net Net Cumulative Year Instrument Purchase Sales Investment Investment Investment (` crore) (` crore) (` crore) (US $ mn.) * (US $ mn.) ȱ ¢ȱ Ŝşśȱ řȱ ŜşŘȱ ŗŘŝȱ ǯǯ 2012-13 ȱ ȱ ȱ ŚŝŞȱ śȱ Śŝřȱ Şŝȱ ǯǯ Debt Șȱ ȱȱȱȱȱȱŘŞǰȱŘŖŗřȱȱ ȱ ǯȱǻŗȱȱǞȱƽȱ` śŚǯřŞşřǼǯ

Table 2.57: Allocation of Debt Investment limits to FIIs and Sub-accounts during 2012-13 (` Ǽ Date Govt. Debt Old Govt. Debt Long Corporate Corporate Debt Corporate Debt Term Debt Old Long Term Infra Long Term ȱŘřǰȱŘŖŗŘȱ ŗǰŘŖřȱ ŗǰřŘŗȱ ŚǰśŚŝȱ ȱ ¢ȱŘŗǰȱŘŖŗŘȱ řǰŖŘŞȱ ŗǰŞŝśȱ řǰşŘşȱ ȱ ȱŘŖǰȱŘŖŗŘȱ ŗǰŚŜŚȱ ŘǰŚřŝȱ ŗǰśşşȱ ŜǰřŞŗȱ ¢ȱŖŚǰȱŘŖŗŘȱ ȱ ŘŖǰŚŜşȱ ȱ ŗşǰŝŝŝȱ ¢ȱŘŖǰȱŘŖŗŘȱ ŗǰŘŜŚȱ řǰŜŜşȱ Śǰřśŝȱ ŚǰŘŗşȱ ȱŘŗǰȱŘŖŗŘȱ ŘǰŘŝśȱ ŚǰŜşŞȱ Śǰśşŗȱ ŘǰŗřŘȱ ȱŘŖǰȱŘŖŗŘȱ ȱ ŗřǰŘśśȱ řǰŝřŜȱ śǰŝşŚȱ ȱŘŘǰȱŘŖŗŘȱ ŘǰŚŚŘȱ ŗŘǰŖřśȱ ŚǰŖśřȱ ŚǰŘŚŝȱ ȱŘŖǰȱŘŖŗŘȱ ŗǰŖşŚȱ ŚǰŚśŗȱ śǰŖŝŗȱ ȱ ȱŘŖǰȱŘŖŗŘȱ ŗǰşŞśȱ ŗŖǰŘŜŚȱ ŚǰřŖŗȱ ȱ ¢ȱŘŗǰȱŘŖŗřȱ ȱ ŗřǰŝŖŝȱ řǰşśŚȱ ȱ ¢ȱŘŖǰȱŘŖŗřȱ ŗǰşŗşȱ řřǰşśşȱ řǰŞŜŜȱ ȱ ŘŜǰşŘś ȱŘŖǰȱŘŖŗřȱ ŗǰŖŜŗȱ şǰŞŚŝȱ śǰřřŗȱ ȱ

101 Annual Report 2012-13

ȱ ȱ ȱ ŘǯśŞȱ ȱ ȱ ¢ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ£ȱěȱȱȱ ȱřŗǰȱŘŖŗřǯ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ¢ȱȱȱ` ŗǰŚŝǰşŖśȱȱȱȱ ȱȱȱ¢ȱŘŖŖŘǯȱǯȱ ȱȱŘŖŗřȱȱȱ` ŗǰŜśǰŞřŘȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŗŘȱ ǻȱ ŘǯŜŖǼǯȱ ȱ ȱ ȱ ȱ ` ŗŝǰřŞǰśŘŜȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ řŗǰȱ ŘŖŗřȱ ȱ ȱ ȱ ` ŘŖǰŗşǰřŜŝȱ ȱȱ ȱȱȱȱ ȱȱȱ ȱ ȱ ȱ ȱ řŗǰȱ ŘŖŗŘǯȱ ȱ ȱ ŘŖŖŞȬŖşǯȱ ȱŘŖŗŘȬŗřǰȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŗǯŗȱ ȱ ȱ ȱ highest at ` ŗŖǰŗŖǰŖřŘȱ ȱ ¢ȱ Ȭȱ ȱ ǯȱ¡ȱȱȱ¢ǰȱ ŘŖŗřǰȱ ȱ ¢ȱ ȱ ȱ ǻ` Śǰŝŝǰşşřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ǽǰȱ ¡ȱ ȱ ǻ` ŗǰşşǰŜŘŗȱ Ǽȱ ȱ ȱȱŝǯŞȱȱȱŘŖŗŘȬŗřǯ ȱȱǻ` śŖǰŞŝşȱǼȱǻȱŘǯśşǼǯ

Table 2.58: Debt Utilisation Status as on March 31, 2013 S.No. Type of Instrument Upper Limit Limit Investment Limit Free limit Cap (in acquired (` crore) available (in ` crore) (in USD ` crore) by the with the as on March bn) entity entity 31, 2013 (including (in ` crore) investment) (in ` crore) ŗȱ ȱȱȬȱȱ ŗŖȱ ŚŜǰŘŗŜȱ ŚŗǰŝŘşȱ řŞǰşŝŘȱ ŘǰŝśŜȱ ŚǰŚŞŝ 2 ȱȱȬȱȱȱ ŗśȱ ŝŞǰŘŗŜȱ śřǰśşśȱ ŚřǰŞśśȱ şǰŝŚŗȱ Ŗ řǻǼȱ ȱȱȬȱȱ ȱ ŞŘǰŖřŜȱ ŘŖȱ şşǰŝŝŝȱ şŜǰŘşŞ ŗŗǰşřŚȱ řǰŚŝş řǻǼȱ ȱȱȱȱ ȱ ȱ ȱ ŚǰřŘŞ řȚȱ ȱȱȬȱȱǻ Ǽȱ ŗȱ śǰśŘŜȱ ŚřŞȱ śǰŖŞŞ Śȱ ȱȱȬȱȱȱ śȱ ŘŜǰşŘśȱ ŘŜǰşŗŞȱ ŞǰŖŜřȱ ŗŞǰŞśśȱ ŝ śǻǼȱ ȱȱȱȱ řȱ ŗřǰŚśŗȱ Ŗȱ Ŗȱ Ŗȱ ŗřǰŚśŗ ȱ ȱȱȱ ȱ ȱȱ śǻǼȱ ȱȱȱȱ ŗŘȱ śřǰŞŖŜȱ Ŗȱ ŗŚǰŚŘśȱ Ŗȱ řşǰřŞŗ ȱ ȱǻŗśȱȱ ȱ ¢Ǽ śȚȱ ȱȱ ȱ ŗŖȱ ŚŚǰŞřŞȱ Ŗȱ Ŗȱ Ŗȱ ŚŚǰŞřŞ Ŝȱ ȱȱȬȱ ȱ Ŗǯśȱ ŘǰřŖŝȱ Ŗȱ Ŗȱ Ŗȱ ŘǰřŖŝ Total 76.5 3,71,062 2,18,540 1,90,117 43,285 1,37,659

Ǳȱ ȱȱ ȱŘşǰŗŖŞȱȱȱ ȱȱ¢ȱǻǯǯȱ ȱŚǰŚŞŝȱȱȱ ȱȱȱ¢ȱȱ ȱŘŚǰŜŘŗȱȱȱ ȱȱȱȱ¢ǼȱȱȱȱȱȱȱȱŗśǱřŖȱȱȱŗŝǱřŖȱȱȱȱŘŘǰȱ ŘŖŗřȱȱȱ ȱȱǯȱ Ȧ Ȧ ȦŗŘȦŘŖŗŘȱ ȱȱŘŝǰȱŘŖŗŘǰȱ ȱȱǯȱ Ȧ Ȧ ȦřȦŘŖŗřȱ ȱ¢ȱŖŞǰȱŘŖŗřȱȱ ȱȱ Ȧ Ȧ ȦŜȦŘŖŗřȱȱȱŖŗǰȱŘŖŗřǯȱȱȱŖŗǰȱŘŖŗřǰȱ ȱ ȱȱȱȱȱ ȱȱȱȱȱȱȱȱȱşŖƖȱȱ ȱȱȱ ȱ ȱȱȱȱȱȱȱȱǯȱȱȱ ȱȱ Ȧ Ȧ ȦŜȦŘŖŗřȱ ȱȱŖŗǰȱŘŖŗřǰȱȱȱȱȱ¢ȱȱȱȱ ȱȱȱ¢ȱȱȱǻȱ ȱǼȱȱȱ ǰȱǯǯȱ ǯǯǯȱȱ ǯǯȱ¢ǯȱȱȱȱȱ ȱȱȱȱȱȱ ȱȱȱǰȱȱȱȱȱǰȱȱȱȱȱ ȱ ȱȱȱȱ ȱȱȱȱȱȱǯ

102 Part Two: Trends and Operations in Securities Markets

Table 2.59: Notional Value of Open Interest of Foreign Institutional investors in Derivatives during 2012-13 (` Ǽ

Items Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

1 2345678 910111213

¡ȱ ŘǰŖŗǰŚśşȱ ŘǰŚŞǰŜřŗȱ ŘǰŘŚǰśřŗȱ řǰŗŚǰŚśŚȱ řǰřśǰśŗŝȱ ŘǰŚŝǰŞŝşȱ ŘǰşŗǰŗřŚȱ ŗǰşŜǰŘřşȱ ŘǰŘřǰŗŝśȱ ŗǰŝŚǰśŜŖȱ ŗǰşŖǰŝśŖȱ ŗǰşşǰŜŘŗ ¡ȱ ŜǰŜşǰşŞŝȱ ŞǰśŜǰşŖŗȱ ŞǰŞŖǰŜŞŘȱ ŞǰŞŚǰŝŜřȱ şǰśŘǰŖřŚȱ şǰŘśǰŘŚŜȱ şǰŚřǰřŞřȱŗŖǰŘřǰŜşŚȱ ŞǰŗŞǰŜşřȱŗŖǰřşǰŝŖŚȱ ŞǰşşǰśŝŚȱ ŗŖǰŗŖǰŖřŘ Options ȱ Śǰśřǰśřŗȱ ŚǰŝřǰŚŚşȱ ŚǰŝŚǰřŚřȱ śǰŜŖǰŝŝŖȱ śǰŘŜǰŚřŖȱ śǰřŚǰřřśȱ śǰşŞǰşŜŘȱ śǰşŚǰŝŖŚȱ ŜǰŘřǰşŞŖȱ ŝǰřŚǰŖŞŗȱ śǰŞřǰşŘśȱ Śǰŝŝǰşşř ȱ ŗŞǰŗŗŜȱ ŘśǰŜŖśȱ ŘŘǰŗŞŜȱ řŖǰřśşȱ řşǰŝřŚȱ řŘǰŗŘŘȱ řŝǰŞŘŜȱ ŚśǰşŝŚȱ řřǰŖśŖȱ ŝŝǰŝşŞȱ śŖǰŞŘŗȱ śŖǰŞŝş Options Interest rate 00000000000 0 Total 13,43,092 16,04,586 16,01,743 17,90,345 18,53,714 17,39,582 18,71,304 18,60,611 16,98,898 20,26,144 17,25,070 17,38,526

ȱȱ ȬŜǰŝŜǰŘŝśȱ ŘǰŜŗǰŚşŚȱ ȬŘǰŞŚřȱ ŗǰŞŞǰŜŖŘȱ ŜřǰřŜşȱ ȬŗǰŗŚǰŗřŘȱ ŗǰřŗǰŝŘŘȱ ȬŗŖǰŜşŘȱ ȬŗǰŜŗǰŝŗřȱ řǰŘŝǰŘŚŜȱ ȬřǰŖŗǰŖŝŚȱ ŗřǰŚśŜ open position Ɩȱȱ ȬŖǯřřȱ Ŗǯŗşȱ ŖǯŖŖȱ ŖǯŗŘȱ ŖǯŖŚȱ ȬŖǯŖŜȱ ŖǯŖŞȱ ȬŖǯŖŗȱ ȬŖǯŖşȱ Ŗǯŗşȱ ȬŖǯŗśȱ ŖǯŖŗ

Table 2.60: Notional Value of Participatory Notes (PNs) Vs Assets under Management of FIIs Total value of Total value of Assets Under Total value of Total value of PNs on Equity PNs on Equity Custody of FIIs (B) PNs on Equity PNs on Equity & Year/Month & Debt & Debt excluding (`ȲǼȱ ǭȱȱȱ ȱ¡ including PNs PNs on PNs on derivatives PNs on derivatives on derivatives derivatives as % of B as % of B (`ȲǼȱ ȱǻ`ȲǼȱ ȱ ȱ 2008-09 69,445 55,640 3,91,954 17.7 14.2 2009-10 1,45,037 1,32,557 9,00,869 16.1 14.7 2010-11 1,75,097 1,33,098 11,06,550 15.8 12.0 2011-12 1,65,832 1,15,332 11,07,399 15.0 10.4 2012-13 1,47,905 1,04,229 13,36,557 11.1 7.8 ȬŗŘȱ ŗǰřŖǰŖŗŘȱ ŞŜǰŝŞśȱ ŗŖǰşřǰşśśȱ ŗŗǯşȱ ŝǯş ¢ȬŗŘȱ ŗǰŘŞǰŞşśȱ ŜśǰŚŝŘȱ ŗŖǰŚŖǰśŚŝȱ ŗŘǯŚȱ Ŝǯř ȬŗŘȱ ŗǰŘşǰŞśŗȱ ŜşǰśŘřȱ ŗŖǰşŖǰřśşȱ ŗŗǯşȱ ŜǯŚ ȬŗŘȱ ŗǰŘşǰśŞŜȱ ŜŞǰŜŝŝȱ ŗŖǰşŜǰŚşŘȱ ŗŗǯŞȱ Ŝǯř ȬŗŘȱ ŗǰŚŗǰŝŗŖȱ ŜŞǰŚśŖȱ ŗŗǰŗřǰŞşŚȱ ŗŘǯŝȱ Ŝǯŗ ȬŗŘȱ ŗǰŚŜǰŜŖŖȱ ŞŘǰřŝşȱ ŗŘǰŗşǰŗŜřȱ ŗŘǯŖȱ ŜǯŞ ȬŗŘȱ ŗǰŝśǰŞŘşȱ şśǰśřŜȱ ŗŘǰŘŗǰşŖŖȱ ŗŚǯŚȱ ŝǯŞ ȬŗŘȱ ŗǰŝŝǰŗŜŚȱ şŚǰŜśŞȱ ŗŘǰŞşǰŜŗŘȱ ŗřǯŝȱ ŝǯř ȬŗŘȱ ŗǰśŗǰŖŞŚȱ ŗǰŖŗǰŜŜŜȱ ŗřǰřśǰŗŞşȱ ŗŗǯřȱ ŝǯŜ Ȭŗřȱ ŗǰŜŘǰŗřşȱ ŗǰŖśǰşŗŖȱ ŗřǰŝŖǰŞŜŜȱ ŗŗǯŞȱ ŝǯŝ Ȭŗřȱ ŗǰŜŚǰŘŝŗȱ ŗǰŖśǰŘśŞȱ ŗřǰřŘǰŚşŜȱ ŗŘǯřȱ ŝǯş Ȭŗřȱ ŗǰŚŝǰşŖśȱ ŗǰŖŚǰŘŘşȱ ŗřǰřŜǰśśŝȱ ŗŗǯŗȱ ŝǯŞ

103 Annual Report 2012-13

7. ALTERNATIVE INVESTMENT ȱ ǯȱ ȱ ȱ FUNDS ȱ¢ȱȱȱȱǲ ¢ǰȱ ȱ ȱ ȱ III. Category III AIF ȱ ¢ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ǯȱ ȱ ¡ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ¡ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ęȱ ǰȱ ȱȱȱǯ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱǰȱ ȱ ȱ ȱ ȱ ěȱ ȱ ŚŘȱ ȱ ȱ ȱ ȱ ǯȱ ¢ȱ ȱ ǯȱ ȱ ȱ ȱ ǰȱ ȱ ¡ȱ Ȧ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ǯǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ǻǼȱ ǰȱ ŗşşŜȱ ȱ ȱ ǻ Ǽȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ǰȱ ŘŖŖŖǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ¢ȱ ȱ ȱȦ ȱȱȱȱȱŘǯŜŗǯ ȱ ȱ ȱ ȱ ¢ǯȱ ǰȱ experience in advanced countries have ȱ ȱ ȱ ȱ ȱ ȱȱ¢ȱȱȱ ȱ ȱ ¢ȱ şǯŚȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ` ` ȱǻ Ǽȱȱȱȱȱȱ řŗǰśśŜȱ ȱ ȱ ŘŞǰŞřşȱ ȱ ȱ ŘŖŗŗȬ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ŗŘǯȱ ǰȱ ȱ ȱ ȱ ¢ȱ ȱ ` ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ¢ȱŗŚǯśȱȱȱ řřǰŝŝřȱȱȱ ` ȱȱȱȱ¢ȱȱȱȱ ŘŖŗŘȬŗřȱȱ řşǰŚşŘȱȱȱŘŖŗŗȬŗŘǯȱǻȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ŘǯŜŗǼ ȱȱ ȱȱȱȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ Table 2.61: Cumulative Net Investments by VCFs and FVCIs ȱȱȱȱȱȱǯ (` ǼȱǻȱȱȱȱȱǼ ȱȱȱȱ ǰȱ ȱȱęȱ Year VCFs FVCIs Total (*) ȱ ȱ ǻ ȱ Ǽȱ ȱ ¢ȱ Řŗǰȱ ŘŖŖŜȬŖŝȱ ŗŗǰŘŝŖȱ ŝǰŞśŜȱ ŗŝǰŜŘŗ ŘŖŗŘǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŖŝȬŖŞȱ ŗşǰşśśȱ ŗŜǰŝŖśȱ řŗǰŜŞŘ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖŖŞȬŖşȱ ŘŘǰŝŝŗȱ ŘřǰŖŚŝȱ řŝǰśŝŞ ȱ ¡ȱ ȱ ȱ ǯȱ ȱ ȱ ŘŖŖşȬŗŖȱ ŗŞǰŘŝřȱ ŘŞǰŞşŚȱ řşǰŖśŗ ȱȱȱ Ǳ ŘŖŗŖȬŗŗȱ ŘśǰśŝŜȱ řśǰśşřȱ śŘǰŜŞŞ ŘŖŗŗȬŗŘȱ ŘŞǰŞřşȱ řşǰŚşŘȱ śŞǰşřŜ I. Category I AIFȱ ȱ ȱ ȱ ŘŖŗŘȬŗřǛȱ řŗǰśśŜȱ řřǰŝŝřȱ śśǰśŚŘ ȱȱěȱȱ¢ȱȱ Note: ȱ ȱ ¢ȱ ȱ ȱ ȱ Șȱ¡ȱȱ¢ȱ ȱȱ ǰȱ ǰȱ ȱ ȱ ȱ ȱ ǛȱȱȱęȱȱȱȱřŗǰȱŘŖŗŘǯ ȱǲ ȱ ȱ ȱ ȱ ȱ Şşǯřȱ II. Category II AIF ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱȱ ȱ ¡ȱ ȱ ȱ ǯȱ ǻȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘǯŜŘǼȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȬȬ¢ȱ ¢ȱ ȱ ȱ ŘŗǯŜȱ ȱ ȱ

104 Part Two: Trends and Operations in Securities Markets

Table 2.62: Category-wise Investors in VCFs Number of Percentage to Cumulative Percentage to total Category investors total investors Investments investments (`ȲǼ Ȧȱ Ȧȱȱ ŚǰŘŞŝȱ ŗŖǯŜȱ ŘŚǰŘřŞȱ śŖǯŘ ȱ ŘŞȱ Ŗǯŗȱ ŗřǰŜřŚȱ ŘŞǯŘ ȱ řŜǰŖŗśȱ Şşǯřȱ ŗŖǰŚŖŝȱ ŘŗǯŜ ȱ şȱ ŖǯŖȱ ŗśȱ ŖǯŖ Total 40,339 100.00 48,294 100.0

ȱ ȱ ȱ ǯȱ ȱ ȱ improvising the provisions so as to promote ȱ ǰȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŖǯŜȱ ȱ ȱ ȱ ȱ ȱ ȱ investors. The data pertaining to the market ȱȱśŖǯŘȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱǯȱȱ ȱ¢ȱ ȱ ŘǯŜřǯȱ ȱ ŘŖŗŘȬŗřǰȱ ŝśȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ £ȱ ȱ ` ŗŘǰŖŘŚȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ¢ȱ ǯȱȱȱȱȱ ȱ ȱ £ȱ ŘŞǯŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱǯ Ȭ ȱǯȱȱȱȱ ¢ǰȱŜŞǯşȱȱȱȱȱěȱȱ ȱ ȱěȱ ȱȱȱȱȱ 8. CORPORATE RESTRUCTURING ȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ŘŖŗŗȬŗŘǰȱ şŞǯŚȱ ȱ ȱȱǰȱȱȱȱ ȱȱȱěȱȱ ȱ ȱȱȱ ȱȱȱ ȱȱȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ cross-border takeovers by Indian companies ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ śŝȱ ȱ ŘŖŗŗȬŗŘȱ ȱ ŗŚȱ ȱ ŘŖŗŘȬŗřǯȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǯȱȱŘŖŗŗȬŗŘǰȱ ȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱȱȱ¡ȱ¢ȱȱŘŖŗŗȬŗŘȱȱ ȱ ȱ ȱ ȱ ȱ ȱ řŚȱȱŘŝȱȱŘŖŗŘȬŗřǯ

105 Annual Report 2012-13

Table 2.63: Trends in Corporate Restructuring Ȧȱ ȱě Objectives Total Change in Control Consolidation of Substantial No. of Amount of Management Holdings Acquisition issue (` crore) No. of Amount No. of Amount No. of Amount issue (` crore) issue (` crore) issue (` crore) 1 23456789 2008-09 80 3,713 13 598 6 400 99 4,711 2009-10 56 3,649 14 1,761 6 448 76 5,858 2010-11 71 10,251 17 8,902 14 145 103 18,748 2011-12 57 18,726 8 286 6 294 71 19,305 2012-13 14 836 34 8,284 27 2,904 75 12,024 ȬŗŘȱ Řȱ ŗŝȱ ŗȱ Ŗȱ Ŗȱ Ŗȱ řȱ ŗŝ ¢ȬŗŘȱ ŗȱ Ŗȱ Ŗȱ Ŗȱ řȱ ŗřśȱ Śȱ ŗřś ȬŗŘȱ śȱ ŝřŞȱ Řȱ ŝŞȱ Řȱ ŗŞŜȱ şȱ ŗǰŖŖŘ ȬŗŘȱ ŗȱ Ŗȱ ŗȱ Ŗȱ Śȱ ŚŜŝȱ Ŝȱ ŚŜŝ ȬŗŘȱ Śȱ ŗŚȱ Ŗȱ Ŗȱ ŝȱ ŞŘśȱ ŗŗȱ ŞřŞ ȬŗŘȱ Ŗȱ Ŗȱ řȱ ŗŖŘȱ řȱ Şȱ Ŝȱ ŗŖş ȬŗŘȱ Ŗȱ Ŗȱ Řȱ ŜŖśȱ řȱ ŗŝŞȱ śȱ ŝŞŘ ȬŗŘȱ Ŗȱ Ŗȱ Śȱ Şȱ Řȱ ŝȱ Ŝȱ ŗś ȬŗŘȱ ŗȱ Ŝŝȱ ŝȱ ŗŚȱ Ŗȱ Ŗȱ Şȱ Şŗ Ȭŗřȱ Ŗȱ Ŗȱ Şȱ ŝǰŘŖşȱ řȱ ŗǰŖşşȱ ŗŗȱ ŞǰřŖŞ Ȭŗřȱ Ŗȱ Ŗȱ Ŝȱ ŘŜşȱ Ŗȱ Ŗȱ Ŝȱ ŘŜş Ȭŗřȱ Ŗȱ Ŗȱ Śȱ ŗřśȱ Ŗȱ Ŗȱ Śȱ ŗřś

106 PART THREE: REGULATION PartOF Three: SECURITIES Regulation of SecuritiesMARKET Market

ȱȱȱȱȱȱȱȱȱ ȱȱęȱ Section 11 of the SEBI Act, 1992

1. INTERMEDIARIES Ȅȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ I. Streamlining the Process of applicant. Before the expiry of their initial Initial / Permanent Registration of registration, if they so desire, they may apply Intermediaries for “permanent registration” in order to The process for streamlining the continue their business. registration and approvals by enhancing During 2012-13, 11 merchant bankers, the transparency continued during the year three registrars to an issue and share transfer 2012-13. The policy of sending response to agents, 38 depository participants, four the applicants, in a time-bound manner i.e., bankers to an issue and two debenture within 30 days was adhered to. The status trustees were granted new/ initial registration. of processing of each application for Initial/ Further, 62 merchant bankers, 29 registrars Permanent registration of intermediaries to an issue and share transfer agents, 176 while clearly indicating why it is pending depository participants, one credit rating and also whether pending with SEBI or with agency, one underwriter, 24 bankers to an the intermediary, was displayed on SEBI issue and 12 debenture trustees were granted website on a monthly basis. With a view permanent registration. Thus, overall 58 to ensure higher level of transparency and new entities were granted initial registration accountability within SEBI, it is also mentioned whereas 305 existing entities were given on the website that in case any application permanent registration (Table 3.1 and 3.1a). ȱĴǰȱȱȱȱȱ hesitate to approach the concerned Division To bring uniformity in the KYC Chief or the Executive Director of the Market Requirements for the securities market and Intermediaries Regulations and Supervision set up a mechanism wherein one or more Department. The respective e-mail IDs of SEBI regulated KYC Registration Agency ȱĜȱȱȱ¢ǯ (KRA) shall undertake KYC for all clients in The practice of seeking details of the securities market. As on March 31, 2013, corrective measures taken by the applicants ȱȱęȱ ȱȱ ȱ ȱǻȱ where administrative and quasi-judicial 3.1). actions have been initiated by SEBI against It was decided to allow Qualified them or their associate companies, at the time Foreign Investors (QFI), to directly invest in of processing the applications for registration Indian equity market in order to widen the or other approvals, has greatly improved the ȱȱǰȱĴȱȱȱǰȱ compliance culture among the intermediaries. reduce market volatility and to deepen the Indian capital market. These investments can II. Registered Intermediaries Other be made by opening a demat account with than Stock Brokers and Sub-Brokers SEBI registered Depository Participants who Pursuant to the amendment to the meet the prescribed eligibility criteria and respective Regulations in 2011-12, have got prior approval from SEBI. These applicants found eligible are granted “initial ȱ ȱ ȱ ȱ ęȱ ȱ ǻǼǯȱ ȱ

107 Annual Report 2012-13

on March 31, 2013, there are 31 DPs at CDSL were 260 cases of cancellation/ surrender and 29 DPs at NSDL who have got the prior of brokers in 2012-13 compared to 184 in approval to act as QDP. (Table 3.1) 2011-12. The total number of registered stock brokers as on March 31, 2013, increased III. Registration of Stock Brokers to 10,128 from 9,307 in 2011-12 (Table 3.2). During 2012-13, 1,081 new stock brokers Applications of brokers and sub-brokers in were registered with SEBI in cash segment the process of registration are given in Table compared to 256 in 2011-12. Further, there 3.2a.

Table 3.1: Registered Intermediaries other than Stock Brokers and Sub-Brokers (Number) As on March 31 Absolute Percentage Type of Intermediary 2012 2013 Variation Variation 1 2345 Registrar to Issue and Share Transfer Agent 74 72 -2 -2.7 Merchant Banker 200 199 -1 -0.5 Underwriter 3 3 0 0.0 DPs - NSDL 287 288 1 0.3 of which that acts as QDP Na 29 29 Na DPs - CDSL 567 577 10 1.8 of which that acts as QDP Na 31 31 Na Credit Rating Agency 6 6 0 0.0 Bankers to an Issue 56 57 1 1.8 Debenture Trustee 32 32 0 0.0 KYC (Know Your Client) Registration Agency (KRA) 0 5 5 NA

Table 3.1a: Intermediaries other than Stock Brokers and Sub-Brokers in the Process of Registration Registration Granted Application received During the Year 2012-13 Pending as on during the Year (including those March 31, Type of Intermediary 2012-13 applications received 2013 in previous year) Initial Permanent Initial Permanent Initial Permanent 1 234567 Registrar to Issue and Share Transfer Agent 538329315 Merchant Banker 10 38 11 62 7 15 Underwriter 020101 Depository Participant 31 103 38 176 11 37 Credit Rating Agency 000100 Bankers to an Issue 5 34 4 24 5 12 Debenture Trustee 1 12 2 12 0 4 Total 52 227 58 305 26 84

108 Part Three: Regulation of Securities Market

Table 3.2: Registered Stock Brokers (Number) Details 2011-12 2012-13 123 Registered Stock Brokers in the beginning of the year 9,235 9,307 Addition during the Year 256 1,081 Reconciliation / Cancellation/ Surrender of Memberships 184 260 Registered Stock Brokers as on March 31 9,307 10,128

Table 3.2a: Stock Broker and Sub-Broker Applications under the Process of Registration* (Number) Category of Application Number of Applications under Process 12 Registration – Brokers in Cash Segment 96 Registration – Brokers in Equity Derivatives Segment 148 Registration – Brokers in Currency Derivatives Segment 81 Sub-broker 42 ǱȱǻȘǼȱȱȱȱȱȱěȱȱ£ǯȱȱ¡ȱȦȱȱȱȱ ȱȱȱ Ȧȱęȱȱȱȱȱ ǯȱȱȱȱȱȱȱřŗǰȱŘŖŗřǯȱ

The stock exchange MCX SX was In equity derivative segment, 34 trading granted permission by SEBI to commence members (TM), three clearing members trading in equities during the year 2012-13. (CM) and eight self-clearing members 458 Stock Brokers were granted registration (SCM) were granted registration at NSE for trading on this exchange. Futures and Options (F&O) segment during The number of registered brokers was 2012-13. In case of BSE F&O segment, the highest in NSE (1,416) followed by BSE ȱ ęȱ ȱ Ŝřǰȱ ȱ ȱ (1,361), Inter-Connected Stock Exchange (ISE) three respectively. 313 trading members (883) and Calcutta Stock Exchange (CSE) and 72 clearing members were granted (869) (Table 3.3). The number of corporate registration at MCX-SX in Futures and brokers were also highest in NSE (1,261) Options (F&O) segment during the same followed by BSE (1,162) and OTCEI (496). period. Further, four trading members Corporate brokers constitute 89.1 percent were granted registration at Madras Stock of the total stock brokers at NSE whereas Exchange (MSE), 59 trading members were the corporate brokers constituted 85.4 granted registration at Madhya Pradesh Stock percent and 76.7 percent at BSE and OTCEI, Exchange (MPSE) and 17 trading members respectively. Highest number of stock brokers ȱ ȱ ȱ ȱ Ĵȱ ȱ in ‘proprietorship’ category was at CSE Exchange (CSE) during 2012-13 (Tables 3.4). (616), followed by ISE (537). Stock brokers in In the currency derivatives segment, ‘partnership’ category were highest in NSE total number of registered members with (81), followed by CSE (43). Bhubaneswar and NSE, BSE, MCX-SX and USE in various Coimbatore Stock Exchanges did not have categories were 1,074, 189, 1,040 and 473 any brokers in the ‘partnership’ category respectively at the end of March 31, 2013 ǻȱřǯřǼǯȳ (Table 3.5).

109 Annual Report 2012-13

ȱřǯřǱȱęȱȱȱȱȱȱȱȱȱȱȱ Ș Proprietorship Partnership Corporate** Total Stock Exchange 2012 2013 2012 2013 2012 2013 2012 2013 Nos. Percent Nos. Percent Nos. Percent Nos. Percent Nos. Percent Nos. Percent Nos. Nos. 1 23456789101112131415 Ahmedabad 137 40.3 137 40.4 21 6.2 22 6.5 182 53.5 180 53.1 340 339 Bangalore 134 49.1 127 48.7 6 2.2 6 2.3 133 48.7 128 49.0 273 261 BSE 181 13.2 171 12.6 30 2.2 28 2.1 1,164 84.6 1,162 85.4 1,376 1,361 Bhubaneswar 195 91.1 185 91.6 0 0.0 0 – 19 8.9 17 8.4 214 202 Ĵȱ ŜŚŚȱ ŝŘǯŘȱ ŜŗŜȱ ŝŖǯşȱ Śřȱ ŚǯŞȱ Śřȱ śǯŖȱ ŘŖŚȱ ŘŘǯşȱ ŘŗŖȱ ŘŚǯŘȱ ŞşŘȱ ŞŜş Cochin 350 79.4 320 78.6 9 2.0 9 2.2 82 18.6 78 19.2 441 407 Coimbatore 88 64.7 87 64.4 0 0.0 0 0.0 48 35.3 48 35.6 136 135 Delhi 190 38.2 183 37.8 32 6.4 30 6.2 275 55.3 271 56.0 497 484 Gauhati 90 95.7 59 95.2 1 1.1 1 1.6 3 3.2 2 3.2 94 62 ISE 552 60.2 537 60.8 28 3.1 27 3.1 336 36.6 319 36.1 917 883 Jaipur 447 94.9 434 94.8 6 1.3 6 1.3 18 3.8 18 3.9 471 458 Ludhiana 215 70.3 213 70.1 2 0.7 2 0.7 89 29.1 89 29.3 306 304 MPSE 162 77.9 187 73.1 1 0.5 1 0.4 45 21.6 68 26.6 208 256 Madras 112 51.9 104 52.5 14 6.5 13 6.6 90 41.7 81 40.9 216 198 NSE 72 5.1 74 5.2 80 5.6 81 5.7 1,269 89.2 1,261 89.1 1,423 1,416 OTCEI 145 21.0 135 20.9 18 2.6 16 2.5 528 76.4 496 76.7 691 647 Pune 123 67.6 117 67.6 7 3.9 7 4.1 52 28.6 49 28.3 182 173 UPSE 244 77.0 210 75.0 3 1.0 3 1.1 70 22.1 67 23.9 317 280 Vadodara 245 78.3 242 78.1 3 1.0 3 1.0 65 20.8 65 21.0 313 310 MCX-SX 0 0.0 20 4.4 0 0.0 10 2.2 0 0.0 428 93.5 0 458 * As on March 31 of the respective year. ȘȘȱ ȱȱȱęȱȱȱȱȱȱȱ ȱȱ¢ȱȱȱǯ Note: Percent ownership represents category-wise percent share for a particular exchange.

110 Part Three: Regulation of Securities Market

Table 3.4: Number of Registered Members in Equity Derivatives Segment (Number) NSE BSE MSE MPSE CSE MCX-SX Regis- Regis- Regis- Regis- Regis- Regis- Regis- Regis- Regis- Regis- Regis- Regis- Type trations trations trations trations trations trations trations trations trations trations trations trations of granted at the granted at the granted at the granted at the granted at the granted at the Member during end of during end of during end of during end of during end of during end of 2012-13 March 2012-13 March 2012-13 March 2012-13 March 2012-13 March 2012-13 March 2013 2013 2013 2013 2013 2013 12345678910111213 Trading Member 34 1,374 63 993 4 30 59 89 17 17 313 313 Clearing Member 327071480000007272 Self Clearing Member 845434100000000 Total 45 2,098 73 1,182 4 30 59 89 17 17 385 385

Table 3.5: Number of Registered Members in Currency Derivatives Segment (Number) NSE BSE MCX-SX USE Type of Registration Registrations Registrations Registrations Registrations Registrations Registrations Registrations Member during at the end of during at the end of during at the end of during at the end of 2012-13 March 2013 2012-13 March 2013 2012-13 March 2013 2012-13 March 2013 1 23456789 Trading Member 45 878 0 158 91 864 12 414 Clearing Member 5 186 0 31 8 163 0 56 Self-clearing Member 2100 012130 3 Total 52 1,074 0 189 111 1,040 12 473

111 Annual Report 2012-13

IV. Registration of Sub-brokers presence of APs has ensured the increase The number of registered sub-brokers in reach of the markets for exchange traded has declined by 9.1 percent from 77,165 products, as intended while introducing the as on March 31, 2012 to 70,178 as on concept of APs (Table 3.6). March 31, 2013. However, the number of V. Recognition of Stock Exchanges Authorised Persons (APs) as approved by the stock exchanges in accordance with SEBI The stock exchanges are granted Guidelines, has increased substantially (27.1 recognition by SEBI under Section 4 of the percent) during the year (from 98,533 as on Securities Contracts (Regulation) Act, 1956. March 31, 2012 to 1,25,273 as on March 31, Presently, there are 21 stock exchanges 2013). Stock brokers were allowed to provide recognised under SC(R)A. Out of which, market access to clients through APs, in eight stock exchanges have permanent addition to sub-brokers, with a view to recognition. (Table 3.7) During the year, expand the reach of the markets for exchange renewal of recognition was granted to 12 traded products, vide SEBI circular dated stock exchanges. Application of Coimbatore November 6, 2009. Thus, while number of Stock Exchange Ltd. for exit is under sub-brokers has come down, the increased examination. Beside, the Hyderabad Securities

Table 3.6: Registered Sub-brokers* 2012 2013 Stock Exchange Number Percentage of Total Number Percentage of Total 1 2345 Ahmedabad 81 0.1 77 0.1 Bangalore 158 0.2 158 0.2 Bhubaneswar 16 0.0 14 0.0 BSE 33,852 43.9 31,635 45.1 Ĵȱ ŝŗȱ Ŗǯŗȱ ŝŗȱ Ŗǯŗ Cochin 41 0.1 41 0.1 Coimbatore 20 0.0 20 0.0 Delhi 222 0.3 200 0.3 Gauhati 4 0.0 4 0.0 Interconnected 1 0.0 0 0.0 Jaipur 30 0.0 30 0.0 Ludhiana 28 0.0 21 0.0 Madhya Pradesh 5 0.0 5 0.0 Madras 107 0.1 103 0.1 NSE 42,327 54.9 37,600 53.6 OTCEI 14 0.0 14 0.0 Pune 156 0.2 156 0.2 Ĵȱȱ řȱ ŖǯŖȱ Řȱ ŖǯŖ Vadodara 29 0.0 27 0.0 Total 77,165 100 70,178 100 * As on March 31 of the respective year.

112 Part Three: Regulation of Securities Market

and Enterprises Ltd (erstwhile Hyderabad ȱ¡ȱȱĴȱȱ¡ȱ Stock Exchange) has been granted exit by operationalised trading with NSE. SEBI vide order dated January 25, 2013. (Table 3.8) VII. Registration of Foreign Institutional Investors VI. Memorandum of Understanding Sub-accounts and Custodians ǻǼȱ ȱȱ¡Ǳ During 2012-13, there was a decrease in Pursuant to Section 13 of Securities the number of Foreign Institutional Investors Contracts (Regulation) Act, 1956, stock (FIIs) registered with SEBI. As on March exchanges can enter into an MoU for trading. 31, 2013, there were 1,757 FIIs registered In this regard, Madhya Pradesh Stock with SEBI as compared to 1,765 a year ago, Exchange operationalised trading under such showing a decrease of eight (in number) MoU with NSE and BSE. Further, Madras during the year. However, the number

ȱřǯŝǱȱȱ¡ȱ ȱȱ Sr. No. Exchanges Recognition 12 3 1 Ahmedabad Stock Exchange Permanent 2 Bangalore Stock Exchange Permanent 3 Bombay Stock Exchange Permanent ȱ Śȱ Ĵȱȱ¡ȱ 5 Delhi Stock Exchange Permanent 6 Madhya Pradesh Stock Exchange Permanent 7 Madras Stock Exchange Permanent 8 National Stock Exchange of India Permanent

ȱřǯŞǱȱ ȱȱȱ ȱȱȱ¡ȱȱŘŖŗŘȬŗř

Sr. Date of Exchanges Period ȱǯȱ ȱ ę 12 3 4 1. Ludhiana Stock Exchange Apr 27, 2012 Apr 28, 2012 – Apr 27, 2013 2. Gauhati Stock Exchange Apr 30, 2012 May 1, 2012 – Apr 30, 2013 ȱ řǯȱ Ĵȱȱȱ¡ȱ ¢ȱŘśǰȱŘŖŗŘȱ ȱŖřǰȱŘŖŗŘȱȮȱ ȱŖŘǰȱŘŖŗř 4. Bhubaneswar Stock Exchange Jun 05, 2012 Jun 05, 2012 – Jun 04, 2013 5. OTC Exchange of India Aug 22, 2012 Aug 23, 2012 – Aug 22, 2013 6. Pune Stock Exchange Aug 29, 2012 Sept 02, 2012 – Sept 01, 2013 7. MCX Stock Exchange Ltd. Sept 11, 2012 Sept 16, 2012 – Sept 15, 2013 8. Cochin Stock Exchange Nov 6, 2012 Nov 08, 2012 – Nov 07, 2013 9. Interconnected Stock Exchange of India Nov 09, 2012 Nov 18, 2012 – Nov 17, 2013 10. Vadodara Stock Exchange Dec 26, 2012 Jan 04, 2013 – Jan 03, 2014 11. Jaipur Stock Exchange Jan 8, 2013 Jan 09, 2013 – Jan 08, 2014 12. United Stock Exchange of India Mar 20, 2013 Mar 22, 2013 – Mar 21, 2014

113 Annual Report 2012-13

of registered sub-accounts has increased VIII. Registration of Collective marginally to 6,335 as on March 31, 2013 Investment Schemes (CIS) compared to 6,322 as on March 31, 2012 As on March 31, 2013, there was only (Table 3.9). ȱ ȱ ǰȱ £ǯȱ Ȧǯȱ ȱ ȱ Table 3.9: Number of Registered FIIs, Investment Management Company Ltd. Sub-accounts and Custodians which was registered during 2008-09. (Number) As on As on IX. Registration of Mutual Funds Particulars March March 31, 2012 31, 2013 As on March 31, 2013, 52 mutual funds 123were registered with SEBI, of which 45 were Number of FIIs 1,765 1,757 in the private sector and seven (including Number of Sub-accounts 6,322 6,335 UTI) were in public sector. During 2012-13, Number of Custodians 19 19 ȱ ȱ ȱ ȱ £ǯȱ ȱ ȱ Fund, SREI Mutual Fund, IIFCL Mutual ȱ ȱ ęȱ ¢ǰȱ ȱ ȱ ȱ ŝŞȱ Fund and IL&FS Mutual Fund were granted fresh FIIs were registered. Further, 581 fresh registration of which SREI Mutual Fund, sub-account were registered with SEBI during IIFCL Mutual Fund and IL&FS Mutual Fund ŘŖŗŘȬŗřǯȱ ȱ ȱ śŜȱ ěȱ ȱ are dedicated Mutual Funds for Infrastructure have been registered by SEBI out of which Debt Fund (IDF). USA has the maximum number of 578, followed by UK (207), Luxembourg (125), During 2012-13, Fidelity Mutual Fund Mauritius (101), Canada (79) and Singapore was acquired by L&T Mutual Fund following (75) respectively. Status of registration of FIIs, which registration of Fidelity Mutual Fund sub-accounts and custodians during 2012-13 was cancelled. AIG Mutual Fund sold its is provided in Table 3.9a. entire stake to PineBridge Investments

Table 3.9a: Status of Registration of FII, Sub-accounts and Custodians during 2012-13 FII Sub Account Custodian Particulars Fresh Fresh Fresh Regi- Total Regi- Total Regi- Total stration stration stration 1 2345678910 I. Application received for fresh registration / renewal 106 422 528 571 1458 2029 0 17 17 a. Applications registered / renewed 78 384 462 581 1416 1997 0 16 16 b. Applications pending# 26 79 105 107 277 384 2 1 3 c. Application rejected / returned* 3035 05NANANA Șȱ ȱȱȱȱȱ ȱȱȱȱȱȱ¢ȱȱȱĴȱȱ ȱȱ got subsequently registered or rejected. Ǜȱ ȱȱȱȱȱȱȱȱȱȱřŗǰȱŘŖŗřǯȱȱęȱȱȱȱ applications which were received before FY 2012-13.

114 Part Three: Regulation of Securities Market

Japan Co. Ltd following which registration SEBI notified Alternative Investment of AIG Mutual Fund was cancelled and it Funds (AIFs) Regulations, 2012 (AIF was renamed to PineBridge Mutual Fund. Regulations, 2012) on May 21, 2012. AIF are Bank of India acquired 51% stake in Bharti basically funds established or incorporated AXA Mutual Fund, pursuant to which its in India for the purpose of pooling in name was changed to BOI AXA Mutual capital from Indian and foreign investors for Fund. Invesco Hong Kong Limited acquired investing. During 2012-13, 42 AIF have been 49 percent stake in Religare Mutual Fund registered with SEBI. (Table 3.10). Out of 42 registered Alternative Investment Funds (AIFs), Category I, II and ȱřǯŗŖǱȱȱ ȱ ȱ ȱ III AIFs are 13, 22 and 7 respectively. Further, SEBI (Number) out of the 13 AIFs registered in Category I, As on As on ȱ ȱ ęǰȱ ǰȱ ȱ ȱ ȱ ȱ ȱ Sector March March VCF, Infrastructure, SME and Social AIFs 31, 2012 31, 2013 respectively. 123 Public Sector (including UTI) 5 7 Private Sector 44 45 XI. Fees and Other Charges Total 49 52 Details of the amount of fees and other charges (un-audited) collected by SEBI from market intermediaries on both recurring X. Registration of Venture Capital and non-recurring basis is provided in Table Funds 3.12. During 2012-13, the total amount of There were 211 domestic and 182 foreign fees and other charges received was ` 149 venture capital funds registered with SEBI as crore (unaudited) as against ` 154.5 crore on March 31, 2013 compared to 207 and 175 in 2011-12 (audited). The recurring fee was funds respectively registered with SEBI as on 59.4 percent in 2012-13 as compared to 55.9 March 31, 2012 (Table 3.11). percent in 2011-12. The largest amount of ` 34.8 crore which was fully recurring in nature was collected from derivatives Table 3.11: Registered Venture Capital members’ registration, while the second Funds / AIFs largest recurring fee of ` 20 crore was (Number) collected from stock brokers and sub-brokers. As on As on In non recurring fee category, the highest VCFs March March ` 31, 2012 31, 2013 fee was collected from FIIs ( 11.6 crore) ` 123followed by fees from mutual funds ( 11.2 ` VCF 207 211 crore), takeover fees ( 10.3 crore), and sub- ` FVCI 175 182 accounts ( 10.2 crore). AIFs Na 42

115 Annual Report 2012-13

Table 3.12: Fees and other Charges (` crore) 2011-12 2012-13 (Unaudited) Recu- Non-re- Total Recu- Non-re- Total Particulars rring curring Fees rring curring Fees fees fees Received fees fees Received # ## # ## (Un- audited) 1 234567

ěȱȱȱȱęȱ ŖǯŖȱ ŗřǯŞȱ ŗřǯŞȱ ŖǯŖȱ Śǯşȱ Śǯş Merchant Bankers 1.5 2.6 4.1 3.0 2.0 5.0 Underwriters 0.0 0.0 0.0 0.1 0.0 0.1 Portfolio Managers 3.4 3.6 7.0 2.8 2.5 5.2 Registrars to an Issue and Share Transfer Agents 0.1 0.0 0.1 0.4 0.1 0.5 Bankers to an Issue 0.1 0.2 0.3 1.1 0.8 1.9 Debenture Trustees 0.1 0.2 0.3 0.5 0.4 0.9 Takeover fees 0.0 6.5 6.5 0.0 10.3 10.3 Mutual Funds 2.3 11.9 14.2 2.4 11.2 13.6 Stock Brokers and Sub-Brokers 14.4 0.0 14.4 20.0 0.0 20.0 Foreign Institutional Investors 0.0 14.1 14.1 0.0 11.6 11.6 Sub Account – Foreign Institutional Investors 0.0 11.2 11.2 0.0 10.2 10.2 Depositories 0.2 0.0 0.2 0.0 0.2 0.2 Depository Participants 0.1 0.9 1.0 0.1 2.2 2.3 Venture Capital Funds 0.0 1.7 1.7 0.0 0.2 0.2 Custodian of Securities 9.2 0.0 9.2 10.0 0.2 10.2 Approved Intermediaries under Securities Lending Scheme 0.1 0.0 0.1 0.0 0.0 0.0 Credit Rating Agencies 0.3 0.1 0.4 0.1 0.0 0.1 Listing Fees Contribution from Stock Exchanges 7.1 0.0 7.1 6.9 0.0 6.9 Alternative Investment Scheme 0.0 0.0 0.0 0.0 2.8 2.8 KYC Registration Agency 0.0 0.1 0.1 0.0 0.1 0.1 Foreign Venture Capital 0.0 1.2 1.2 0.0 0.8 0.8 Derivatives Members registration 39.5 0.0 39.5 34.8 0.0 34.8 Informal Guidance Scheme 0.0 0.1 0.1 0.0 0.0 0.0 Regulatory Fees 8.2 0.0 8.2 6.4 0.0 6.4 Total 86.5 68.1 154.5 88.5 60.5 149.0

Notes: # Recurring fees: Fees which is received on annual / 3-yearly / 5-yearly basis (includes Fee / Service Fee / annual fee / Listing Fees from exchanges / Regulatory Fees from stock exchanges). ǛǛȱȬȱǱȱȱ ȱȱȱȱȱȱǯȱ ȱȱȱěȱȱȱȦȱȱ Fee / Application Fee / Takeover Fees / Informal Guidance Scheme / FII Registration and FII Sub – Accounts Registration. Note: 1. Since the amount realised by way of penalties on or after 29.10.2002 has been credited to the Consolidated Fund of India, therefore, the same has not been included in the fees income of SEBI since 2003-04. 2. Stock brokers and sub-brokers fee includes annual fees and turnover fees. 3. Stock brokers and derivatives fees are of recurring nature and depend on the trading turnover of the stock brokers and members of derivatives segment.

116 Part Three: Regulation of Securities Market

2. CORPORATE RESTRUCTURING Regulation 4 of Takeover Regulations deals with applications for seeking exemption I. Substantial Acquisition of Shares from open offer obligations provided in and Takeovers Chapter III of Takeover Regulations (referred As on March 31, 2012, total 32 draft as Takeover Panel Applications). A total of 22 Ĵȱȱěȱȱȱȱȱ ȱ applications were examined during 2012-13, ȱ ȱ ǯȱȱȱęȱ¢ȱ of which, in 10 applications, exemption was ŘŖŗŘȬŗřǰȱ ȱ ŝŜȱ ȱ Ĵȱ ȱ ěȱ ȱ ȱ ȱ ěȱ ǰȱ ȱ ȱ ęȱ ȱ ȱ ǻȱ ȱ ȱ ȱ applications were returned/ withdrawn/ ęȱ ȱ ȱ ȱ ȱ ȱ rejected (Table 3.13). There were nine ŝŚȱ ȱ ȱ ęȱ ȱ ȱ ȱ Takeover Panel applications pending as on Regulations) and observations were issued on March 31, 2013. ŞŝȱȱĴȱȱěȱȱȱ¢ȱȱŘŗȱ ȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬŗřǰȱ ŞŖȱ ȱĴȱȱěȱ ȱȱ ȱ ȱ offers were launched for fulfilling open for issuance of observations as on March 31, ěȱ ǯȱ ȱ ŗŖȱ ǰȱ ȱ ȱ 2013 (Table 3.13). ¡ȱȱȱěȱǯȱǻȱ 3.14) ȱřǯŗřǱȱȱ ȱ ȱ Ĵȱ ȱ ěȱ for Open Offers filed under ȱřǯŗŚǱȱȱěȱȱ¡ȱȱ Regulation 18(1) of SEBI ȱě (SAST) Regulations, 1997 {Old Takeover Regulations} and under (Number) Regulation 16(4) of SEBI (SAST) Exemption ȱ ȱ ȱěȱ ȱ ǰȱŘŖŗŗȱǿ ȱȱ ȱ ȱ ȱ ě Regulations} during 2012-13 123 Status Number 2009-10 76 18 of cases 2010-11 101 16 122011-12 71 9 ȱĴȱȱěȱȱȱě 2012-13 80 10 ȱĴȱȱěȱȱȱȱřŗǰȱŘŖŗŘȱ řŘ ȱĴȱȱěȱȱȱŘŖŗŘȬŗřǰȱ under Old Takeover Regulations 2 ȱĴȱȱěȱȱȱŘŖŗŘȬŗřǰȱ II. Buyback under New Takeover Regulations 74 The total of 20 buyback offers were Total 108 received during 2012-13 indicating a decrease Observations issued by SEBI during 2012-13 87 ȱřŗȱȱȱŘşȱ¢ȱěȱȱ ȱĴȱȱěȱȱȱȱȱ during 2011-12. Out of the 17 cases filed March 31, 2013 21 during the year for buyback through open Takeover Panel Applications Applications as on March 31, 2012 10 market purchase method, three cases were Applications received during 2012-13, opened and closed and 14 cases were opened under New Takeover Regulations 12 but did not close. Further, there were three Total Applications 22 ȱȱ¢ȱȱȱěȱ ȱ Applications disposed of during 2012-13 13 opened and also closed during 2012-13 (Table Applications in process as on March 31, 2013 9 3.15).

117 Annual Report 2012-13

Table 3.15: Buyback cases during 2012-13 Buy-back Size Actual amount utilized for Buy-back Cases No. of Cases (` crore) buy-back of securities (`crore) 1234 Buy-back through Open Market Cases Received, Opened and Closed 3 332 264.1 Cases Received, Opened but not Closed 14 753.2 Na ¢Ȭȱȱȱě Cases Received, Opened and Closed 3 191.6 191.6

ȱ ȱ ȱ ¡ȱ ¢ȱ ěȱ ȱ ȱȱ¡ȱȱěȱȱ¢ȱ and closed during 2012-13 as compared to of their audit/inspections and the action ŗŘȱ ěȱ ȱ ŘŖŗŗȬŗŘǯȱ ȱ ȱ ¢ȱ taking process. ěȱ£ȱȱŘŖŗŘȬŗřȱ ȱ` 1,277 crore as ȱ ȱ ¢ȱ ěȱ £ȱ ȱ ` 13,058 I. Promotion and Regulation of Self crore in 2011-12 indicting a decrease of 90.2 Regulatory Organisations percent over the previous year. It was also SEBI (Self Regulatory Organisations) ȱȱȱ¢ȱěȱ ȱ ȱ ǰȱŘŖŖŚȱ ȱęȱȱ¢ȱ opened and closed during 2012-13 that there 19, 2004 with the objective to promote ȱȱȱ£ȱȱřśǯŝȱȱȱ organisation of intermediaries representing ȱěȱ£ǯȱȱŘŖŗŘȬŗřǰȱȱȱ a particular segment of the securities market ěȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ as a self regulated entity / organisation. For completely utilised. recognition of organisation of intermediaries as SROs, SEBI held discussions with various 3. SUPERVISION bodies like Association of Merchant Bankers Supervision of intermediaries through of India (AMBI), Association of NSE Members ȬȱȱěȬȱǰȱȱȱ of India (ANMI) and Registrars Association of adjudications in case of violation of rules and India (RAIN). The various measures taken in regulations and administrative and statutory 2012-13 for promotion and regulation of Self actions are essential features of effective Regulatory Organisations are: enforcement by SEBI. ǯȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ SEBI conducts inspections directly as distributors, SEBI (Self Regulatory well as through organisations like stock Organisations) (Amendments) exchanges, depositories, etc. Inspections on Regulations, 2013 w.e.f. January 7, a periodic basis were conducted to verify ŘŖŗřȱ ȱ ȱ ȱ ęȱ the compliance levels of intermediaries. of distributor and issuer, revised the Special purpose i.e. theme based inspections ęȱ ȱ ¢ȱ ȱ ȱ were also conducted on the basis of investor that a distributor shall be deemed to be complaints, references, surveillance reports, an intermediary. specific concerns, etc. Special purpose B. Under Regulation 14 of SEBI (Investment inspections of major stock exchanges as well Advisers) Regulations, 2013, SEBI may as the depositories were also carried out in recognise any body or body corporate

118 Part Three: Regulation of Securities Market

for the purpose of regulating investment A. Inspection of Stock Brokers advisers and delegate administration During the year 2012-13, 162 stock and supervision of investment advisers brokers have been inspected as against 69 to such body or body corporate. As ȱ ȱ ¢ȱ ŘŖŗŗȬŗŘǯȱ ęȱ ȱ decided in the Board Meeting in which risk-based inspections were carried out the Regulations were approved, SEBI during the year. The focus of the inspections will directly register and regulate the included themes such as compliance of Investment Advisors till such time an norms regarding Anti-money Laundering, SRO is recognised for the purpose. Ĵȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ basis, Segregation of clients and proprietary II. Inspection of Market funds/securities, KYC norms, clearing Intermediaries operations, etc. During inspections, the The number of inspections has compliance of specific provisions of SEBI substantially increased from 111 in the Ȧȱȱ ȱęǯȱȱȱ ęȱ ¢ȱ ŘŖŗŗȬŗŘȱ ȱ řŖŖȱ ȱ ȱ ęȱ of inspection of stock brokers and sub-brokers year 2012-13. The inspection process of carried out are given in Table 3.16. intermediaries has been further streamlined with a view to improve the quality such Table 3.16: Inspection of Stock Brokers/Sub- as selection of themes for inspections, brokers questionnaire for inspections and follow up Particulars 2011-12 2012-13 action. 123 ȱ ȱ ęȱ ȱ ȱ ȱ Inspections Completed – 69 162 considering the comments of intermediaries, Stock Brokers ¢ȱ ȱę¢ȱȱȱȱȱ Inspections Completed – 12 39 Sub - brokers where improvement was required by them. They were also required to report to SEBI Total 81 201 about the corrective steps taken by them and also place the same before their board/ In compliance with the requirement of partners/proprietor, as the case may be. These inspecting all active members by the stock steps taken by SEBI have improved the level exchanges, the number of entities inspected of compliance among the intermediaries. by the stock exchanges is given in Table 3.16a: Administrative and quasi-judicial actions Additionally, stock brokers/clearing ȱ ȱ ȱ ȱ ȱ ęȱ ȱ members are required to carry out complete ȱȱȱȱĴȱ¢ȱȱ internal audit on a half yearly basis by intermediaries. independent auditors. By and large, all the

Table 3.16a: Inspection by Stock Exchange/ Clearing Corporation (Number) Year NSE BSE MCX-SX USE 12345 2011-12 1,044 746 133 99 2012-13 1,384 936 245 89

119 Annual Report 2012-13

active stock brokers/clearing members of the taken in case of defaults by issuer companies. four major stock exchanges (NSE, BSE, USE Inspection of Portfolio Managers were ȱ ȬǼȱ ȱ Ĵȱ ȱ ȱ conducted so to ascertain various compliance audit reports for the half year ended March requirements including the Know Your 31, 2012 and September 30, 2012, to the Client (KYC) due diligence carried out by respective stock exchanges. the Portfolio Manager. A total of seven The system of internal audits of stock inspections were carried out. Further, 58 brokers by outside professionals, inspections pre-registration/renewal visits of portfolio by stock exchanges and by SEBI has improved managers were conducted. This was primarily the compliance level of stock brokers. done to check the general compliance level in the portfolio managers. B. Inspection of Other Intermediaries During 2012-13, inspections were Special focus inspections of inter- completed for 51 depository participants, 16 mediaries are undertaken by SEBI to ascertain ȱǰȱęȱȱȱǰȱ ȱ¡ȱȱȱȱęȱǯ 10 debenture trustees and 17 RTI & STA. The SEBI carried out inspection of merchant total number of inspections conducted by bankers to check the due diligence exercised SEBI of these intermediaries has increased in respect of pre-issue and post-issue activities. substantially during the year, from 30 in 2011- Apart from such due diligence inspections, 12 to 99 in 2012-13 (Table 3.17). There was inspections of merchant bankers were also special focus on follow-up action after the carried out to ascertain compliance with SEBI inspections so that corrective steps are taken Circular on disclosure of track record of public by the intermediaries. issues managed by merchant bankers. Table 3.17: Inspection of other Market Inspection of registrars to an issue was Intermediaries carried out to check the allotment process (Number) followed and the redressal of investor Particulars 2011-12 2012-2013 complaints. Besides, inspections of share 123 transfer agents including in-house share transfer agents were conducted to ascertain Debenture Trustee 3 10 the process followed by them in executing Registrar to Issue and Share Transfer Agent investor requests such as transmission, etc. (RTI&STA) 2 17 and the Disaster Recovery and Business Merchant Banker 7 16 Continuity Plan (DR&BCP) adopted by them. Depository Participant 13 51 SEBI conducted inspections of debenture Credit Rating Agency 5 5 trustees based on the number of public issues Total 30 99 ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ with the applicable regulatory and statutory requirements with focus on their systems III. Inspection of Depositories and controls with respect to monitoring of During the inspection of depositories, payment of interest/ redemption amount, a review of the market operations, processing of investor grievances and action £ȱ ȱ ȱ ȱ

120 Part Three: Regulation of Securities Market

control of the depository is conducted to / grant of its recognition under section 4 ascertain as to whether:- of the SC(R) Act, 1956. a. The procedures and practices of the During the year 2012-13, comprehensive depository are in compliance with the inspections were carried out at the following Depositories Act 1996, SEBI (Depositories stock exchanges and Participants), Regulations, 1996, a. MCX Stock Exchange (MCX-SX) SEBI circulars, the bye-laws etc. b. United Stock Exchange (USE) b. The book of account are being maintained by the depository, in the ǯȱ Ĵȱȱȱ¡ȱǻǼ ȱ ęȱ ȱ ȱ ǻȱ d. Bombay Stock Exchange (BSE) and Participants), Regulations, 1996 ȱ ȱ ȱ ǰȱ ȱ ȱ ęȱ c. The complaint received by depositories year 2012-13, compliance inspections were from participants, issuers, issuer’s agent, carried at the following stock exchanges:- ę¢ȱ ȱ ȱ ¢ȱ ȱ ȱ a. Pune Stock Exchange (PSE) are redressed; b. Inter-connected Stock Exchange of India During 2012- 13, comprehensive (ISE) inspection of Central Depository Services c. Cochin Stock Exchange (India) Limited (CDSL) was conducted to ascertain the systems, procedures and d. Ludhiana Stock Exchange (LSE) practices in conducting the inspection of e. Gauhati Stock Exchange (GSE) depository participants by depositories and f. Jaipur Stock Exchange (JSE) desirability of adopting the practices by g. OTC Exchange of India (OTCEI) depositories. The Compliance inspections of IV. Inspection of Stock Exchanges exchanges were carried out for the purpose of renewal of recognition of stock exchange. During the inspection of stock exchanges, a review of market operations, V. Prevention of Money Laundering £ȱ ȱ ȱ ȱ control of the stock exchange is conducted to ¢ȱȱȱ¢ȱ£ȱ ascertain as to whether :- as one of the largest threats posed to the financial system of a country. The fight Ȋȱ ȱȱȱǰȱǰȱȱ ȱ ȱ ęȱ ȱ ȱ ȱ and growing market to the investors , emerging threat with grave consequences Ȋȱ ȱ£ȱ¢ȱȱȱȱ for both the political and economic standing in accordance with the SC(R) Act , 1956 of a jurisdiction. Rapid developments and and rules framed there under, ȱ ȱ ȱ ȱ ęȱ ȱ Ȋȱ ȱ ȱ ȱ ȱ ǰȱ together with improvements in technology guidelines and instructions issued by and communication channels continue to SEBI/ Government of India (GoI) from pose serious challenges to the authorities time to time and and institutions dealing with anti-money Ȋȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ laundering and combating financing of any, imposed on it at the time of renewal terrorism (AML and CFT).

121 Annual Report 2012-13

The Prevention of Money Laundering of intermediaries, such as, stock brokers, Act, 2002 (PMLA) and the rules framed there- depository participants and mutual funds. under, which have been brought into force SEBI has also carried out specific theme ȱ ěȱ ȱ ¢ȱ ŗǰȱ ŘŖŖśǰȱ ȱ ȱ ȱ based inspections of intermediaries focusing ęȱȱȱ¢ȱ ȱ ȱȱ on compliance with KYC norms (which the global war against money laundering and includes Client Due Diligence) and AML/ ęȱ ȱ ǯȱ ȱȱ ȱ ¢ȱ ȱǯȱ ȱȱȱȱęȱ been amended in December 2012 so that the purpose inspections of stock brokers to check legislative and administrative framework their compliance with KYC norms, which ȱ ȱ ¢ȱ ȱ ȱ ěȱ ȱ were conducted last year, in 2012-13 SEBI has capable of handling new evolving threats in carried out 40 special purpose inspections of ȱȱȱ¢ȱȱȱę stock brokers to check their compliance with of terror. the AML/CFT framework that has been put in As in the past, during 2012-13, SEBI has place. Further 35 inspections of stock brokers ȱ ȱ ȱ ěȱ ȱ ȱ and six depository participants focusing on ȱ ¢ȱ ȱ ȱ £ȱ ȱ compliance with KYC norms have also been risk emanating from money laundering and carried out in 2012-13. In addition to the ȱ ęȱ ȱ ȱ ȱ ǯȱ special purpose inspections conducted by The following steps have been taken in this SEBI, compliance with AML/CFT norms is also regard: ęȱ¢ȱȱȱ¡ȱȱȱ during their inspections of stock brokers and ǯȱ ęȱȱęȱ depository participants and also at the time of half yearly internal audits by independent To further tackle the risk posed by the professionals. Depository participants are misuse of complex legal structures, such also required to undergo concurrent audits as, companies, partnerships, trusts, etc. in with respect to their operations, which ¢ȱȱ ȱęȱ ȱǰȱ includes account opening/KYC/AML norms. SEBI, vide circular dated January 24, 2013 Appropriate sanctions are applied where has made it mandatory for its intermediaries AML/CFT violations/discrepancies are ȱ ¢ȱ ȱ ęȱ ȱ ǻǼȱ ȱ ȱ observed. Further, the penalty structure of the take all reasonable steps to verify the identity stock exchanges has been recently reviewed of such BOs for clients who are legal persons/ and the penalties imposed for KYC and arrangements. These guidelines are in line AML/CFT discrepancies/violations have been with the revised Financial Action Task Force suitably enhanced. (FATF) standards. (Box 3.1 may be referred for details) The table given below provides data on the number of members/participants against B. Inspections on AML/CFT related issues whom action for AML/CFT discrepancies has SEBI has appropriately included the been taken by the exchanges and depositories AML/CFT risks as part of its inspection in 2012-13:

122 Part Three: Regulation of Securities Market

¡ȱřǯŗȱǱȱ ȱȱ ęȱȱęȱ ȱ(contd.)

ęȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ¢ȱ ǰȱ ȱ ȱ Ěȱ ȱ ȱ and/or persons on whose behalf a transaction is being conducted, and includes a person who exercises ultimate ěȱȱȱȱȱȱȱǯ For clients other than individuals or trusts: Intermediaries are required to take reasonable measures to verify the identity of the: i. natural person, who, whether acting alone or together, or through one or more juridical person, exercises control through ownership or who ultimately has a controlling ownership interest in the client Controlling ownership interest means ownership of/entitlement to: Ǽȱ ȱȱŘśƖȱȱȱȱȱȱęȱȱȱȱǰȱ ȱȱȱȱȱȱ company, Ǽȱ ȱ ȱ ŗśƖȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ partnership, or Ǽȱ ȱȱŗśƖȱȱȱ¢ȱȱȱȱęȱȱȱȱǰȱ ȱȱȱȱ is an unincorporated association or body of individuals ii. In cases where there exists a doubt as to whether the person with the controlling ownership interest, as ȱ ǰȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ interests, the identity of the natural person exercising control over the juridical person through other means. a) Control through other means can be exercised through voting rights, agreement, arrangements or in any other manner. Ǽȱ ȱȱȱȱȱęȱȱȱȱǰȱȱ¢ȱȱȱȱȱ ȱ ȱȱȱȱȱȱȱĜǯ ȱȱ ȱȱȱǱȱȱȱȱȱȱǰȱȱ¢ȱȱ¢ȱȱęȱ ȱȱȱ ȱȱȱȱȱȱ¢ȱȱ¢ȱȱȱǰȱȱȱ¢ȱȱȱĴȱȱ ȱǰȱȱǰȱȱǰȱȱęȱ ȱŗśƖȱȱȱȱȱȱȱȱ¢ȱȱȱ ȱ¡ȱȱěȱȱȱȱȱȱȱȱȱȱȱ ǯ Exemption in case of listed companies: Where the client or the owner of the controlling interest is a company listed on a stock exchange, or is a majority-owned subsidiary of such a company, it is not necessary to identify and ¢ȱȱ¢ȱȱ¢ȱȱȱęȱ ȱȱȱǯ Applicability for foreign investors:ȱ ȱ ȱ ȱ ȱ Ȃȱ £ǯǰȱ ȱ ȱ ǰȱȱȱȱęȱȱ ǰȱ¢ȱȱȱ¢ȱȱęȱ¢ȱȱ ȱ ȂȱȱȱȱśǰȱŘŖŗŘǰȱȱȱȱȱęȱȱęȱ ȱȱȱǯ All registered market intermediaries have been directed to review their Know Your Client (KYC) and Anti-Money Laundering (AML) policies accordingly.

Table 3.18: Actions against AML / CFT Violations / Discrepancies Particular NSE BSE CDSL NSDL 1 2345 No. of members where AML discrepancies were observed and action taken 62 310 * 57 34 of which Advice issued 58 308 * 57 30 Fines levied 4 16 * 1 5 ȱȱęȱȱǻȱ`) 35,000 3,68,000 * 2,500 3,700 Șȱ ȱȱȱȱȱȱȱȱȱȱȱęȱȱǭȱȱȱȱ 31, 2013 irrespective of the period in which inspection was conducted

123 Annual Report 2012-13

Stock exchanges and depositories also clients from these high-risk jurisdictions. In conducted trainings/seminars for their the year 2012-13, SEBI circulated three such ȱ ȱ £ȱ ȱ ȱ ȱ FATF Public Statements dated June 22, 2012, ęȱȱȦȱ ȱȱȱ October 19, 2012 and February 22, 2013 to need to ensure continuous compliance with it. registered intermediaries for their compliance.

The Eurasian Group (EAG) had C. International co-operation on AML/CFT instituted a typology research project on topic related issues: “Money Laundering through the Securities SEBI has consistently been in touch with Market” and Securities and Exchange Board the global bodies and other Indian regulators of India (SEBI) was assigned leadership of ȱ ȱ Ĵȱ ȱ ȱ ¢ȱ ȱ this project in March 2011. In this regard, for AML robust in the Indian securities ȱ ȱ ȱ ęȱ ȱ ȱ ǰȱ ǯȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ based on information received from various Government delegation participated in the member jurisdictions, in the meetings of EAG plenary and working group meetings of plenary held in May 2012 and November FATF and ‘Eurasian Group on Combating 2012. ¢ȱȱȱęȱȱȱ (EAG)’, which is a FATF-style regional body (FSRB) and sets standards and promotes 4. SURVEILLANCE ěȱ ȱ ȱ ǰȱ ¢ȱ and operational measures for combating I. Market Surveillance Mechanism ¢ȱ ǰȱ ȱ ęȱ ȱ The key objective of surveillance is the other related threats to the integrity of the prevention and investigation of abusive, ȱęȱ¢ǯ manipulative or illegal trading practices in the securities markets. Market surveillance aims In order to protect the international to ensure orderly markets, where buyers and financial system from money laundering sellers are willing to participate because they ȱęȱȱȱǻȦǼȱȱȱ ȱęȱȱȱȱȱ¢ȱȱ to encourage greater compliance with the transactions. In Indian context, the primary AML/CFT standards, the Financial Action responsibility of market surveillance has been ȱȱǻǼȱęȱȱȱ entrusted to the stock exchanges and in order ȱ ȱ ęȱ ȱ ȱ ȱ ȱȱěȱȱ¢ȱ¡ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ independent surveillance cells have also been ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ established in stock exchanges. The objective The names of these jurisdictions are made of surveillance is to ensure that these cells public as part of a FATF Public Statement. ȱ ȱ ȱ ȱ ȱ ȱ ěȱ As required by the FATF Recommendations, manner. the Ministry of Finance, Government of India (GoI) circulates the FATF Public Statements to At SEBI, the Integrated Surveillance all regulators with an advice to disseminate Department (ISD) is in charge of overall ȱ ȱ ȱ ȱ ęȱ ȱ ȱ market surveillance and scope of its activities their supervision for applying enhanced includes monitoring market movements and due diligence measures when dealing with detecting potential breach of Regulations,

124 Part Three: Regulation of Securities Market

analysing the trading in securities and Presently Phase I and II are fully initiation of appropriate action wherever operational. Phase III is also complete and has warranted. been released for User Acceptance Test (UAT).

II. Integrated Market Surveillance ǯȱ ęȱȱȱ System (IMSS) during 2012-13 Integrated Market Surveillance System Major market movements in terms of (IMSS) continues to provide SEBI assistance percentage change are given below: in monitoring the securities market and a. On July 26, 2012, few mid cap scrips fell in discharging its regulatory functions by 20 percent, while the scrip M/s. Tulip ě¢ǯȱȱ¢ȱȱȱȱȱ ȱǯȱ ȱȱęȱȱ aberrations and generates alerts on a daily of 46.5 percent. ǯȱ ȱ ȱ ȱ ¢£ȱ ¢ȱ ȱ ȱ ȱȱȱęȱ b. On October 05, 2012, Nifty fell from 5815 for investigation and for further action. The to 4888 (15.9 percent) intraday due to purpose of this exercise is to promote market placement of erroneous sell order by one integrity and to ensure orderly conduct of the of the member of NSE. However, Nifty market. recovered later during the day to close at 5747. During the year, SEBI upgraded the c. On February 25, 2013, few mid cap scrips IMSS system to handle more than 2 billion fell in the range of 17 to 32 percent, records in a day. To further enhance the while the scrip M/s. Core Education & system capability and performance of alert ȱǯȱ ȱȱęȱ generation process, implementation of rolling fall of 66.5 percent. ȱ ȱ ȱ Ĵȱ ȱ are underway. V. Surveillance Actions III. Data Warehousing and Business During financial year 2012-13, NSE Intelligence System (DWBIS) initiated preliminary examination and investigation in 85 cases and BSE initiated ȱ ȱ ȱ £ȱ ȱ ȱ preliminary examination and investigation in ¡ȱȱȱȱ ȱȱ£ȱ Ȃȱ 885 cases. Apart from above, as surveillance intelligence and surveillance capabilities and ǰȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬŗřȱ ȱ comprises of data warehouse, data mining shifted 336 scrips to trade to trade (T to T) and business intelligence tools. It consists of segment and similarly BSE shifted 1,151 scrips three phases as: to trade to trade (T to T) segment. In this Ȋȱ Ȭ ȱȮȱȱȱȱȱȱȱ ȱȱȱȱȱĴȱȱ and enables users to generate multi mandatory delivery and no netting off dimensional reports dynamically. positions are allowed. This leads to reduction Ȋȱ Ȭ ȱ Ȯȱ ȱ Ĵȱ ȱ in the amount of speculation as only those modules and predictive modeling who can deliver the securities can enter into scenarios. sale transactions and thereby speculation is Ȋȱ Ȭ ȱ Ȯȱ ȱ ȱ ȱ ȱ reduced. Further, with a view to dampen research initiatives. the amplitude of prices, scrips shifted to

125 Annual Report 2012-13

T to T segment attract applicable circuit ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ filters. NSE reduced circuit filter in 693 of information so that the authenticity instances and BSE in 1,652 instances. Further, of the source of the information is ȱ ȱ ȱ ęȱ şŚȱ ȱ ŗŖŖȱ ǰȱ ascertained by the exchanges before respectively (Table 3.19). MCX-SX being a disseminating the same. new exchange in equities, has not initiated c. In order to discharge their surveillance ¢ȱ ȱ ȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬ responsibilities effectively, SEBI 13 except shifting of one scrip from rolling has reviewed and strengthened the Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Surveillance Committee of the stock ȱęȱȱŚŗȱǯ exchanges.

VI. Surveillance Measures d. SEBI has mandated all Exchanges SEBI conducts meetings at regular to disseminate for each derivative intervals with stock exchanges to monitor stock, the combined open position their surveillance activities and market of group of connected entities on the movements. In consultation with the stock respective Exchange website twice a exchanges, the following surveillance month without disclosing the individual measures have been taken: names. The criteria for determining a. SEBI has advised the Exchanges to connected entities and methodology for put a penalty of ` 10,000 (Rupees ten dissemination of combined positions thousand only) on brokers who are have also been prescribed by SEBI. Ĵȱ ȱ ȱ ȱ ȱ e. In order to arrest any further misconduct and PAN details. in the market by trading entities, it was b. Companies are required to make decided that the exchanges shall issue disclosures in respect of price ȱ ĴȦȱ Ĵȱ ȱ ȱ sensitive information to stock entities whose behaviour is found to be exchanges particularly flowing from aberrant and prima facie does not appear SEBI (Prohibition of Insider Trading to be in conformity with the extant (PIT)) Regulations, 1992 and Listing securities law governing the securities agreement. SEBI advised the exchanges market.

Table 3.19: Surveillance Actions during 2012-13 Nature of Action NSE BSE MCX-SX 1 234 Scrips shifted to Trade to Trade segment 336 1,151 1 (311) (1,053) (Na) No. of scrips in which price bands were imposed 693 1,652 41 (2 percent, 5 percent & 10 percent) (613) (885) (Na) Preliminary Investigations taken up 85 885 Nil (116) (914) (Na) ȱęȱ şŚȱ ŗŖŖȱ (104) (115) (Na) * Note: Figures in parentheses pertains to 2011-12

126 Part Three: Regulation of Securities Market

f. SEBI advised the exchanges to put in the closing price in cash market, which acts place systems to prevent leakage of ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ information. is known as ‘marking the close’ in common parlance. Examination, prima facie, revealed g. As a surveillance measure the exchanges that certain connected entities indulged in were advised to apply price bands on ‘marking the close’ by moving the closing stocks which do not have derivative price of the said scrip in the cash market in products available on them but are ȱęǰȱȱȱȱȱ forming part of the index on which and thereby made unlawful gain on the long derivative products are available, in positions held by them in futures of the scrip. case such stock witness sharp intraday movements. SEBI, passed an interim order dated February 15, 2013 against nine connected VII. Enforcement Actions entities restraining them from accessing securities market and prohibiting them from A. Interim orders: buying, selling or dealing in securities in any manner whatsoever, till further directions in ǯȱ ȱȱȱȱĴȱȱȱȱ ȱĴȱȱȱȱȱǯȱ¢ȱ in certain scrips on July 26, 2012 to these entities to submit their submissions in On July 26, 2012, SEBI noticed an ȱĴȱȱȱǯ abrupt downward movement in prices of certain scrips namely M/s. Pipavav Defence c. Interim order in the matter of M/s. and Offshore Eng. Ltd., M/s. Parsvanath Zenith Infotech Ltd. Developers Ltd., M/s. Tulip Telecom Ltd. SEBI observed that M/s. Zenith Infotech and M/s. Glodyne Technoserve Ltd. as Ltd. (ZIL) raised US$ 33 & US$ 50 million compared to their closing prices on July by issuing ‘FCCBs which were due for 25, 2012 at NSE and BSE. After preliminary redemption in September 2011 and August analysis, SEBI, vide its order dated August 2012, respectively. ZIL in its EGM held on 03, 2012 banned 19 entities from accessing January 29, 2011 took approval from its securities market and prohibiting them from shareholders to sell its assets for repayment/ buying, selling or dealing in securities in any redemption of FCCBs due for maturity. manner whatsoever, till further directions On September 26, 2011, ZIL announced to ȱ ȱ Ĵǯȱ ȱ ȱ ȱ ǰȱ ȱ exchanges that it has sold one of its divisions, considering the submissions made by these (Managed Services Division) MSD, to Zenith 19 entities, ȱȱęȱȱȱ RMM LLC. against eight entities. Examination, prima facie, revealed b. Interim order in the matter of M/s. that the substantial portion of sale proceeds Ruchi Soya Industries Ltd. of MSD Division of ZIL was diverted in a SEBI carried out an examination in the ȱ ȱ ȱ ȱ ęȦȱ ȱ scrip of M/s. Ruchi Soya Industries Ltd. in promoters and/or directors and subsidiaries view of surveillance alerts regarding ‘marking which was not remotely connected to the ȱ Ȃǯȱ ȱ ȱ ȱ ę¢ȱ ȱ £ȱȱȱǯȱȦ

127 Annual Report 2012-13

ȱȱ ȱȱĴȱȱȱ ¢ȱ ǯȱ ȱȱȱȱĴȱȱȦǯȱ the assets of a listed company directly and DFM Foods Ltd. ¢ȱȱȱ ȱęȱȱȱęȱ Adjudication order dated November 29, of entities owned and controlled by them, ŘŖŗŘȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ȱ ǯȱ thereby causing loss to shareholders. was passed wherein a penalty of ` 1,50,000/ ǻȱȱȱę¢ȱȱ¢Ǽȱȱǯȱ SEBI, passed an interim order dated Mohit Satyanand was imposed for violation March 25, 2013 against 6 promoters of ZIL of Regulation 13(4) read with13(5) of SEBI restraining them from accessing securities (PIT) Regulations, 1992 and Clause 4.2 of market and prohibiting them from buying, Schedule I of Model Code of Conduct for selling or dealing in securities in any manner Prevention of Insider Trading for Listed whatsoever, till further directions in the Companies. Ĵǯȱǰȱȱȱȱȱȱ ȱ is directed to furnish, within 30 days, bank ǯȱ ȱȱȱȱĴȱȱȦǯȱ guarantee(s) of a minimum tenure of one A V Cotex Ltd. year, for USD 33.93 million (i.e. the amount Adjudication order dated May 28, 2012 of sale proceeds of MSD Division that has ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ȱ ¡ȱ ǯȱ ȱ been diverted), in the name of SEBI, without passed wherein a penalty of ` 25,000 (Rupees using the funds of ZIL or creating any charge ¢ȱęȱȱ¢Ǽȱȱȱǯȱȱ on assets of ZIL. The bank guarantee may Dhawan, M/s. Conchem Construction Pvt. be invoked in case any adverse inference is Ltd, M/s. Lee Infratech Pvt. Ltd. (Erstwhile, ȱ¢ȱ ȱȱȱęȱȱ ȱȱ M/s. Lee Hotels Pvt. Ltd.), Ms/. Jas Expoship to the actions of Board of directors/promoters Pvt. Ltd., M/s. ADB Trade Services Pvt. Ltd. of ZIL in diverting the sale proceeds of MSD and Ms/. Competent Surveyors Pvt. Ltd. was Division and SEBI deems it necessary to imposed for violation of Regulation 13 (1),(3) compensate. &(4) read with regulation 13(5) of SEBI (PIT) Regulations, 1992. B. Adjudication Orders: ǯȱ ȱȱȱȱĴȱȱȦǯȱ ǯȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ GHCL Ltd. M/s. S J Corporation Ltd. Adjudication order dated August 17, Adjudication orders dated April 30, ŘŖŗŘȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ǯȱ ȱ ` ŘŖŗŘȱȱ ȱŘŖǰȱŘŖŗŘȱȱȱĴȱȱȦǯȱ passed wherein a penalty of 25,000 (Rupees S J Corporation Ltd. was passed wherein, a ¢ȱ ęȱ ȱ ¢Ǽȱ ȱ ȱ ȱ penalty of ` śŖǰŖŖŖȱ ǻȱ ę¢ȱ ȱ Mr. Pramod Jain for violation of Regulation only) each on M/s. India Advantage Securities 13(2) & (4) of SEBI (PIT) Regulations, 1992. Ltd. and M/s. Inventure Growth & Securities Ltd. were imposed for violation of provisions e. Adjudication orders against four of clause A (2) of the code of conduct for entities in the matter of M/s. Fact ȱȱęȱȱȱ ȱȱ Enterprises Ltd. with regulation 7 of SEBI (Stock Brokers and Adjudication orders dated January 11, Sub-brokers) Regulations, 1992. ŘŖŗŘȱȱȱŖŞǰȱŘŖŗŘȱȱȱĴȱȱ

128 Part Three: Regulation of Securities Market

M/s. Fact Enterprises Ltd. were passed wherein Ms. K Nirmala for violation of Regulations a penalty of ` 1,00,000 (Rupees one lakh only) 8(A)(2) and 8(A)(3) of SEBI (SAST) ȱȱǯȱ ¢ȱ£ȱ¢ǰȱǯȱ¢ȱ Regulations, 1997; Regulations 29(2) read with Chander Mohite and Mrs Urmila Lakhotia 29(3), 31(2) read with 31(3) of SEBI (SAST) and ` 1,75,000 (Rupees one lakh seventy Regulations, 2011; and Regulations 13(3) read ęȱ ȱ ¢Ǽȱ ȱ ǯȱ ȱ ȱ with 13(5),13(4A) read with 13(5) of SEBI Kashyap was imposed for violation of SEBI (PIT) Regulations, 1992. Penalty of ` 3,00,000 (PIT) Regulations, 1992 and SEBI (SAST), 1997. (Rupees three lakh only) was imposed on Mr. K Nirupama for violation of Regulations 8(A) ǯȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ (2) and 8(A)(3) of SEBI (SAST) Regulations, M/s. Clutch Auto Ltd. 1997; and Regulations 13(3) read with 13(5) of Adjudication orders dated August 17, SEBI (PIT) Regulations, 1992. ŘŖŗŘȱȱȱŖŗǰȱŘŖŗŘȱȱȱĴȱȱ ǯȱ ȱȱȱȱĴȱȱȦǯȱ M/s. Clutch Auto Ltd. were passed wherein a ȱ¢ęȱǯ penalty of ` 1,00,000 (Rupees one lakh only) was imposed on Mr. Hari Krishna Yannam for Adjudication order dated March 5, 2013 violation of Regulation 4(2) (b) and 4(2)(g) of ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ¢ęȱ ǯȱ ` SEBI (Prohibition Of Fraudulent And Unfair was passed wherein a penalty of 5,00,000 Trade Practices relating to Securities Market ǻȱęȱȱ¢Ǽȱ ȱȱȱǯȱ (PFUTP)) Regulations, 2003. Sanjay Bajranglal Sharma for violation of Regulation 7(1),(2) of SEBI (SAST) Regulations ǯȱ ȱȱȱȱĴȱȱȦǯȱ and Regulation 13(3), (5) of SEBI (PIT) Sigrun Holdings Ltd. Regulation, 1992.

Adjudication order dated January 18, ǯȱ ȱȱȱȱĴȱȱȦǯȱ ŘŖŗřȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ȱ Livingroom Lifestyle Ltd. Ltd. was passed wherein a penalty of Adjudication order dated October ` 2,00,000 (Rupees two lakh only) was řŗǰȱ ŘŖŗŘȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ imposed on Mr. C R Rajesh Nair for violation Lifestyle Ltd. was passed wherein a penalty of Reg. 13(4) of SEBI (PIT) Regulations, 1992. of ` ŘśǰŖŖŖȱ ǻȱ ¢ȱ ęȱ ¢Ǽȱ ȱ ȱȦǯȱ ȱęȱȱȱȱǯȱ ǯȱ ȱȱȱȱĴȱȱȦǯȱ Avishek Bose and ` 45,000 (Rupees fourty Concurrent (India) Infrastructure Ltd. ęȱȱ¢ǼȱȱȦǯȱ ȱ¢ȱ Adjudication order dated November Private Ltd was imposed for violation of SEBI řŖǰȱ ŘŖŗŘȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ (SAST) and SEBI (PIT) Regulations, 1992. (India) Infrastructure Ltd. was passed wherein a penalty of ` 50,000 (Rupees ǯȱ ȱȱȱȱĴȱȱȦǯȱ ę¢ȱ ȱ ¢Ǽȱ ȱ ȱ ȱ ¢ȱ ȱ Veer Energy Infrastructure Ltd. imposed for violation of Clause 35 of the Adjudication order dated February Listing Agreement read with Section 21 of ŘŖǰȱ ŘŖŗřȱ ȱ ȱ Ĵȱ ȱ Ȧǯȱ ȱ ¢ȱ the Securities Contracts Regulations Act Infrastructure Ltd. was passed wherein a (SCRA), 1956. Penalty of ` 3,25,000 (Rupees penalty of ` 1,00,000 (Rupees one lakh only) ȱ ȱ ¢ȱ ęȱ ȱ ¢Ǽȱ each was imposed on Mr. Dhrenendra Shah

129 Annual Report 2012-13

for violation of Regulation 13(4) read with 5. INVESTIGATION Regulation 13(5) of SEBI (PIT) Regulations, Timely completion of investigation cases 1992 and Mr. Jaswantilal Shah for violation ȱ ěǰȱ ȱ ȱ ȱ of Regulation 13(3) read with Regulation 13(5) action in case of violations of established of the SEBI (Prohibition of Insider Trading) securities laws is important for protection Regulations, 1992. of investors’ interest and ensuring fair, transparent and orderly functioning of the ǯȱ ȱȱȱȱĴȱȱȦǯȱ market. It is also vital for improving the Allied Computers International (Asia) ęȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ Ltd. market. SEBI is therefore constantly striving Adjudication order dated June 06, 2012 to upgrade its investigative skills by making in the matter of M/s. Allied Computers use of Information Technology. Importance International (Asia) Ltd. was passed wherein ȱěȱȱȱȱȱȱ ` a penalty of 3,00,000 (Rupees three lakh has also been underscored by IOSCO in its only) was imposed on Mr. Hirji Kanji Patel “Principles for the Enforcement of Securities for violation of Section 15A (b) of SEBI Act Regulation”. and provisions of Regulation 7(1A) read with Regulation 7(2) of SEBI (SAST) Regulations, Keeping the above objectives and 1997 and Regulation 13(4) read with Regulation principles of securities regulations in view, 13(5) of SEBI (PIT) Regulations. SEBI initiates investigation to examine alleged or suspected violations of laws and obligations ǯȱ ȱȱȱȱĴȱȱȦǯȱ relating to securities market. The possible Ȭ ȱȱǯ violations may include price manipulation, Adjudication order dated February ȱ ȱ ęȱ ǰȱ ȱ ǰȱ 18, 2013 in the matter of M/s. Ind-Swift capital issue related irregularities, takeover Laboratories Ltd. was passed wherein a related violations, non-compliance of disclosure penalty of ` 10,00,000 (Rupees ten lakh only) requirements and any other misconduct in the was imposed on Mr. Balwinder Singh for securities markets. violation of provisions of Regulation 3 and Reg. 4(2)(g) of the SEBI (PFUTP) Regulations, I. Initiation of Investigation 2003. There are various sources of information for initiation of investigation. SEBI initiates ǯȱ ȱȱȱȱĴȱȱȦǯȱ investigation based on reference received Atlanta Ltd. from sources such as stock exchanges, Adjudication order dated February internal surveillance department, other 20, 2013 was passed wherein a penalty of government departments, information ` 48,26,500 (Rupees fourty eight lakh twenty submitted by market participants and ¡ȱȱęȱȱ¢Ǽȱ ȱȱ complainants. In appropriate cases, on Mr. Shadilal Chopra who failed to comply investigation may also be initiated suo-moto, with the directions issued by SEBI under where there are reasonable grounds to believe section 11B of the SEBI Act, 1992 read with those investors’ interests are being adversely Regulation 11 of SEBI (PFUTP) Regulations, ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ 2003. the provisions of the securities laws.

130 Part Three: Regulation of Securities Market

II. Process of Investigation investigations have been completed. Apart from enforcement action, an important The steps involved during investigation attendant benefit resulting from such process include an analysis of market data investigations is contribution to the policy (order and trade log, transaction statements changes with a view to further strengthen etc.) and static data (KYC documents obtained the regulatory and enforcement environment. from brokers, depository participants etc., During 2012-13, 155 new cases were taken ȱǰȱęȱǰȱȱȱ up for investigation and 119 cases were major corporate developments etc.) The completed (Table 3.20 and Chart 3.3). purpose of such investigation is to gather evidence and to identify persons/ entities A. Nature of Investigation Cases Taken Up behind irregularities and violations so that During 2012-13, about 55 percent of the appropriate and suitable regulatory action cases taken up for investigation pertain to can be taken, wherever required. Outcome market manipulation and price rigging, as of investigation in the form of enforcement against about 47 percent of such cases in the action is a clear signal to the market players previous year. Other cases pertain to insider to comply with the law and expected trading, takeover violations, irregularities standards of conduct in the market. in capital issues, and other violations of securities laws. Since, several investigation III. Trends in Investigation Cases cases involve multiple allegations of ǰȱ Ȭȱ ęȱ ȱ Since 1992-93, SEBI has undertaken ęȱ¢ȱȱĜǯȱǰȱ 1,772 investigation cases. In 1,539 cases,

131 Annual Report 2012-13

Table 3.20 Investigations by SEBI B. Nature of Investigation Cases (Numbers) Completed Year Cases Taken up Cases During 2012-13, about 44 percent of for Investigation Completed the cases completed pertain to issue related 12 3 1992-93 2 2 to manipulation and 34 percent of the cases 1993-94 3 3 completed pertain to market manipulation 1994-95 2 2 and price rigging. Other cases in which 1995-96 60 18 investigation was completed pertain to 1996-97 122 55 insider trading, takeovers etc. The details of 1997-98 53 46 investigation cases taken up and completed 1998-99 55 60 are provided in Table 3.21, Chart 3.4 and 1999-00 56 57 Chart 3.5. 2000-01 68 46 IV. Regulatory Action 2001-02 111 29 2002-03 125 106 After completion of investigation, penal 2003-04 121 152 action is initiated as approved by the 2004-05 130 179 competent authority wherever violations of 2005-06 159 81 laws and obligations relating to securities 2006-07 120 102 market is observed. Action is decided based 2007-08 25 169 on the principles of objectivity, consistency, 2008-09 76 83 materiality and quality of evidence available, 2009-10 71 74 after thorough analysis and appreciation of 2010-11 104 82 facts. 2011-12 154 74 2012-13 155 119 The action included issuing warning Total 1772 1539 letters, initiating enquiry proceedings for registered intermediaries, initiating ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ adjudication proceedings for levy of monetary charge / violations (Table 3.21 and Chart 3.4). penalties, passing directions under Section 11

132 Part Three: Regulation of Securities Market

Table 3.21: Nature of Investigations taken up and completed (Number) Investigations Taken up Investigations Completed Particulars 2011-12 2012-13 2011-12 2012-13 1 2345 Market manipulation and price rigging 73 86 37 41 "Issue" related manipulation 35 43 4 52 Insider trading 24 11 21 14 Takeovers 2322 Miscellaneous 20 12 10 10 Total 154 155 74 119

of SEBI Act, 1992, and initiating prosecution Table 3.22: Type of Regulatory actions taken and referring matter to other regulatory during 2012-13 agencies. Particulars Number of Entities SEBI issued 168 Prohibitive directions 12 during the year 2012-13. These directions Suspension 31 have the strong and salutary effect of Warning issued 9 ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ Prohibitive directions issued under 168 to deal with emergent situations requiring a Section 11 of SEBI Act (other than timely and faster response. A detailed break consent orders) up of all regulatory actions is given in Table Cancellation 3 3.22 and Chart 3.6. Adjudication orders passed 485 Administrative warning / warning Further, proceedings under Section Ĵȱȱ řŗ 11 of SEBI Act, 1992 were initiated against ę¢ȱȱȱ ŗŚ 128 entities, and proceedings under ȱĴȱȱ Řř Intermediaries Regulations were initiated Total 764

133 Annual Report 2012-13

against 19 entities and adjudication 2013 restraining M/s SGI Research and proceedings were initiated against 713 entities Analysis Ltd. and its 7 directors from in 2012-13. In addition to above, Show Cause accessing the securities market and Notices were issued against 206 entities for further prohibited from buying, selling or the proceedings under Section 11 of SEBI otherwise dealing in securities and being ǰȱŗşşŘǯȱ ȱȱĴǰȱ ȱ associated with the securities market orders have been passed by SEBI in 2012-13. directly or indirectly for a period of 10 years. The Order further directed the A. Orders under Section 11B of SEBI Act, company and its directors to refund the 1992 money collected towards subscription a. Based on the complaints received of convertible preference shares to the regarding cheating and misappropriation subscribers of M/s. SGI Research and of several crores of Rupees by M/s Analysis Ltd. along with the interest of Stock Guru India, SEBI had initiated 15 percent per annum. examination in the said matter. The activity of M/s Stock Guru appeared b. M/s Sarang Chemicals Limited was to be a Multi Level Marketing (MLM) debarred for a period of two years in Scheme. However, SEBI found that one of the matter of M/s Sarang Chemicals its group companies, M/s. SGI Research Limited for publishing misleading and Analysis Ltd., issued convertible corporate announcements, incorrect preference shares of ` 10/- each at a financial results, wrong shareholding premium of Rs.1,500 per share to more Ĵǰȱȱ¢ȱȱȱȱȱ than 50 investors, thereby, violating relevant disclosures regarding change Regulation 4(2), 5(1), 5(7), 6, 7, 25, 26, in shareholding as required by the 46 and 59 of SEBI (ICDR) Regulation SEBI (Substantial Acquisition of Shares and Regulation 3(b), 4(1) and 4(2)(r) of and Takeovers) Regulations, 1997 and SEBI(PFUTP) Regulations. Thereafter, SEBI (Prohibition of Insider Trading) 11B Order was passed on January 11, Regulations, 1992, etc.

134 Part Three: Regulation of Securities Market

B. Adjudication Orders C. Enquiry Proceedings a. The promoters of Bank of Rajasthan a. Based on the reference received from the (BoR) in compliance with RBI Guidelines Ĝȱȱȱ¢ȱȱ of Police, Crime Branch, New Delhi disclosed that they have reduced their stating that Mr. B B Sharma, the promoter shareholding in BoR from 44.18 percent ȱȦȱ ĝȱ ȱȱȱȱ in June 2007 to 28.61 percent in December disclosed the details of stock exchanges 2009 of the issued capital. However, in the ȱ ȱ ¢ȱ ȱ ȱ ěȱ ȱ garb of reduction, they had transferred ȱ ȱ ȱ ȱ £ȱ ȱ ȱ ȱȱȱěȬȱȱȦȱ¢ȱȦȱ purchase of the tickets of various stock Yadav / Silvassa Group entities who were exchanges was diverted from the money their PACs (persons acting in concert). collected from the public by the M/s Instead of reduction from 44.18 percent ĝȱ ȱȱǰȱ¢ȱ to 28.61 percent the promoters along proceedings were initiated against several with PACs (Tayal, Silvassa and Yadav brokers including M/s. Spurt Fincap Ltd. Groups) increased their shareholding b. Investigation revealed that the funds for from 44.18 percent in quarter ended June purchase of LSE tickets by M/s. Spurt 2007 to 63.15 percent in quarter ended ȱ ǯȱ ȱ ęȱ ¢ȱ ȱ Ȧȱ December 2009. The disclosures of the so ĝȱ ȱ ȱ £ǯǰȱ Ȧȱ called reduced promoters holding were ĝȱȱȱȱȦȱȱ disseminated in the market by way of Order Share Shoppe. M/s. Spurt Fincap ȱ ęȱ ȱ ȱ ȱ ¡ǯȱ Ltd. had acted in collusion with M/s Summons were issued to all promoter ĝȱ ȱȱȱȱ of BoR, M/s Tayal Group, M/s Yadav of LSE and is associated /linked with the Group and M/s Silvassa Group entities Ȧȱ ĝȱ ǯȱ ǰȱȦǯȱȱ however they did not co-operate with the ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȁęȱ investigation. Adjudication proceedings and proper person’ within the benchmark were initiated against 142 entities for prescribed in regulation 3(2) (a) and violation of SEBI (PFUTP) Reg., SEBI 3(2)(h) of the Fit and Proper Persons, (SAST) Reg., SEBI (PIT) Reg. and non Regulations, 2004 as well as Schedule II of compliance of summons. Adjudication the Intermediaries Regulations, 2008. M/s. proceedings were completed against Spurt Fincap Ltd. has violated regulation 141 entities and a total penalty of Rs 5(e) and regulation 5A of the Stock 29,97,50,000 was imposed. Brokers Regulations read with Fit and Proper Persons, Regulations, 2004 and b. SEBI had levied penalty of ` 5 lakh in Schedule II read with regulation 38(3) of ȱȱǯȱ ȱȱȱȱĴȱȱ the Intermediaries Regulations. Therefore, M/s Betala Global Securities Limited for the certificate of registration granted unfair trade practices indulged in by Mr. to the stock broker, M/s Spurt Fincap Jalaj Batra through brokers in connivance Ltd. Member, Ludhiana Stock Exchange Limited and having SEBI registration with other entities of M/s Mahesh Mistry no. INB 120944137 has been cancelled Group. vide order dated March 25, 2013.

135 Annual Report 2012-13

ǯȱ ȱȱĴȱȱȦȱ¢ȱ ȱǯȱȬȱ involved in post-investigation enforcement ȱȱȱŘśȦŖřȦŘŖŗřǰȱęȱȱ actions and quasi-judicial proceedings. Such Registration of M/s. Shri Parshwa Finance actions include issuing show cause notices Ȭȱ Ĝȱ ȱ ȱ ¢ȱ to the entities, examining their replies, Bhogilal Stock Brokers Pvt. Ltd. was organising and participating in the hearings of cancelled. The noticee and its connected the entities before the Whole Time Members entities created false and misleading of SEBI, co-ordination with Enforcement appearance of trading in the securities Department (EFD), preparing draft orders, market thereby inducing the sale or issuing press releases after orders are purchase of the shares of the company. ǰȱĴȱęȱȱȱȱ The noticee was also found to be repeated replying to their queries, co-ordination with defaulter. Enforcement Department in the proceedings ǯȱ ȱȱĴȱȱȦȱȱ ¢ȱǯȱȮȱ before Securities Appellate Tribunal (SAT) and Vide Order dated 30/01/2013, M/s Angel before courts, co-ordination with Prosecution Broking Limited was prohibited from Department for cases filed in the courts, taking up any new assignment (i.e. not follow-up for collection of penalty after orders to take up any new clients) for a period ȱ ¢ȱ ȱ Ĝǰȱ ȱ of two weeks. The noticee had aided prosecution for non-payment of penalties, ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ processing of consent proposals filed by ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ the entities, etc. Timely and qualitative violation of the provisions of Regulation completion of such actions is also important 4(b) and (d) of the PFUTP Regulations. ȱ ȱ ȱ ěȱ ȱ ¢ȱ measures taken by SEBI. ǯȱ ȱȱĴȱȱȱ ¢ȱǯȱȮȱȱ Order dated 30/01/2013, certificate of registration of M/s NCJ Share and Stock 6. ENFORCEMENT OF Brokers Ltd. was suspended for a period REGULATIONS of one week. The noticee while trading in its proprietary account has dealt in Effective enforcement in the form of the scrip of SIL in a manner detrimental ěȱ Ȭȱ ȱ ¢ȱ ȱ to the interest of investors. Such acts ȱȱ¢ȱ¢ȱěǯ threaten the market integrity and orderly development of the market and call for I. Enforcement Mechanisms regulatory intervention to protect the ȱȱęȱȱȱ interest of investors as the same pose that SEBI uses in case of any violation(s) serious threat to the price discovery pertaining to the laws regulating the mechanism of the stock exchange and the safety of the securities market securities market. Age-wise analysis of mechanism. ȱ ȱ ȱ £ǯȱ ȱ u/s 11, 11B and 11D of SEBI Act, enquiry proceedings, adjudication proceedings, ǯȱ Ȭȱȱ prosecution proceedings and summary After completion of investigation, the proceedings as on March 31, 2013 are Investigation Department is also actively provided in Tables 3.23 to Table 3.23d.

136 Part Three: Regulation of Securities Market

A. Section 11/11B Proceedings or registration. Under section 11/11B of SEBI Act, 1992, In the financial year 2012-13, 36 SEBI may issue directions or prohibitive cases were disposed by SEBI after the due orders such as debarment from accessing the completion of enquiry proceedings. In the securities market or not to deal in securities. same financial year, 27 fresh cases were In 2012-13, 142 cases under section 11/11B initiated where enquiry proceedings are being ȱȱ¢ȱ ǯȱ ȱȱȱęȱ followed. The cumulative pending cases as on year, 184 fresh cases under the caption March 31, 2013 stands at 114. (Table 3.23) provision of law were initiated by SEBI. The cumulative pending cases as on March 31, C. Adjudication Proceedings 2013 were 1,016 (Table 3.23). Under Chapter VIA of SEBI Act, 1992, ȱ¢ȱȱȱȱĜȱȱ B. Enquiry Proceedings conducting enquiry and imposing penalties. ȱ¢ȱȱȱȱȱęȱ In 2012-13, 485 cases were disposed by of registration of an intermediary through SEBI under adjudicating proceedings. In the Enquiry Regulations on the recommendation ȱ ęȱ ¢ǰȱ ŗǰśŚŞȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ĜȦȱ ¢ȱ initiated under adjudicating proceedings. The appointed for that purpose. It may also issue cumulative pending cases as on March 31, warning to an intermediary if it considers that 2013 stands at 2,333 (Table 3.23b). ȱȱĴȱ¢ȱȱ¢ȱ does not warrant suspension or cancellation D. Prosecution

ȱřǯŘřǱȱ Ȭ ȱ ¢ȱ ȱ ȱ ȱ Ȯȱ Ȧȱ ŗŗǰȱ ŗŗȱ ȱ ŗŗȱ ȱ SEBI Act as on March 31, 2013

No. Number of Actions Disposed of Ac- Aggre-Pen- Year tions 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- gate ding Initi- 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Dis- Cases ated posal 1 2 3 4 5 6 7 8 9 10111213141516171819202122 1995-96 0 0 0 0 0 1996-97 3 3 0030 1997-98 85 6 15 9 34 1 14 4 0 0 83 2 1998-99 51 9 9 26 7 0 0 0 51 0 1999-00 83 13 12 10 20 19 1 5 3 0 0 83 0 2000-01 461 269 18 45 49 28 1 2 2 15 0 3 4 0 436 25 2001-02 441 390 32 12 1 3 2 0 0 1 0 441 0 2002-03 321 58 74 30 21 8 21 30 24 7 25 0 298 23 2003-04 713 30 135 45 94 197 47 52 33 25 5 663 50 2004-05 522 2 38 39 168 105 85 19 46 3 505 17 2005-06 196 1 12 31 65 69 18 0 0 196 0 2006-07 402 34 67 65 119 54 15 1 355 47 2007-08 374 58 75 61 61 48 6 309 65 2008-09 75 8 44 23 0 0 75 0 2009-10 376 30 69 114 45 258 118 2010-11 346 30 87 37 154 192 2011-12 348 10 35 45 303 2012-13 184 10 10 174 Total 4,981 0 0 6 3 28 299 427 215 192 196 107 189 561 412 493 320 375 142 3,965 1,016

137 Annual Report 2012-13

ȱřǯŘřǱȱ Ȭ ȱ ¢ȱ ȱ ȱ ȱ Ȯȱ ¢ȱ ȱ ȱ ȱ March 31, 2013

No. Number of Actions Disposed of Ac- Aggre-Pen- Year tions 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- gate ding Initi- 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Dis- Cases ated posal 1 2 3 4 5 6 7 8 9 10111213141516171819202122 1995-96 8 8 080 1996-97 20 1 12 7 0200 1997-98 66 3 48 7 5 1 2 0 66 0 1998-99 335 48 116 12 154 2 3 0 335 0 1999-00 69 27 1 18 19 1 1 0 2 69 0 2000-01 267 6 33 204 6 9 2 1 5 0 1 267 0 2001-02 204 35 83 49 16 11 4 6 0 0 204 0 2002-03 371 141 56 27 27 60 20 16 4 14 6 0 371 0 2003-04 476 21 71 115 82 83 28 48 14 8 6 476 0 2004-05 190 3 17 3 57 70 30 10 0 0 190 0 2005-06 80 9 31 19 8 13 0 0 80 0 2006-07 122 4 8 28 22 27 20 3 112 10 2007-08 89 3118144115138 2008-09 20 43121010 2009-10 23 15041013 2010-11 24 8151410 2011-12 8 0008 2012-13 27 2225 Total 2399 0 9 15 103 150 24 87 603 134 127 172 164 216 172 125 108 40 36 2285 114

ȱřǯŘřǱȱȬ ȱ ¢ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ March 31, 2013

No. Number of Actions Disposed of Ac- Aggre-Pen- Year tions 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- gate ding Initi- 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Dis- Cases ated posal 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 1995-96 2 1 1 20 1996-97 5 1 2 1 1 5 0 1997-98 16 3 2 1 1 7 2 16 0 1998-99 33 2 7 1 1 1 8 2 1 2 0 0 0 0 25 8 1999-00 32 9 7 3 2 4 2 2 3 0 0 0 0 32 0 2000-01 77 4 17 1 6 8 5 4 5 23 0 0 4 0 77 0 2001-02 64 16 14 4 14 2 6 5 0 1 1 0 63 1 2002-03 150 10 11 62 19 15 8 6 3 5 0 0 139 11 2003-04 577 52 344 55 66 8 27 9 3 0 0 564 13 2004-05 418 8 137 126 45 28 17 21 23 2 0 407 11 2005-06 283 27 47 22 66 23 56 10 6 257 26 2006-07 578 34 82 102 120 106 18 5 467 111 2007-08 1215 4 20 152 373 295 47 8 899 316 2008-09 546 70 101 255 42 51 519 27 2009-10 644 114 229 121 80 544 100 2010-11 571 284 257 30 571 0 2011-12 609 143 118 261 348 2012-13 1548 187 187 1361 Total 7368 0 0 1 6 9 16 43 29 85 581 242 218 181 473 764 1257 645 485 5035 2333

138 Part Three: Regulation of Securities Market

Section 24 of the SEBI Act, 1992 During 2012-13, SEBI initiated 1,548 empowers SEBI to launch prosecution adjudication and 27 enquiry proceedings against any person for contravention of any (Table 3.24). provision of the SEBI Act, 1992 or any rules Further, during 2012-13, 498 orders or regulations made there under before a ȱ ȱ ȱ Ĵǰȱ ȱ ȱ ŚŞśȱ court of criminal jurisdiction. In 2012-13, 22 cases were adjudication proceedings and ȱȱęȱ¢ȱ ȱ ȱȱ 13 cases were enquiry related. During 2012- by courts and 75 new cases were initiated. 13, SEBI issued 658 show cause notices and The cumulative pending cases as on March conducted 876 hearings (Table 3.24a). 31, 2013 stands at 988. (Table 3.23c) As on March 31, 2013, 114 enquiry E. Summary Proceedings proceedings and 2,333 adjudication Chapter VA of the SEBI (Intermediaries) proceedings are pending with enquiry and Regulations, 2008 provides the power to ȱĜȱǻȱřǯŘŚǼǯ conduct summary proceedings in certain During 2012-13, SEBI issued 59 ęȱǯȱ ȱŘŖŗŘȬŗřǰȱȱȱȱ¢ȱ warning/deficiency/advice letters to other proceedings were disposed as well as initiated intermediaries of which 29 were issued by SEBI. The cumulative pending cases as on against Depository Participants, 17 against March 31, 2013 stands at 83 (Table 3.23d). ȱǰȱęȱȱȱȱ Agencies and four each against Debenture II. Enquiry and Adjudication

ȱřǯŘřǱȱ Ȭ ȱ ¢ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ March 31, 2013

No. Number of Actions Disposed of Ac- Aggre-Pen- Year tions 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 2009- 2010- 2011- 2012- gate ding Initi- 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Dis- Cases ated posal 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 1995-96 9 1 1 1 3 6 1996-97 6 11 24 1997-98 8 1 1 1 144 1998-99 11 1 1 1 3 8 1999-00 25 1 1 1 2 5 20 2000-01 28 1 1 2 4 24 2001-02 95 344121481 2002-03 229 1 5 17 6 5 2 5 5 46 183 2003-04 480 1 5 29 29 5 15 15 33 11 143 337 2004-05 86 1 13 6 2 3 3 1 29 57 2005-06 30 321 624 2006-07 23 023 2007-08 40 11238 2008-09 29 029 2009-10 30 030 2010-11 17 1116 2011-12 29 029 2012-13 75 075 Total 1250 0 0 0 0 1 2 2 2 2 6 6 43 65 19 24 25 43 22 262 988

139 Annual Report 2012-13

ȱřǯŘřǱȱȬ ȱ¢ȱȱȱȱȮȱ¢ȱȱȱ ȱ Act as on March 31, 2013

Table 3.24: Enquiry and Adjudication Table 3.24b: Pending Enforcement Actions as Proceedings Initiated during on March 31, 2013 2012-13 ȱ ȱ ȱ¢ȱȱ ǯȱ Particulars No of Cases ȱ ȱĜȱ 12 12 Enquiry Related 27 Enquiry Related (excluding 114 summary proceedings) Adjudications 1,548 Adjudications 2,333 Total 1,575 Total 2,447

Trustees and RTI & STAs. Moreover, SEBI has proceedings initiated during 2012-13 against initiated adjudication proceedings against one other intermediaries (Table 3.25). Debenture Trustees. There wasn’t any enquiry III. Regulatory Actions against CIS Table 3.24a: Enquiry and Adjudication during 2012-13 A. M/s. MPS Greenery Developers Ltd. Particulars Enquiry Adjudication Total (MPS) 1 234 The company was granted provisional Orders Passed / registration on August 21, 2009 for a period ȱĴȱ ŗřȱ ŚŞśȱ ŚşŞ of two years, subject to compliance of Hearings Conducted 12 864 876 various conditions stipulated in Regulation Show Cause Notices 71 of the SEBI (CIS) Regulations, 1999, Issued 12 646 658 hereinafter referred as the Regulations.

140 Part Three: Regulation of Securities Market

Table 3.25: Enquiry and Adjudication due to the investors as per the terms of the Proceedings Initiated against ěȱ ȱȱȱȱȱȱȱȱ other Intermediaries during 2012- date of this order, failing which: 13 a. SEBI would initiate prosecution Adjudi- Warning/ ȱ ȱ ȱ ¢ȱ ę¢ proceedings against MPS under Section advice 24 of SEBI Act, 1992. 1234b. The promoters/ directors/ managers/ Registrar to an Issue & persons in charge of the business of the Share Transfer Agents 0 0 4 scheme(s) of MPS would be restrained Merchant Bankers 0 0 17 from accessing the capital market and Depository Participants 0 0 29 prohibited from buying, selling or Credit Rating Agencies 0 0 5 Debenture Trustees 1 0 4 otherwise dealing in the securities Total 1 0 59 market till all the monies are refunded. c. A reference would be made to the State SEBI also instructed MPS not to launch any Government/ local police to register a new scheme or raise any money from the civil/ criminal case against MPS and investors, even under the existing schemes, its promoters/ directors for apparent ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ offences of fraud, cheating, criminal the Board. breach of trust and misappropriation of public funds. MPS failed to comply with certain important conditions of the provisional d. A reference would be made to the registration and also continued raising money ¢ȱȱȱěǰȱȱȱ from the public. SEBI, therefore, directed the process of winding up of MPS. MPS, vide an ex-parte order dated May 11, 2012, to deposit an amount of ` 1,169 B. M/s. NGHI Developers India Ltd. crore, raised by MPS through its Collective (NGHI): Investment Schemes in an escrow account It came to the notice of SEBI that NGHI ȱȱ£ȱǯȱ ȱȱȱȱ and its promoters/ directors are engaged in any reply from the company regarding the ȁȱ £ȱ ¢Ȃȱ ȱ ǰȱ ¢ȱ said order, which was to be treated as a Show ĚȦȱ Ȧȱ ȱ ȱ ȱ Cause Notice by MPS. obtaining registration from SEBI. Vide an ad Meanwhile, several litigations were interim ex-parte order dated July 09, 2012 ęȱ ¢ȱ ȱ ¢Ȃȱ ȱ Ȧȱ (hereinafter referred to as the ‘interim order’), development executives seeking injunctions SEBI directed NGHI and its promoters and against MPS and/or SEBI orders. MPS also directors to immediately stop collecting ȱȱ£ȱ¢ȱȱȱ money, directly or indirectly, from investors public. Therefore, vide order dated December ȱ ȱ Ȧȱ ȱ ěȱ ¢ȱ ȱ ȱ 06, 2012, directed MPS to wind up its ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻǼȱęȱȱȱ ȱ any further plans/ schemes in the nature of Schemes and refund the money collected by a CIS. The order further directed the NGHI it under the scheme(s) with returns which are to deposit the money collected from the

141 Annual Report 2012-13

investors in a separate bank account within C. M/s. Nicer Green Forests Ltd (NGFL) a period of 3 days. Thereafter, on request of ȱ¢ȱ£ȱȱȱȱ the company, various hearings were granted public and pooled it to purchase large tracts and it was concluded that the transactions of land at low cost to develop the same and between NGHI and its customers are not real sell the land/produce to the investors at low estate transactions simpliciter; rather they price. The investors were given estimated ¢ȱȱȱȱȱȱ ȱȱęȱ £ȱ ȱ ȱ ȱ ȱ ȱ under Section 11AA of the SEBI Act, 1992. the end of the term and they are also given Accordingly, an order dated November ȱȱȱȱȱȱȱȱę¡ȱ¢ȱ 06, 2012 was passed against the above as per the terms of the scheme. Therefore, in company for violation of SEBI (CIS) accordance with the scheme, the investors Regulations, 1999. The company was directed made payment, and were entitled to receive to wind up its scheme(s) identified as ęǰȱ ǰȱ ȱ ȱ ¢ȱ ȱ Collective Investment Schemes in this order such scheme or arrangement without having and refund the money collected by it under any day to day control over the investments, the scheme(s) with returns which are due thus satisfying the requirements of Section ȱȱȱȱȱȱȱȱȱěȱ 11AA of SEBI Act, 1992. within a period of one month from the date of The company was found to be carrying this order, failing which the following actions out CIS activities without obtaining SEBI would follow: registration. Accordingly, vide order dated November 09, 2010, SEBI directed the a. SEBI would initiate prosecution company to wind up its existing collective proceedings against NGHI under Section investment scheme(s) and refund the money 24 of SEBI Act, 1992. collected by it under the scheme(s) with b. The promoters/ directors/ managers/ returns which are due to the investors as persons in charge of the business of the ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ scheme(s) of NGHI would be restrained one month from the date of the said order. from accessing the capital market and However, even after repeated reminders, the prohibited from buying, selling or company failed to submit the required WRR, otherwise dealing in the securities and hence its claim regarding completion of market till all the monies are refunded. repayments in compliance with order dated November 9, 2010 could not be verified/ c. A reference would be made to the State ascertained. In view of the same, SEBI issued Government/ local police to register a a Show Cause Notice (SCN) dated June 27, civil/ criminal case against NGHI and 2012 to NGFL and its promoters/ directors/ its promoters/ directors for apparent persons in charge of business of its scheme(s) ěȱȱǰȱǰȱȱȱ {hereinafter referred to as ‘the noticees’} breach of trust and misappropriation of calling upon them to show cause as to why public funds. appropriate actions in terms of SEBI Act, d. A reference would be made to the 1992 and SEBI (CIS) Regulations, 1999 should ¢ȱȱȱěǰȱȱȱ not be taken against it and its promoters/ the process of winding up of NGHI. directors/ persons in charge of the business of its scheme(s) for failing to comply with the

142 Part Three: Regulation of Securities Market

order dated November 9, 2010. The noticees On examination of the same, it was found were thereafter granted various opportunities that the company is carrying out CIS activities for personal hearing but the noticees did not and hence, an order dated March 25, 2013 avail any of them. Accordingly, vide order was passed against the company directing it dated March 12, 2013; the following directions to wind up its existing collective investment ȱȱȱȱĴǱ schemes and refund the money collected by a. The company and its 7 promoters/ it under the schemes with returns which are directors are restrained and debarred ȱȱȱȱȱȱȱȱȱěȱ from accessing the securities market and within a period of three months from the further prohibited from buying, selling date of this order and submit a winding up or dealing in securities market, directly and repayment report to SEBI in accordance or indirectly, in any manner whatsoever with the CIS regulations failing which the till the schemes of the NGFL is wound up following actions shall follow: ȱȱȱ£ȱ¢ȱȱȱ Ȋȱ ȱ ȱ ȱ ȱ its collective investment schemes are proceedings against MSPL under Section refunded to the satisfaction of SEBI. 24 of SEBI Act, 1992. b. The company and the 7 promoters/ Ȋȱ ȱ Ȧȱ Ȧȱ Ȧȱ ȱȱȱȱ£ȱ persons in charge of the business of the funds under any schemes or arrangement, scheme(s) of MSPL would be restrained existing or future, as defined under from accessing the capital market and section 11AA of SEBI Act, 1992. prohibited from buying, selling or otherwise dealing in the securities market till all the monies are refunded. D. M/s. Maitreya Services Pvt. Ltd. (MSPL) Ȋȱ ȱȱ ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ Government/ local police to register a The Income Tax alleging contravention of civil/ criminal case against MSPL and the SEBI Act and Regulations against MSPL, its promoters/ directors for apparent SEBI sought information from the company ěȱȱǰȱǰȱȱȱ regarding its activities. From the examination breach of trust and misappropriation of of the information received, it appeared that public funds. the company is carrying out the activities of Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ CIS and not those of real estate, as claimed ¢ȱȱȱěǰȱȱȱ by the company. Accordingly, a Show Cause the process of winding up of MSPL. Notice was issued to the company and its directors on October 14, 2011 asking them to 7. PROSECUTION show cause as to why suitable action should not be initiated against them for violation I. Trends in Prosecution of regulation 3 of SEBI (CIS) Regulations, 1999 read with section 11AA of the SEBI A. Number of Prosecutions Launched Act. Thereafter, on request of the company, During 2012-13, 75 prosecution cases various hearings were also granted to the were launched against 150 persons/ entities as company and its directors where they made compared to 29 prosecutions launched against various submissions regarding their business. 60 persons/entities in 2011-12. (Table 3.26)

143 Annual Report 2012-13

Table 3.26: Prosecutions Launched B. Higher Court Proceedings No. of cases in No. of persons/ During 2012-13, 21 applications/petitions ȱ ȱ ȱȱ ȱ ȱ ȱ ȱȱ ȱ ȱęȱȱȱ ȱȱ£ǯǰȱȱ launched has been launched Courts, High Courts and Supreme Court. 12 3During the period 11 cases were disposed and Up to and a total of 116 cases are pending. including 1995-96 9 67 C. Important Court Pronouncements in 1996 - 1997 6 46 ȱĴ 1997 - 1998 8 63 1998 - 1999 11 92 a. SEBI vs. M/s. PPL Pink Harvest Ltd. 1999 - 2000 25 154 and others (C.C. no. 1318/2002)- Before 2000 - 2001 28 128 Hon’ble Addl. Sessions Judge, Delhi 2001 - 2002 95 512 It has been held that SEBI has proved its 2002 - 2003 229 864 case beyond reasonable doubt and accordingly 2003 - 2004 480 2,406 held guilty M/s. PPL Pink Harvest Ltd. (A-1) 2004 - 2005 86 432 and Mr. Anurag Bisaria (A-4) for the violation 2005 - 2006 30 101 of Section 12 (1B) of SEBI Act and Regulation 5 2006 - 2007 23 152 and 73 of SEBI (CIS) Regulations, 1999. During 2007 - 2008 40 185 the trial proceedings Mr. M.L. Saxena (A-2) 2008 - 2009 29 114 and Smt. Asha Saxena (A-3) were abated on 2009 - 2010 30 109 account of their death. 2010 - 2011 17 67 The court sentenced the A-4 for a period 2011 - 2012 29 60 ȱ¡ȱȱ ȱȱȱ ȱȱęȱȱ 2012 - 2013 75 150 ` 1,00,000 (Rupees one lakh only) in default Total 1,250 5,702 convict shall undergo SI for a period of two ȱȱěȱȱȱȱ Till 2012-13, region-wise, the highest 24(1) of the SEBI Act, 1992. The A-1 was number of prosecutions were launched in ȱ ȱ ȱ ęȱ ȱ ` 3,00,000 (Rupees ȱ ĜȦȱ ȱ ǻŝŖşǼȱ ȱ ȱ ȱ ¢Ǽȱ ȱ ȱ ěȱ ȱ by the Northern Region (346) (Table 3.27). under Section 24(1) of the SEBI Act, 1992. The ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱřǯŘŝǱȱȬ ȱȱȱȱ A-2. Since, company was not represented by Cases as on March 31, 2013 ¢ȱȱȱęȱȱȱ¢ȱ Number Exemption ȱȱȱ£ǯ Region of Percentage Cases of Total b. SEBI vs. M/s. Pioneer Forests India Ltd. 123ȱ ȱ ǻǯǯȱ ǯȱ ŗŘŖŖȦŖřȱ ǭȱ ȱ ȱĜȱȦ C.C. 135/05)- Before Hon’ble Addl. Western Region 709 56.7 Northern Region 346 27.7 Sessions Judge, Delhi Southern Region 96 7.7 It was held that SEBI has proved Eastern Region 99 7.9 its case beyond reasonable doubt and Total 1,250 100.0 accordingly held guilty Mr. Balwinder Singh,

144 Part Three: Regulation of Securities Market

Mr. Kulwinder Singh, Mr. Gurudev Singh The Ld Court vide Judgment dated Saini, Mr. Hardyal Singh, Shir Ajay Kumar 06/06/2012 held that SEBI has proved its case Sharma for the violation punishable under beyond reasonable doubt and accordingly Section 24(1) of SEBI Act, 1992. held Accused Nos. 1 Company, Sanjay Kr. Sinha, Virendra Sinha, Atul Kishore Gupta, During trial the company was deleted Lalit Awasthi liable for the above said from the array of the parties vide court order violations. Convict company was burdened dated September 13, 2007, Mr. Surinder Singh ȱ ȱ ęȱ ȱ ` 4,00,000 (Rupees four lakh and Mr. Manjit Singh and Mr. Jatinder Singh only) and convict number two and three were were declared PO vide court order dated sentenced to rigourous imprisonment for a Setptember 26, 2007. ȱȱȱȱȱȱ ȱȱęȱȱ ` The court sentenced the Mr. Balwinder 2, 00,000 (Rupees two lakh only) each. Singh and Mr. Kulwinder Singh rigorous imprisonment for a period of one year and ǯȱ ȱȱȦǯȱ ȱȱǯȱ ȱ ęȱ ȱ ` śǰŖŖǰŖŖŖȱ ǻȱ ęȱ ȱ ¢Ǽȱ and Others- C. C. no. 1232/03- Before each in default further three months SI for the Hon’ble Addl. Sessions Judge, Delhi ěȱ ȱ ȱ ȱ ŘŚǻŗǼȱ Ȧ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ Section 27(1) & 27(2) of under Section 24(1) was filed by SEBI on December 15, 2003 of the SEBI Act, 1992 whereas Mr. Gurudev against Flawless Plantations Ltd (A-1) and its Singh Saini, Mr. Hardyal Singh and Mr. directors before the Court of ACMM for the Ajay Kumar Sharma were burdened with a violation of SEBI Act, 1992 read with SEBI ęȱ ȱ ` 2, 00,000 (Rupees two lakh only) (CIS) Regulations, 1999 which is punishable ȱȱȱȱȱ ȱȱȱěȱ under Section 24(1) read with Section 27 of punishable under Section 24(1) r/w Section the SEBI Act, 1992. They mobilised an amount ŘŝǻŗǼȱǭȱŘŝǻŘǼȱȱȱ ȱǰȱŗşşŘǯȱȱęȱ of ` 17,25,000 (Rupees seventeen lakh twenty amount was paid by all the convicts in the ęȱȱ¢Ǽȱȱȱȱǯ court. Proceedings for Mr. Chandra Kishore Asthana were abated on account of his death. c. SEBI vs. M/s. Nexus Farms Ltd. & Ors.- Further, Mr. Manoj Kumar and Mr. Samsher ǯȱ ǯȱ ǯȱ ŗřŘŗȦŖŘǲȱ ŚŗȦŘŖŖśȱ ǭȱ ȱ ȱ ȱ ȱȱȱěȱȱ 01/11- Before Hon’ble Addl. Sessions Order dated 12/04/2007. The Ld Court, vide Judge, Delhi Judgment dated 11/10/2012 held that SEBI ȱ ȱ ȱ ȱ ȱ Ĵȱ has proved its case beyond reasonable doubt was filed by SEBI on December 21, 2002 and accordingly held A-1 Company, Mr. against M/s. Nexus Farms Ltd (A-1) and its Sunil Kumar Asthana (A-2) and Mr. Pawan directors before the Court of ACMM for the Kumar Verma (A-3) liable for the above said violation of SEBI Act, 1992 read with SEBI violations. Convict company was burdened (CIS) Regulations, 1999, which is punishable ȱ ȱ ęȱ ȱ ` 4, 00,000 (Rupees four lakh under Section 24(1) read with Section 27 of only) and A-2 & A-3 were sentenced to the SEBI Act, 1992. They mobilised an amount rigourous imprisonment for a period of four of ` 29,00,000 (Rupees twenty nine lakh only) ȱȱȱȱȱęȱȱ` 2, 00,000 from the general public. (Rupees two lakh only) each.

145 Annual Report 2012-13

ǰȱ ȱ ǯȱ ȱ ȱ Ĵȱ against erring CIS entities, criminal Mr. Ashutosh Kr. Asthana and Mr. Girish Kr. prosecution cases have been launched by Srivastava and observed that merely being the SEBI against CIS entities. Since then, court promoter/share holders, it cannot be held that judgments have been obtained in a total of they were in charge of and responsible to the 171 CIS entities (Table 3.29). conduct of Convict No. 1 company.

II. Nature of Prosecution Table 3.29: Number of Prosecution Cases Table 3.28 represents the nature of decided by the Courts as on prosecutions launched under various sections March 31, 2013 ȱ ěȱ ǯȱ ȱ ȱ ȱ Type of Decision Non- CIS Total by SEBI under the SEBI Act, 1992, Companies by the Courts CIS Act, 1956, Depositories Act, 1996, SC(R) Act, 1234 1956 and the Indian Penal Code. As on March Convictions 138 10 148 řŗǰȱŘŖŗřǰȱŗŘśŖȱȱ ȱǯȳ Compounded (fully)* 7 52 59 Abated 0 4 4 Table 3.28: Nature of Prosecutions Launched Dismissed/Discharged 24 23 47 as on March 31, 2013 Withdrawn 2 2 4 Nature of Prosecution Number Total 171 91 262 Launched of Cases 12 Securities and Exchange Board 8. LITIGATIONS, APPEALS AND of India Act, 1992 (SEBI Act) 1,053 COURT PRONOUNCEMENTS SEBI Act & Securities Contracts (Regulation) Act, 1956 (SCRA) 91 ȱ ŘŖŗŘȬŗřǰȱ ŗŚŘȱ ȱ ȱ ęȱ ȱ SEBI Act, SCRA & Companies Act 1 ěȱȱȱŞŜȱȱ ȱǰȱ SEBI Act & Companies Act 3 cumulative 642 such cases are pending, where SEBI Act & Indian Penal Code 5 SEBI was a party (Table 3.30 and 3.30a). Companies Act, 1956 70 Securities Contracts (Regulation) ȱ ŘŖŗŘȬŗřǰȱ ŘŘśȱ ȱ ȱ ęȱ Act, 1956 5 before Securities Appellate Tribunal (SAT), Depositories Act, 1996 14 whereas 62 appeals were dismissed and as Indian Penal Code 8 on March 31, 2013, 86 appeals are pending Total 1,250 (Table 3.31).

III. Disposal of Prosecution Cases Against the orders of SAT, 12 appeals ȱęȱ¢ȱ ǰȱ ȱřŞȱȱ ȱ i) 262 cases were disposed by the Courts filed against SEBI in the Supreme Court till 2012-13, out of which, 148 cases resulted during 2012-13 under section 15Z of the SEBI in convictions and 59 cases were fully Act (Table 3.32). compounded (Table 3.29). As on March 31, 2013, six appeals were ii) Disposal of Prosecution Cases in case of ęȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ Collective Investment Schemes (CIS) pending against SEBI in the High Court Since the start of launch of prosecution (Table 3.32a).

146 Part Three: Regulation of Securities Market

ȱřǯřŖǱȱȱȱȱȱ ȱ ȱ Table 3.30a: ȱȱȱȱ ȱ ȱ ȱȱ¢ȱǻȱĴǼ ȱȱ¢ȱǻ ȱǼ

Filed Disposed Pending as Filed Disposed Pending as Subject during during on March Forum during during on March 2012-13 2012-13 31, 2013 2012-13 2012-13 31, 2013 1234 1234 Supreme Court 11 9 36 Issue and Listing 23 15 57 High Court 86 57 341 Takeover 3 0 28 Civil Courts 7 1 67 Secondary Market 9 2 61 Criminal Courts (other than prosecution cases Mutual Fund 2 6 22 ęȱ¢ȱ Ǽȱ Řȱ ŗȱ Ś Collective Investment Consumer Forums 12 12 117 Schemes 24 25 107 Company Law Board 1 1 5 Surveillance & BIFR/ AAIFR 18 5 61 Investigations 14 3 43 Labour Commissioner / Labour Court 4 0 10 Stock Broker Registration Fee 1 1 61 Green Tribunal 1 0 1 Total 142 86 642 Depository Participants 1 0 7 Intermediaries 0 0 37 Table 3.31: Status of Appeals before the Cases relating to Securities Appellate Tribunal Investor Complaints 18 8 78 Status of Appeals Number of Appeals Right to Information (RTI) 54 18 12 General Services Appeals Pending as on Department 0 0 11 March 31, 2012 64 Appeals Filed during 2012-13 225 Miscellaneous 42 22 112 Appeals Dismissed 62 Total 142 86 642 Appeals Remanded 10 Note: This table includes all the cases pending before any Appeals Allowed 58 judicial / quasi judicial forums pertaining to respective SEBI Order upheld with ȱĴȱ¡ȱȱ¢ȱȱȱ ęȱ Śś SAT and Hon’ble Supreme Court under SEBI Act/ SCRA/Depositories Act. Appeal Withdrawn 28 Appeals Pending as on March 31, 2013 86

Table 3.31a: Disposals of Appeals by Securities Appellate Tribunal Appeals 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2345678910111213141516 No.of Appeals Dismissed 1 2 7 20 15 16 29 46 139 40 81 86 134 90 62 No.of Appeals ęȱ Ŗȱ Ŗȱ ŗȱ ŝȱ ȱ ŗŖȱ śŞȱ ŗŖŗȱ ŗŜȱ Řŝȱ ŗȱ ŗşȱ Śśȱ śŗȱ Śś No.of Appeals Withdrawn 0 0 0 3 2 1 8 NA NA NA 17 19 29 16 28 No.of Appeals Allowed 1 2 6 8 23 13 19 72 71 32 39 30 77 44 58 Total 2 4 14 38 40 40 114 219 226 99 138 154 285 191 193

147 Annual Report 2012-13

Table 3.32: Status of Appeals before the Hon'ble Supreme Courts ȱ ȱ ȱȱ ȱęȱ ȱ ȱȱȱ ȱ Ĵȱ ȱȱŘŖŗŗȬŗŘȱ ȱŘŖŗŘȬŗřȱ Ȧ ȱ ȱřŗǰȱŘŖŗř 1 2345 ȱęȱ¢ȱ ȱ Ŝśȱ ŗŘȱ śȱ ŝŘ ȱęȱȱ ȱ śşȱ řŞȱ Şȱ Şş Total 124 50 13 161

Table 3.32a: Status of Appeals before the Hon’ble High Courts Subject Case pending Cases dismissed / Case pending as on ȱ Ĵȱ ȱȱŘŖŗŗȬŗŘȱ ȱ ȱřŗǰȱŘŖŗř 1 234 ȱęȱ¢ȱ ȱ Ŝȱ Ŗȱ Ŝ ȱęȱȱ ȱ ŗŗȱ Řȱ ş Total 17 2 15

9. CONSENT AND COMPOUNDING applications were rejected. During the ` During 2012-13, SEBI has received 193 year, SEBI collected 14,71,44,244 (Rupees applications for consent and compounding. Fourteen crore seventy one lakh fourty four Further, 189 consent applications and thousand two hundred fourty four only) six compounding applications were ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ rejected during the year. In addition, 35 through consent mechanism (Table 3.34). applications for consent and compounding Further, eight applications were received were withdrawn by the applicants. The for compounding during 2012-13 and, one number of applications in rejection and application was partly compounded, for an withdrawal categories may include the amount of ` 2,00,000 (Rupees two lakh only). ȱ ęȱ ȱ ȱ ęȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ¢ȱȱȱęȱ¢ǯȱ ȱȱ compounding during 2012-13 are given in ȱ ęȱ ¢ǰȱ Ŝśȱ ȱ ȱ Table 3.35. approved by SEBI under the consent and ȱ ¢ȱ ȱ Ĵȱ ȱ 10. INVESTOR ASSISTANCE AND kinds of enforcement actions and collected EDUCATION an amount of ` 14,73,44,244 (Rupees fourteen crore seventy three lakh fourty four thousand I. Redressal of Investor Grievances two hundred fourty four only)towards SEBI has been taking various regulatory ĴȦȦȦȱ measures to expedite the redressal charges. Month-wise details of applications of investor grievances. The grievances received and disposed under the consent and lodged by investors are taken up with the compounding scheme during 2012-13 are respective listed company or intermediary provided in Table 3.33. and continuously monitored. Grievances 185 applications were received during pertaining to stock brokers and depository 2012-13 for consent, 64 applications were participants are taken up with concerned disposed by passing orders whereas 189 stock exchange and depository for redressal

148 Part Three: Regulation of Securities Market

Table 3.33: Receipt and Disposal of applications under Consent and Compounding Process ȱȦȱȱ ǯȱȱ ǯȱȱȬȱ ĴȱȦȱ ȱȦȱȱ ȱ ȱ ȱ ȱ ȱĴȱ¢ȱ ȱ ȱ ȱ received passing orders Charges (`)(`)(`)(`) 1234567 2007-08 698 101 2,69,07,850 40,00,950 0 3,09,08,800 2008-09 692 440 37,29,30,786 54,90,000 8,27,84,906 46,12,05,692 2009-10 702 363 49,17,39,617 45,69,500 18,98,33,101 68,61,42,218 2010-11 359 177 70,44,96,771 4,76,500 1,71,20,811 72,20,94,082 2011-12 272 105 16,49,04,875 97,000 0 16,50,01,875 2012-13 193 65 12,44,71,413 3,00,000 2,25,72,831 14,73,44,244 Apr-12 15 7 37,00,000 0 0 37,00,000 May-12 11 6 17,10,000 0 0 17,10,000 Jun-12 14 0 0 0 0 0 Jul-12 30 1 7,00,000 0 0 7,00,000 Aug-12 29 0 0 0 0 0 Sep-12 21 5 23,50,000 0 0 23,50,000 Oct-12 11 13 3,59,00,000 0 0 3,59,00,000 Nov-12 10 12 2,04,52,282 0 1,92,31,831 3,96,84,113 Dec-12 8 8 50,74,625 3,00,000 0 53,74,625 Jan-13 27 10 43,90,000 0 33,41,000 77,31,000 Feb-13 12 2 8,92,500 0 0 8,92,500 Mar-13 5 1 4,93,02,006 0 0 4,93,02,006

ȱřǯřŚǱȱȱȱęȱ ȱ ȱȱŘŖŗŘȬŗř No. of Consent No. of application Consent Charges No. of Application Application disposed of by (`) rejected received passing order 1 234 185 64 147,144,244 189

ȱřǯřśǱȱȱȱęȱ¢ȱȱȱȱȱȱȱŘŖŗŘȬŗř No. of Compounding No. of applications compounded^ Compounding charges No. of Application ȱ ȱęȱ ¢ȱȱ ¢ȱȱ ȱ¢ȱ Șȱ Ǆ 1 2345 8 0 1 2,00,000 6 Șȱ ȱȱ ȱǰȱĴȱȱȱ¡ǯ Ǆȱ ȱȱȱȱ¢ȱȱȱȱȱȱȱęȱȱȱęȱ¢ǯ and monitored by the concerned department intermediaries are taken up with them through periodic report obtained from directly for redressal and continuously them. Grievances pertaining to other monitored by concerned department of SEBI.

149 Annual Report 2012-13

The company/intermediary is required to lodge the complaints online and such respond in prescribed format in the form of complaints are considered as ‘e-complaints’. Action Taken Report (ATR). Upon the receipt During 2012-13, a total of 26,195 e-complaints of ATR, the status of grievances is updated. If were received compared to 10,635 the response of the company/intermediary is Ȭȱ ȱ ȱ ŘŖŗŗȬŗŘǰȱ Ěȱ ĜȦȱ ǰȱ ȱ ȱ ȱ ȱ an increase of 146.3 percent over the previous initiated. SEBI takes appropriate enforcement year. This indicates that the SCORES system actions (Adjudication, 11B directions, has been working satisfactorily and has Prosecution etc) as provided under the law helped in making the complaint handling and where progress in redressal of investor ȱȱȱĜǯ grievances is not satisfactory. III. Regulatory action against The following paragraphs highlight Companies and their Directors for SEBI’s performance and measures taken in non-redressal of Investor Grievances the year 2012-13 for expediting the redressal of investor grievances. SEBI takes appropriate enforcement actions (adjudication, directions, prosecution II. SEBI Complaints Redress System etc) as provided under the law where progress in redressal of investor grievances is SEBI has received 42,411 complaints not satisfactory. ȱȱęȱ¢ȱŘŖŗŘȬŗřȱȱȱ 54,852 grievances cumulatively as compared a. The 11B orders were passed during the to 46,548 grievances received and 53,841 last three years, against the companies grievances resolved in the year 2011-12 and its directors debarring them from (Table 3.36). accessing the securities market and from buying, selling or dealing in securities As on March 31, 2013, there were 11,410 directly or indirectly, in whatsoever complaints pending resolution as compared manner, till all the investor’s grievances to 23,725 pending grievances cumulative against the company are resolved by as on March 31, 2012. The net reduction in them. (Table 3.37) pending complaints has been 12,315 in 2012- 13 as compared to 4,928 in 2011-12. During the year 2012-13, the following four companies and its directors were SCORES enables the investor to directly

Table 3.36: Status of Investor Grievances Received and Redressed Grievances Received Grievances Redressed Pending Actionable Financial Year ȱ ȱ Ȭ ȱ ȱ Ȭ ȱ ȱ Ș 1 2345 6 2008-09 57,580 26,74,560 75,989 25,03,560 49,113 2009-10 32,335 27,06,895 42,742 25,46,302 37,880 2010-11 56,670 27,63,565 66,552 26,12,854 28,653 2011-12 46,548 28,10,113 53,841 26,66,695 23,725 2012-13 42,411 28,52,524 54,852 27,21,547 11,410 * excludes complaints against whom regulatory actions are initiated. Further, the above data does not include ȱȱ¢ȱ ȱȱȱĴȱȱȱǯ

150 Part Three: Regulation of Securities Market

Table 3.37: Failure to Redress Investor Table 3.40: Companies Penalised for their Grievances: Order passed under failure to Redress Investor section 11B Grievances Number of companies S. Name of the Penalty ȱ ǯȱ ȱ ȱȱ ȱȱ No. Company Amount (`) ȱ ǯȱ ȱ ȱ ěȱȱȱ 12 3 of grievances 1. Kanel Oil & Export Industries Ltd. 2,00,000 12 3 4 2. Roselabs Industries Ltd. 12,00,000 1 2010-11 18 1 3. Satguru Agro Industries Ltd. 200000 2 2011-12 7 5 4. Simco industries Ltd. 150000 3 2012-13 4 2 5. Jord Engineers India Ltd. 200000 restrained from accessing the securities ȱ Ŝǯȱ ȱ ȱȱǭȱęĴȱǯȱ ŝśŖŖŖ market till all the pending investor grievances 7. Earnest Healthcare Ltd. 10,00,000 are resolved (Table 3.38). 8. Gujarat Aqua Industries Ltd. 10000 9. Gujarat Filaments Ltd. 500000 Table 3.38: Companies Restrained From 10. Lohia Polyester Ltd. 500000 Accessing the Securities Market * M/s Sabero Organics Gujarat Ltd. resolved all S. No. Name of the Company pending complaints and also paid ` 6,80,000 under 12 consent proceedings. (Order dated 29/11/2012). 1 Alpine Industries Ltd. 2 Shukla Data Technics Ltd. 13, Proceedings under section 11B of SEBI 3 Top Telemedia Limited Act, 1992 have been initiated against 146 4 International Hometex Ltd. companies and their directors for their failure b. SEBI has imposed penalty against to redress investor grievances. Adjudication the companies through adjudication proceedings under section 15C has been proceedings during the year, for their approved against 459 companies for levying failure to redress investor grievances. monetary penalty for their failure to redress (Table 3.39) investor grievances. Table 3.39: Failure to Redress Investor Grievances: Adjudication ǯȱ ȱȱȬȱę Proceedings Companies raising capital through S. Number of Penalty public issue of securities are required to ` No. Year companies amount ( ) deposit one percent of the issue amount with 12 3 4 the designated Stock Exchange. This deposit 1. 2010-11 3 42,00,000 is released by the Stock Exchange only 2. 2011-12 5 61,30,000 ȱ ȱ ȱ ȱ ȱ ȱ ęȱ 3. 2012-13 10 40,35,000 (NOC). SEBI issues NOC to companies after SEBI has levied penalty against ten satisfactory redressal of complaints received companies through adjudication proceedings by SEBI against the Companies. during the year 2012-13, for their failure to During the year 2012-13, NOCs were redress investor grievances. (Table 3.40) issued to 73 applicant companies. NOCs to 47 Further regulatory actions have been companies were not issued as the applications initiated against companies for their failure were incomplete or due to unsatisfactory to redress investor grievances. During 2012- redressal of investor grievances.

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V. SEBI Toll Free Helpline was initially available on all working days from Monday to Friday from 9:30 a.m to 5:30 To facilitate replies to various queries p.m (excluding declared holidays). ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ securities market, SEBI had launched toll free ȱěȱȱȱŗǰȱŘŖŗŘǰȱ ȱ helpline service number 1800 22 7575/1800 266 has extended its toll free helpline service 7575 on December 30, 2011. (1800 22 7575 / 1800 266 7575) to Saturday and Sunday also. The services on Saturday The toll free helpline service is available and Sunday are available to investors from to investors from all over India and is in 9:30 a.m. to 5:30 p.m presently in English, ŗŚȱ ȱ £ǯȱ ǰȱ ǰȱ ǰȱ Hindi, Marathi and Gujarati only. The Gujarati, Tamil, Bengali, Malayalam, Telugu, number of calls received on Toll Free Helpline Urdu, Oriya, Punjabi, Kannada, Assamese during the Financial Year 2012-13 is given in and Kashmiri. The toll free helpline service following chart below.

152 Part Three: Regulation of Securities Market

ȱ ěȱ ȱ ȱ ŘŖŗŘǰȱ ȱ awareness among maximum people across Helpline introduced an option of receiving ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ a feedback from the callers and based on the nation. As part of the above Campaign, feedback received various measures have advertisements related to topic “Investor been adopted for improvement of the helpline Grievance Redressal Mechanism at SEBI” services. intending to create awareness regarding SEBI’s SCORES and Toll Free helpline, have VI. Investor Assistance been broadcast in mass media (TV, Radio SEBI provides assistance / guidance to and Print) during December 2012 to February investors by replying to their queries received 2013. through the following modes Education and awareness along with the Ȋȱ Ȭȱǻ[email protected]) grievance redressal had been the thrust areas Ȋȱ ȱȱ ȱ ȱĜ as a part of capacity building and to make Ȋȱ Ĵ ȱęȱȱ ȱ ȱȱ in securities market. SEBI replied 1,874 queries during April 1, 2012 to Mar 31, 2013. Assistance so ǯȱ ȱ ȱȦȱ rendered to investors was augmented by Workshops gathering details from the FAQs, Circulars Various investor awareness programs etc available on SEBI website, and from the have been conducted by SEBI with the help details gathered through e-mail, phone calls of Exchanges, Depositories and various trade from market intermediaries. bodies like AMFI etc. SEBI also reimburses VII. Investor Education - Multimedia the cost of the approved programs conducted Campaign by Investor Associations recognised by SEBI, subject to certain limits. The topic for all In December 2012, SEBI launched ȱ ȱ ȱ ȱ £ǯȱ ȱ a Multi-media Investor Education and Grievance Redressal Mechanism in Securities Awareness Campaign, with objective Market. of giving important messages, creating general awareness among the investors and ȱřǯŚŗǱȱ ȱȱ ȱȦȱ prospective investors across the nation, Workshops Conducted by SEBI regarding various relevant topics of investor Financial 2007- 2008- 2009- 2010- 2011- 2012- Year 08 09 10 11 12 13 ȱ £ǰȱ ȱ ȱ ȱ ȱ respect of schemes which promises unrealistic 1234567 returns, grievance redressal mechanism, Number of awareness regarding the products / programs 15 26 40 149 175 216 ȱǻ ȱȱ¢ȱęȱ Ǽȱȱȱȱȱȱ£ǰȱ A. Regional Seminars Mutual Fund, investment through Primary This initiative started in 2011-12 has been and Secondary Market etc. extended to reach out to more people and Campaign is being carried at pan concentrating primarily on Tier II and Tier India level in Hindi, English and 11 major III cities. As on March 31, 2013, 44 regional regional languages, with an idea of spreading seminars have been conducted in places like

153 Annual Report 2012-13

Sultanpur, Rourkela, Sambalpur, Rangpo, awareness across various topics in securities Gangtok, Satara, Dehradun, Rajkot, Varanasi, market. An in-house video on ‘How to lodge Akola, Guwahati, Durg, Rajnandgaon, a complaint in SCORES’ has been developed Bilaspur, Corba, Thiruvananthapuram, and few more are in the pipeline. Hyderabad, Port Blair, Jamnagar, Porbandar, Pune, Nagpur, Kolhapur, Tiruchirapalli, D. Financial Education Aurangabad, Indore, Ranchi, Bhopal, Raipur, With the aim of spreading financial Ujjain, Jabalpur, Bhubaneswar, Gwalior, literacy, SEBI has taken up various programs Thrissur, Patna, Meerut, Agra, Lucknow, across the country. The resource person Chennai, Jaipur, Amritsar, Jamshedpur, model developed by SEBI has been well Aligarh, Bareilly, Silchar, Durgapur, Kanpur, appreciated internationally as well as by other Mysore, Mangalore, Chandigarh, Jodhpur, regulators and various ministries. Kharagpur, Shillong, Salem, Agartala, E. School Programs Vishakhapatnam. (Table 3.42) ȱȱęȱ¢ȱȱ Table 3.42: Regional Seminars Conducted named ‘Pocket Money’ for school students by SEBI during 2012-13 jointly with National Institute of Securities Financial Year 2011-12 2012-13 Total Market (NISM) in 2008-09 and positioned 1 234 it as an important life skill at the school Number of level targeting mainly 8th and 9th standard Seminars 47 44 91 students. Under the Pocket Money programme, B. Dedicated Investor Website financial literacy was imparted to school SEBI maintains an updated, students. It includes orientation programmes comprehensive website for education of for the School Principals, training programmes investors (www.investor.sebi.gov.in). The for teachers followed by the teachers conducting website has been revamped to make it more ȱȱȱęȱȱȱ user friendly and the educative material covered in the pocket money programme to is being updated. The schedule of various the students. At the end of the programme, programmes is also updated on the website. examination is conducted for the students and SEBI Investor website have been rated four ęȱ ȱȱǯ ȱȱęȱȱȱȱȱ¢ȱ ȱ During the year 2012-13, twenty-five to evaluate regulator websites on investor programs being conducted, benefiting a ǯȱ ěȱ ȱ ȱ ȱ ȱ ȱ total of 1,180 Teachers were conducted. popularise Rajiv Gandhi Equity Savings The programme could reach to 150 schools Scheme (RGESS) through the website. A covering 5,072 students during the year. dedicated link for the RGESS has been Programme was also conducted in schools in provided in the SEBI investor website. Kerala, Karnataka, Mumbai and Tamil Nadu. ǻȱřǯŚřǼȳ C. Educative Material for Investor ȱȱ F. Through SEBI trained Resource Persons SEBI is in the process of updating various SEBI launched a financial education materials relating to investor education and drive through Resource Persons (RPs) in

154 Part Three: Regulation of Securities Market

Table 3.43: School Programs Conducted by SEBI during 2012-13 No. of No. of No. of No. of training the Year Schools Teachers Students trainer Programs Covered trained Covered Conducted 1 2345 2008-09 151 230 0 8 2009-10 10 161 3,876 5 2010-11 31 110 4,311 2 2011-12 360 631 50,946 14 2012-13 150 1,180 5,072 25 Total 702 2,312 64,205 54

June 2010, where teachers and lecturers The study material developed for the were trained and empanelled for conducting above target groups is presently available ęȱȱ ǯȱȱȱ in 10 vernacular languages covering various deliberations at various levels, the eligibility topics. criteria for being empanelled as Resource ȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬŗřǰȱ ȱ Persons has been broadened. The revised rounds of empanelment and training were eligibility criterion presently is as follows: conducted taking the number of RPs on panel from 297 in 2011-12 to 911 as on March 31, ǯȱ ęǱ 2013, from around 313 districts covering 26 ȱȱȱȱęȱȱǰȱ states and four union territories. Through economics, management, law, science and ȱȱǰȱȱśǰşřŚȱęȱ graduates in engineering & medicine education workshops in around 335 districts covering 25 states and 4 union territories have b. Employment: been conducted during the financial year Ȋȱ ¡Ȧȱ ȱ ȱ ȱ ǰȱ ǰȱ 2012-13. (Table 3.44) XII, Graduates and Post Graduate course of college. Table 3.44: Trends in Financial Education Programs through Resource Ȋȱ ¡Ȧȱ ¢ȱ ȱ Ȧ Persons (RPs) state government, various regulators, PSUs and ex-defence persons. Financial Year 2010-11 2011-12 2012-13 Total 12345 c. Experience Total 176 3,089 5,934 9,199 Working experience of at least three years. G. Through SEBI Officers as Resource Apart from the above eligibility criteria, Persons the empanelled RP is also required to abide As a part of SEBI’s financial literacy by the terms and conditions and code of initiative and to further expand our activities, conduct. The workshops conducted through it was decided that SEBI officers may be the Resource Persons are usually for 2 to 3 allowed to conduct financial education hrs duration where the SEBI study material programs and investor education campaigns is distributed free of cost to the participants. ȱȱ¢ǯȱȱŗŗśȱ ȱĜȱ

155 Annual Report 2012-13

voluntarily empanelled themselves as RPs 1992 and actively embarked many studies and have conducted 71 programs across the along with making mandatory reports as per ¢ȱȱȱęȱ¢ǯ the Act.

IX. Visit to SEBI DEPA is responsible to maintain a repository of data for entire capital/ SEBI invites students from schools, securities market, collection of data from colleges and professional institutes who are various sources, verifying their accuracy interested to learn about SEBI and its role as and continuously maintaining/ updating the a regulator of securities markets. The program data. During 2012-13, SEBI has published was started in February 2011 and has been SEBI Annual Report 2011-12, Handbook quite popular. Till date SEBI had conducted of Statistics on Indian Securities Market 80 such visits; and participants visiting from 2012 and SEBI monthly Bulletin which are different parts of the country (Amritsar, available in the publication section of SEBI Pondicherry, Goa, Bareilly, Thrissur etc.) and website (www.sebi.gov.in). SEBI has been ȱ ěȱ ȱ ǻ¢ȱ ǰȱ distributing these publications to various Management, Commerce, Banking, Law, Arts, stakeholders in the market like research science etc.). Educational institutions from institutions, investor associations, mutual ȱ ěȱ ȱ ȱ ŗȱ ȱ ȱ funds, banks, etc on gratis. Apart from ȱ ŘŖȱ ěȱ ȱ ȱ ȱ ȱ the publication, SEBI was responsible for under this program. providing weekly-monthly report on Indian Securities Markets and Monthly Report on 11. RESEARCH ACTIVITIES ȱ Ě ȱ ȱ ȱ ȱ ȱ ¢ȱ Section 11(2) (l) of the SEBI Act enshrines of Finance (MoF). SEBI is contributing SEBI to undertake research activities for the capital market segment on Red Book effectively fulfilling its functions. The Payment System in India (published by Department of Economic and Policy Analysis Bank of International settlement (BIS)), (DEPA) assumes its role primarily from Economic Survey for India and Government Section 11 (2) (l) and Section 18 of SEBI Act, of Maharashtra.

156 Part Three: Regulation of Securities Market

I. Research Inputs derivatives segment like ‘ Cross Border SEBI has launched the SEBI DRG Study Transaction of Capital among SAARC project by inviting research proposals through Ȃȱ Ĵȱ ȱ ȱ ǰȱ ȱ ǯȱ ȱ ȱ ȱ Ĵȱ Kathmandu. was constituted for short listing proposals II. Market Interactions received from the applicants. The Selection Ĵȱȱȱȱ ȱȱ SEBI invites renowned scholars and proposals and the studies are in progress: financial market practitioners, to deliver lecture/talk on the topics related to securities a. Impact of Increased Derivatives Trading markets, economics and finance. During in India on the Price-Discovery Process, 2012-13, SEBI invited experts to speak on b. Penetration of Mutual Fund Industry in the topics such as : “Foreign Trade and India; and Ȭȱ ȱ Ě ȱ ȱ Ǳȱ ȱ c. Foreign Investment in the Indian and Challenges”, “Post Crises Reforms: Government Bond Market. Financial Regulation Issues, Dodd Frank ȱȱȱȄǰȱȃȱĚ ȱȱ SEBI has also initiated research activities Indian equity markets”, “Business cycles related to primary market, secondary market ȱ ęȱ Ȅǰȱ ȃȱ ȱ ȱ and institutional participations in the Indian (Arbitrage, Speculation, and Hedging)”, capital markets for the market development. “Market Liquidity: Asset Pricing, Risk, and Further, SEBI is trying to identify the data Ȅǰȱ ȃȱ ȱ ȱ ĴȄȱ ȧȱȱȱȱęȱ and “How should we present India story to of data disseminated to help the market Investors (Domestic as well as Foreigner)”. participations. SEBI has also conducted study on cross-country experience in risk ȱ ȱ £ȱ ȱ ȱ ȱ management framework in equity cash and Programme to get futuristic inputs on

157 Annual Report 2012-13

various issues important for development coordinated assistance/inputs from SEBI and regulation of securities market such as to FSDC in monitoring Systemic Risks in raising of capital, corporate bond market, respect of Securities Market and monitoring mutual funds, etc. The programme was of Systematically Important Financial held in Mumbai on February 11, 2013. The Institutions (SIFI) under the jurisdiction of program involved interaction with the SEBI. SSU is also coordinating with RBI and experts, academicians, market participants, concerned Departments in SEBI in respect industrialists etc. of circulation of agenda notes, minutes, ȱ ȱ ȱ ȱ Ĵȱȱ III. Risk Management and providing inputs and write up from SEBI has set up Systemic Stability the securities market related perspective for Unit (SSU) to assess systemic risks, if any, Financial Stability Report (FSR) published by ȱ ȱ ȱ ȱ ȱ ěȱ RBI.

158 PART FOUR: REGULATORY CHANGESPart Four: Regulatory Changes

The SEBI Board has taken various ȱ ȱ ȱ ȱ ȱ ȱ regulatory measures to protect the interests ¢ȱȱȱȱȱȱ ȱ of investors in securities market, for the in the form of a trust or a company or a LLP development of the securities market and ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ to regulate the securities markets. Various from investors, whether Indian or foreigner amendments to the existing regulations were ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ęǯȱȱ¢ȱȱ¢ȱȱ investment policy. Mutual funds under the made is as follows: SEBI (Mutual Funds) Regulation, 1996 and collective investment schemes under SEBI 1. REGULATORY DEVELOPMENTS (Collective Investment Schemes) Regulations, 1999, family trust, ESOP trusts, employee I. New Regulations welfare trusts, holding companies, etc. are A. SEBI (Alternative Investment Funds) expressly excluded. Regulations, 2012 w.e.f. May 21, 2012 ¡ȱ ȱ ȱ ȱ ȱ ȱ The Securities and Exchange Board ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ of India (Alternative Investment Funds) ¡ȱȱȱȱȱ¢ȱȱȱ Regulations (“AIF Regulations”) repealed the ȱ ȱǯȱȱȱȱȱĴȱȱ SEBI (Venture Capital Funds) Regulations, launch any new scheme or raise any capital 1996 (“VCF Regulations”). The AIF ȱ ¢ȱ ȱ ȱ ȱ Regulations were introduced with a view corpus unless they seek registration. ȱ ȱ ȱ Ĝ¢ȱ ¢ȱ ȱ unregulated funds, encouraging formation of Before raising any funds, AIFs are new capital and consumer protection. The AIF required to state their investment strategy, Regulations are the outcome of the Concept ȱ ȱ ȱ ȱ ȱ ȱ Paper, issued in August 2011, which was ȱȱȱ ȱȱȱȱ drafted with a view to shift SEBI’s regulatory ęȱ ȱ ȱ ȱ ȱ řŖȱ ¢ȱ ȱ ȱ ȱ strategy from the existing facilitative regime launch of the scheme giving material detail to a mandatory regime. ȱ ȱ ǯȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ A significant requirement of the AIF ȱȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱ ȱȱěǯ raising capital from investors unless they ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ Ȃȱ¢ȱȱ the following three categories: regime: (i) Venture Capital Funds; (ii) Private ȱ ȱ ȱ ¢ȱ ǲȱ ǻǼȱ a. Category I include those AIFs for which ȱ ¢ȱ ǲȱ ǻǼȱ ȱ ǲȱ ǻǼȱ certain incentives or concessions might Infrastructure Equity Funds; (vi) Real Estate ȱ ȱ ¢ȱ ȱ ȱ ȱ Funds; (vii) Small and Medium Enterprises of India or other regulators in India and Funds; (viii) Social Venture Funds; (ix) which shall include Venture Capital Strategy Funds; and (x) Residual category Funds, SME Funds, Social Venture (including hedge funds). Funds, and Infrastructure Funds.

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ǯȱ ¢ȱ ȱ ȱ ȱ ȱ B. Securities Contracts (Regulation) (Stock do not fall in Category I and III and Exchanges and Clearing Corporations) which do not undertake leverage or Regulations, 2012 w.e.f. June 20, 2012 ȱȱȱȱȱ¢ȬȬ¢ȱ The Securities Contracts (Regulation) operational requirements and cannot (Stock Exchanges and Clearing Corporations) engage in derivatives investments. Regulations, 2012 (“SECC Regulations”) were c. Category III has those AIFs including framed to provide for the ownership and hedge funds which trade with a view governance norms for stock exchanges and to make short term returns and may clearing corporations. employ leverage including through Previously, ownership aspects of stock investment in listed or unlisted ¡ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ǻǼȱ derivatives. (Manner of Increasing and Maintaining ȱ¢ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ AIF Regulations include: Exchanges) Regulations, 2006 (“MIMPS ȄǼǯȱ ǰȱȱȱ¢ȱ a. The AIF shall not accept from an investor applied to those stock exchanges that were an investment of value less than one corporatized and demutualised in terms of crore. schemes prepared in pursuance of the power ǯȱ ȱȱȱȱȱȱȱŘŖȱ under section 4B of the Securities Contracts crore. (Regulation) Act, 1956 (“SCRA”). The SECC Regulations were framed to provide a c. The manager or sponsor for a Category ȱ ȱ ȱ ȱ ȱ ȱ I and II AIF shall have a continuing exchanges and clearing corporations, repealed interest in the AIF of not less than 2.5 ȱ ȱ ȱ ȱ ȱ percent of the initial corpus or five the aspects of MIMPS Regulations dealing crore whichever is lower. For Category with shareholding restriction and fit and III Alternative Investment Fund, the proper criteria. Since Securities Contracts ȱȱȱȱȱȱȱ (Regulation) Rules, 1957 (“SCRR”) already ęȱ ȱ ȱ ȱ ȱ ȱ ŗŖȱ ǰȱ provided for the aspects of recognition, the whichever is lower. SECC Regulations cross refer to the SCRR ǯȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ with regard to these aspects. ȱ ȱ ȱ ȱ ȱ ȱ ȱęȱȱȱ ȱ¢ȱȱ memorandum with SEBI along with SECC Regulations are as follows: ȱǯ a. Mandatory recognition of clearing ǯȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭ corporations: The SECC Regulations ended and shall have a minimum tenure makes it mandatory for those entities ȱ řȱ ¢ǯȱ ǰȱ ¢ȱ ȱ ȱ ȱȱȱĴȱȱȱ¢ȱȱ ¢ȱ ȱ ȱ Ȭȱ ȱ Ȭ recognition as clearing corporations. ended. ǯȱ Corporatized and Demutualised f. No scheme of the AIF shall have more entity: Stock exchanges and clearing than one thousand investors. ȱ ȱ ȱ ȱ ȱ

160 Part Four: Regulatory Changes

corporate entities. Trading and clearing such as code of conduct, regulation of ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ compensation policy, etc. ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ g. Corporate Governance: The SECC clearing corporations. Further, the SECC Regulations provide for methods to Regulations provide for a minimum 51 promote good corporate governance. ȱ ȱ ǻȬȱ Ǽȱ ȱ ¡ǰȱ ȱ Ĵȱ ȱ ǯȱȱȱȱȱȱ ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ are mandated. Also, provisions for ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱȱȱȱǯ mandated. Further, clearing corporations c. Adequate dispersal of shareholding: and stock exchanges are mandated to No single entity or person can acquire ensure equal, unrestricted, transparent ȱ ȱ ȱ ȱ ęȱ ȱ ǻęȱ and fair access to all persons without percent in the case of institutions like ¢ȱȱ ȱȱȱȱ ȱ ȱ ȱ ǰȱ entities. ȱ ęȱ ȱ ǯǼȱ ȱ ȱ h. Listing of securities: Recognised stock paid up equity capital of a recognised ¡ȱȱĴȱȱ¢ȱȱȱ stock exchange or clearing corporation. of its securities on any recognised stock exchange other than itself. d. Fit and proper criteria: All shareholders, directors and key management personnel C. SEBI (Investment Advisers) ȱȱȱ ȱęȱ¢ǰȱ Regulations, 2013 w.e.f. January 21, 2013 good reputation etc. The SEBI (Investment Advisers) e. Net worth: Taking into account the ǰȱ ŘŖŗřȱ ǻȃ ȱ ȄǼȱ central role that stock exchanges and were framed to provide a framework for clearing corporations play in the registration and regulation of investment securities market and the risk that these advisers. Only the act of giving advice is institutions need to manage, net worth regulated under the IA Regulations, whereas ȱ ȱ ȱ ȱ the regulation of selling of products, if ȱ ȱ ȱ ¡ȱ ȱ ȱ ¢ǰȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǯȱ ǰȱ ȱ ȱ ȱ the product regulators like IRDA, RBI and within which these requirements need PFRDA. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ provided. ȱ ȱ ȱ ȱ ǰȱ ¢ȱ f. Manner, conditions and terms of corporate (including LLPs) and partnership appointment of directors: Taking into ęǰȱ ǰȱȱǰȱȱȱȱ account the need to ensure healthy ȱȱȱȱȱȱ management of stock exchanges to investors or other persons or group of and clearing corporations, the SECC persons and includes, any person who holds Regulations provide for the manner ȱȱȱȱǰȱ¢ȱ ȱ of appointment of directors and also name called. The salient features of the IA ȱ ȱ ȱ ȱ ȱ ǰȱ Regulations are as follows:

161 Annual Report 2012-13

a. Exemption from registrations ȱǯȱ¢ȱȱȱȱȱȱ¢ȱȱ ȱ ȱ ȱ ȱ ȱ ęȱ¢ȱȱǯ exempted from registration: b. Banks/Body corporates i. Person giving general comments ȱ Ȧȱ ¢ȱ ȱ ȱ ȱ relating to securities market in good ěȱ ȱ ȱ ¡ȱ ȱ ȱ faith; ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǯȱ ȱ Ȧȱ ǰȱ ȱ ȱȱȱ¢ȱȱȱ¢ȱ advisers advising solely in insurance ęȱ ȱ ȱ ȱ ǻ Ǽǯȱ products/ pension products and ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ registered with IRDA/ PFRDA segregated from other activities. Moreover, respectively; ȱ ȱȱȱȱȱȱȱȱ ȱȱȱȱ¢ȱȱ ȱ ǯȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ £ȱ ¢ȱ ȱ ȱ ȱ execution services. registered with an association of asset management companies of mutual c. Compensation funds, providing any investment advice ȱȱȱȱȱȱ to its clients incidental to its primary any remuneration or compensation from activity; ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ iv. Advocates, solicitors, law firms, advised, in respect of the underlying products ȱ ȱ ǰȱ ǰȱ ǰȱ or securities for which advice is provided. Actuarial Society of India providing investment advice to their clients d. Name incidental to their professional service; ȱ ȱ ǰȱ ȱ ȱ ȱ individual, registered under the regulations ȱ ǯȱ Ȭȱ ȱ ǰȱ is required to use the words “investment Ȭǰȱ ȱ ǰȱ adviser” in their name. ȱ ȱ ǻ ǰȱ ȱ intermediaries shall comply with the e. General responsibility ȱ ȱ ȱ ȱ The IA Regulations provide for code of provisions of the Regulations) ǰȱę¢ȱǰȱȱǰȱȱ vi. Any person who provides investment ęȱȱȱȱȱȱȱ ȱȱ ȱ¡¢ȱȱȱȱȱ ȱȱ¢ȱȱȱȱȱ ȱ ǯȱ ǰȱ ȱ ȱ advice. ȱ ȱ ȱ Ȭȱ Indian or Person of Indian Origin f. Obligations of investment advisers will fall within the purview of the IA ȱ ȱ ȱ ȱ ȱ Regulations; include: vii. Any representative and partner of an i. An investment adviser is required to investment adviser which is registered ȱ ȱ ȱ ę¢ȱ ¢ȱ ȱ ȱ ȱ under the IA Regulations: and interest of its clients.

162 Part Four: Regulatory Changes

ii. An investment adviser shall not divulge Placement Programme (IPP). A promoter ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ client without prior permission, except ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ through IPP or OFS through the stock made in compliance with any law. ¡ȱȱęȱ¢ȱ ǰȱ iii. An investment adviser is required to act ȱ ȱ ȱ ȱ ȱ ȱ ȱ¢ȱȱȱȱȱęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ in the IA Regulations. ȱ ȱ ȱ ěǻǼȱ Ȧȱ programme(s). iv. An investment adviser is required to conduct risk profiling and risk B. SEBI (Depositories and Participants) assessment of the investor. (Amendment) Regulations 2012 w.e.f. v. An investment adviser is required to September 11, 2012. ȱ ȱ ȱ ȱ ȱ In line with the recommendation of ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱĴǰȱȱ ȱǻȱ the client. and Participants) Regulations, 1996 were vi. An investment adviser is required to amended to incorporate, inter alia, the ȱ Ĵȱ ȱ ȱ ȱ ȱ norms on shareholding and governance of 5 years. of depositories. The key features of the vii. An investment adviser is required amendment are as follows: to conduct yearly audit in respect of ŗǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ compliance with the IA Regulations. ȱ ȱ ȱ ȱ ȱ ȱ An investment adviser is required to depository. maintain proper system and procedure for 2. A person whose shareholding exceeds redressing grievances of clients. two percent of the paid up equity share capital of a depository is required to seek II. Amendments to Existing Rules/ ȱ ȱ ȱ ȱ ęȱ ¢ȱ Regulations of the acquisition. řǯȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ A. SEBI (Issue of Capital & Disclosure a sponsor of any depository is not Requirements) (Third Amendment) allowed to hold more than 24 percent Regulations, 2012 w.e.f. August 24, 2012 of the paid up equity share capital The SEBI (Issue of Capital & Disclosure of that depository. Mandate on the Requirements) (Third Amendment) sponsor stock exchange to reduce the Regulations, 2012 implement the following shareholding to 24 percent within a Ǳ ȱȱřȱ¢ǯ 1. To align the ICDR Regulations with Śǯȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ŗşǻŘǼǻǼȱ ȱ ȱ ȱ ȱȱȱȱȱȱ (Regulation) Rules, 1957; and appointment of directors. Řǯȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ěȱ śǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŘȱ ȱ ȱ ȱ ȱ for directors and key management ěȱ ȱ ȱ ǻǼȱ ȱ ȱ personnel.

163 Annual Report 2012-13

6. Depositories are now required to have 5. Brokerage and transaction cost an adequate Business Continuity Plan for ȱ ȱ ȱ ȱ ȱ ¡ȱ data and electronic records to prevent, of trade are capped to the extent of 12 prepare for, and recover from any ȱ ȱ ȱ ȱ ȱ ȱ ȱ disaster. ȱśȱȱȱȱȱǭȱǯ 7. A depository is required to ensure equal, 6. To improve the geographical reach of fair and transparent access to all persons ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ money from smaller towns, AMCs related entities. are allowed to charge additional Total Şǯȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ǻǼȱ ǻȱ řŖǼȱ depositories to list its securities on a depending upon the extent of new ȱ ȱ ¡ǰȱ ȱ ȱ Ě ȱ ȱ ȱ ¢ȱ ȱ ŗśȱ ȱęȱȱȱǯ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ řŖȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ C. Securities and Exchange Board of India Ȧȱ ȱ ȱ ȱ řŖȱ ȱ (Mutual Funds) (Second Amendment) ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ǰȱ Regulations, 2012 w.e.f. September 26, or 15 percent of the average assets 2012 under management (year to date) of the The SEBI (Mutual Funds) (Second scheme, whichever is higher. In case of ǼȱǰȱŘŖŗŘȱȱȱȱ ȱĚ ȱȱȱȱ following regulatory changes: ȱȱ ȱȱȱǯ 1. Asset Management Companies (AMCs) 7. In order to encourage long term holding are required to disclose half yearly and to reduce churn and align the ęȱȱȱȱȱȱȱ ȱȱȱȦȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ that of the investors: ȱȱȱȱȱȱȱȱ national English daily newspaper and ǻǼȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ one regional newspaper. credited to the scheme while the Řǯȱ ¢ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ allowed. ȱȱȱ¡ȱȱŘŖȱǲȱ and řǯȱ ȱȱȱĚ¡¢ȱȱȱ quantum of investment and advisory ǻǼȱ ȱȱȱȱȱǻȱȱ ȱȱȱȱȱȱ¡ȱ ȱ ȱ Ě ȱ ȱ ȱ ¢ȱ and provided the same are fully top 15 cities) is provided to the ȱȱȱěȱǯ extent the investments are redeemed 4. In the case of fund of funds schemes, within a period of one year. ȱȱȱȱȱĚ¡¢ȱ D. Securities and Exchange Board of to determine the individual proportions India (Issue of Capital and Disclosure ȱ ȱ ȱ ¡ȱ ȱ ¢ȱ ȱ Requirements) (Fourth Amendment) charged, including the weighted average Regulations, 2012 w.e.f. October 12, 2012 ȱȱȱ¢ȱ¢ȱǰȱ ȱȱȱȱǯ ȱ ȱ ȱ ȱ £ȱ ȱ ǰȱ

164 Part Four: Regulatory Changes

ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱ following regulatory changes: ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ the existing 10 percent, will not a. For enhancing the participation of retail ȱȬęȱ ȱ ǯ investors, share allotment system has ȱęȱȱȱȱ¢ȱȱ iv. To facilitate QIPs even in a falling applicant, irrespective of his application ǰȱ ȱ ȱ ȱ ȱ £ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ¡ȱ ȱ ȱ śȱ ǰȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ percent to the price calculated as aggregate. The system will satisfy more per the SEBI Regulations. ȱ ȱ ȱ ȱ ȱ ȱ v. To provide updated information ȱ ǯȱ ȱ ȱ to investors, listed companies have ȱ£ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ increased to ` ŗŖǰŖŖŖȬ` 15,000, as against disclosures in the prospectus on the existing ` śǰŖŖŖȬ` 7,000. ȱȱȱȱȱȱȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ and simplification of fund raising ǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ Ȭǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ęȱ ȱ purpose of FPOs / Rights Issue entrepreneurs, rationalize disclosures in ęȱ ȱ ȱ ¢Ȭ ȱ ȱ ěȱ ȱ ȱ links without requiring a repetition ȱȱȱ ȱǱȬ of such disclosures.

ǯȱ ȱ ȱ ȱ ȱ Ěȱ ǯȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ market capitalization reduced from offerings and enhance investor ` ` 5,000 crore to řǰŖŖŖȱ ȱ ȱ ǰȱȱ¢ȱȱȱȱ ȱ ȱ ȱ ȱ ȱȱȱȱȃę¢ȱ (FPOs) and rights issues through Ȅȱ ȱ ȱ ǯȱ ǰȱ ¢ȱ Ȭȱǯ ȱ ȱ ȱ ȱ ȱ Ȭ ii. To encourage professionals and ¡ȱ ȱ ęȱ ȱ ǯȱ ŗśȱ ȱ ȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ŘŖȱ ȱ ȱ to access the capital market through ¢ȱ ȱ ȱ ȱ ȱ either the SME platform or compulsory ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱ ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ participation of 75 percent, as against the Alternative Investment Funds existing 50 percent. such as SME Funds, Infrastructure d. To avoid any misleading signals to retail ǰȱȱǰȱǰȱǯǰȱȱ ȱȱȱ¡ȱȱȱ to a cap of 10 percent. in the issue, no withdrawal or lowering ǯȱ ȱ ȱ ȱ ¡¢ȱ ȱ ȱ ȱ £ȱ ȱ ȱ ȱ ȱ ȱ issuers, changes upto 20 percent ȱ Ȭȱ ȱ ȱ ¢ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱȱȱȱȱ

165 Annual Report 2012-13

¢ȱȱ ȱȱȱȱȱ 1. Shelf disclosure document ȱę£ȱȱǯ for private placement of debt securities: The amendment ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ regulations permitted issuers to ęȱȱȱȱȱ have Shelf Disclosure Document at least five working days prior to ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ opening of the issue, as against the amended regulations, an issuer current provision of two working days is not required to file a Shelf in the case of IPOs. This will provide Disclosure Document again if the more time to the market to analyze the ȱ ȱ ȱ ȱ issue. ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ŗŞŖȱ ¢ȱ ȱ ęȱ ȱ ǰȱȁ ȱȱȂȱȱ the Shelf Disclosure Document. ȱȱȱȱȱȱȱȱȱ ǰȱȱȱȱ Řśȱȱȱȱȱȱ¢ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ issuer as against existing no cap. respect to each tranche, containing ǯȱ ȱ¢ȱȱȱȱȱȱȱ details of the private placement associate of the issuer, these amendment and material changes, if any, in regulations mandate that it shall disclose the information provided in Shelf ȱȱȱȱȱȱȱȱȱ Disclosure Document. ‘Marketing Lead Manager’ and its role F. SEBI (Prohibition of Fraudulent and ȱ ȱ ȱ ȱ ȱ ȱ ȱ Unfair Trade Practices Relating to issue. Securities Market) (Amendment) Regulations, 2012 w.e.f. December 11, E. Securities and Exchange Board of India 2012 (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 w.e.f. ȱ ȱ ȱ ȁǻǼȂȱ ȱ ȱ ȱ Ȭ October 12, 2012 regulation (2) of regulation 4 of the SEBI ǻȱȱȱȱȱȱ The key features of these amendment Practices relating to Securities Market) ȱȱȱ Ǳ ǰȱŘŖŖřȱȱȱȬȱȱȱ a. Disclosures in relation to privately ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ placed bonds: The amendment fraudulent or an unfair trade practice. regulations introduced a standard template for disclosures on terms of G. Securities and Exchange Board of India the issue, financial information and (Self Regulatory Organisations) 2004 ȱ ȱ ȱ ěȱ ȱ ȱ (Amendment) Regulations, 2013 w.e.f ¢ȱ ȱ ȱ ǯȱ ȱ January 7, 2013 additional disclosures that have now These amendment regulations were ȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱęȱ¢ȱ Regulatory Organisations (SRO) that ȱȱȱȦ¢ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱęȱ¢ǯ of mutual funds and portfolio managers.

166 Part Four: Regulatory Changes

The SRO Regulations were notified on ȱ ȱ ȱ ȱ ȱ ǻȱ ŗşǯŖŘǯŘŖŖŚȱȱȱȱ¢ȱȱȱȱ Acquisition of Shares and Takeovers) force. Notification issued pursuant to the Regulations, 2011 (“Takeover Code”), the ȱǰȱȱȱȱȱ following changes were made to the Takeover ȱ ȱ ȱ ȱ ȱ ȱ Code: ȱ¢ȱȱȱȱȱ a. Public announcement in case of ȱ ȱ ȱ ȱ ȱ ¢ȱ combined modes of acquisition: portfolio managers. ȱ ȱ ȱ ȱ ȱ ȱ H. Securities and Exchange Board of rights is completed either through India (Issue of Capital and Disclosure an agreement and one of the other Requirements) (Amendment) specified modes, or through one or Regulations, 2013 w.e.f February 27, 2013 ȱ ȱ ȱ ęȱ ǰȱ ȱ ȱ ȱȱȱȱ ȱȱȱ In order to provide liquidity in the ȱ ȱ ȱ ęȱ ȱ ȱ ȱ domestic markets, the amendment regulations ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭ ¢ȱ ¢ȱ ȱ ȱ was made. This exception shall apply Depository Receipts (IDRs). Now, IDRs shall only when the acquirer discloses in the ȱȱȱ¢ȱ¢ȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱ¢ȱȱȱȱęȱ ȱȱǯ ¢ȱ ȱȱȱȱȱ ǰȱȱȱ to time. ǯȱ Public announcement in case of preferential allotment: Earlier, the I. Securities and Exchange Board of India date on which the special resolution ({KYC (Know Your Client) Registration approving the preferential allotment was Agency} (Amendment) Regulations, ȱ ȱ ȱ ȱ ȱ ȱ 2013 w.e.f. March 22, 2013 ȱȱȱȱȱǯȱ The SEBI (KRA) Regulations, 2011 After the amendment, the date on which were amended to provide that physical ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ the KRA. The KYC information is required ǯȱ ǰȱȱȱȱ ȱ ȱ ȱ ¢ȱ ȱ ǰȱ ȱ not allowed to withdraw such an open proper authentication, on the system of the ěȱȱȱȱȱȱȱȱ KRA. Physical copies of the KYC documents successful. ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ c. Disclosure requirements: The disclosure ¢ȱȱ ǯ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱ J. Securities and Exchange Board of India of Insider Trading) Regulations, 1992. (Substantial Acquisition of Shares and The revised clause clarifies that any Takeovers (Amendment) Regulations, person who acquires shares or voting 2013 w.e.f. March 26, 2013 rights of the target company is required Taking note of concerns raised during to disclose any change in shareholding

167 Annual Report 2012-13

exceeding two percent, even if such Investment Corporation Ltd. vs. SEBI change results in the shareholding falling (Civil Appeal. No. 9833/2011) ȱęȱǯ a.ȱ ȱ ȱ ȱ ȱ ȱ řŗǯŖŞǯŘŖŗŘȱ d. Relevant date in case of buy-back of order held that the issue of OFCDs shares: Earlier, a shareholder, who was to more than 50 persons fell within ȱȱ¢ȱȱȱ¢Ȭȱǰȱ Ȃȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ directed to provide the monies raised his shareholding within 90 days of ¢ȱ ȱ ǻȱ ȱ Ǽȱ ȱ ȱ ȱȱȱȱȱ¢ȱȱ ȱȱȱ ȱȱ ȱǻǼȱ ȱ ǯȱ ȱ ȱ was directed to refund the investors regulations have altered this requirement along with interest after undertaking to state that the period of 90 days shall proper verification of the documents ȱ ȱ ȱ ȱ ȱ ȱ ȱ and genuineness of the investors. The ȱȱ¢Ȭǰȱȱȱȱȱȱ court fixed a period of 10 days for ȱȱȱȱȱ¢ȱ provision of all the documents and three ȱȱǯ months for providing monies to SEBI. SEBI was directed to take appropriate e. Completion of market purchases during ȱ ȱ ȱ ȱ Ȭȱ the offer period: As per the earlier of its directions. Justice B N Agrawal provisions, an acquirer could not acquire (Retd.) was appointed to oversee the shares or voting rights which triggered entire process. ȱěȱȱȱȱ¡¢ȱȱ b.ȱ ȱ ȱ ȱ ȱ Ȭ¢ȱ ȱěȱǯȱ ȱȱ ȱȱ with the SC directions citing various amendment regulations, acquisition of pretexts. SEBI accordingly filed its shares of the target company may now status reports (three as on date) with ȱȱȱȱȱ ȱ ȱ ¢ǯȱ ȱ ȱ ęȱ ȱ ȱȱȱȱ¡ȱĴȱ applications in SAT with a view to ȱ ǻȱ ȱ Ȧȱ Ǽȱ ¡ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱȱȱěȱȱȱǯȱ documents and the refund amount to ǰȱ ȱ ȱ ȱ ¢ȱ ȱ ǯȱȱȱ ȱȱ¢ȱ completed only if such shares are kept SAT, with a direction to approach SC for in an escrow account and the acquirer ¢ȱǯȱ¢ȱȱȱȱ doesn’t exercise any voting rights over of the Saharas, Supreme Court directed such shares. Saharas to immediately deposit ` 5,120 ȱ ȱ ŗŖǰŖŖŖȱ ȱ ¢ȱ ŗȱ ȱ ȱ 2. SIGNIFICANT COURT ¢ǰȱ ŘŖŗřȱ ȱ ȱ ¢ȱ ŗȱ ȱ ȱ PRONOUNCEMENTS ǰȱŘŖŗřǯ

I. Supreme Court B. M/s. P.G.F. Ltd. vs. Union of India (Civil Appeal No. 6572 of 2004) A. M/s. Sahara India Real Estate Corporation Ltd. vs. SEBI (Civil Appeal. a.ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ Ŝǰȱ No. 9813/2011); M/s. Sahara Housing ŘŖŖŘǰȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ

168 Part Four: Regulatory Changes

ȱȦȱǯ ǯǯȱǰȱ¢ǰȱȱȱ to any particular commercial activity and development of agricultural land, such as a shop or any other commercial ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ were all collective investment schemes. operation or transportation or shipping It further directed that since the M/s or entertainment industry etc. The ǯ ǯǯȱ ȱ ȱ ȱ ¢ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ the statutory requirement as provided identify any scheme or arrangement, under the SEBI (Collective Investment ȱ ȱ ȱ ȱ ȱ ǰȱ Ǽȱ ǰȱ ŗşşşǰȱ Ȧȱ ǯ ǯǯȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ Limited shall neither collect any money funds at the instance of someone else from investors nor launch any new who comes forward to promote such scheme and it shall refund the money ȱȱȱȱ¢ȱęȱȱ collected under the schemes, and failing such scheme or arrangement provides which threatened to initiate actions as for the various consequences to result ȱ ȱ ȱ ȱǰȱ ŗşşŘȱ ȱ there from. SEBI (Collective Investment Schemes) Regulation, 1999. d.ȱ ȱȱȱȱȱȱȱȱ Parliament in enacting the SEBI Act itself b.ȱ ȱ ¢ȱ ȱ ȱ ȱ and in particular the addition of section order, the appellant preferred an appeal 11AA was with a view to protect the ȱȱ Ȃȱ ȱȱȱȱ ȱȱȱȱ ȱȱȱ ȱ ¢ǯȱȱ Ȃȱ ȱǰȱ and uneducated or retired personnel in its order dated July 26, 2004, upheld ȱ ȱ ȱ ȱ ȱ ȱ ȱ the validity of section 11AA of the SEBI group and who seek to invest their hard Act, 1992. ȱȱęȱȱȱȱ c.ȱ Ȧȱ ǯ ǯǯȱ ǯȱ ęȱ ȱ ȱ ȱ such schemes with a view to earn some ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱęȱȱ ȱȱȱȱ ȱ ȱ ȱ Ȃȱ ȱ ǯȱ ȱ that such investment will get appreciated Ȃȱ ȱ ǰȱ ȱ ȱ ȱ in course of time. In this regard, the ȱ ȱ ŗŘǰȱ ŘŖŗřǰȱ ȱ ȱ ȱ Ȃȱ ȱ ȱ ȱ ȱ ŗŗȱȱȱȱǰȱȱěȱ ȱ ȱ ȱ Ȧȱ ǯ ǯǯȱ ȱ ȱ ȱ¢ȱę¢ǰȱȱȱȱȱȱ having perpetrated this litigation was into the specific activities of sale of frivolous and vexatious in every respect, agricultural land and its development. ȱ ȱ ȱ ȱ ȱ ȱ ȱ Therefore, there was no scope to apply ȱ¢ȱȱȱȱȱȱ Entry 18 of List II of Seventh Schedule in 11AA of the SEBI Act without any order to strike down the said provision ȱȱȱȱȱȱ on the ground of legislative competence. prolonged this litigation for more than a ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ȭȱ defrauding its customers who invested (2) of section 11AA of SEBI Act, 1992, their hard earned money in the scheme ȱ ęȱ ȱ ȱ ȱ of sale of land and its development. As scheme, disclosed that it is not restricted ȱ Ȃȱ ȱ ȱ ȱ

169 Annual Report 2012-13

that the appellants had not approached ȱ ȱ ¢ǰȱ ȱ ȱ ȱ the Court with clean hands, it imposed dealing in the securities, directly or exemplary costs of Rs. 50 lakh, while indirectly, for a period of two years from dismissing the appeal. the date of the order under section 11 ȱ ŗŗȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ e. It further held that the activity of the of alleged violations with respect to the Ȧȱ ǯ ǯǯȱ ǰȱ ¢ǰȱ ȱ ȱ rights issue of M/s RKIL. and development of agricultural land squarely fell within the definition of b. The company M/s RKIL is listed in collective investment scheme under ¢ȱ ȱ ¡ȱ ȱ ȱ ȱ ŘǻŗǼǻǼȱ ȱ ȱ ȱ Stock Exchange. It came out with section 11AA of the SEBI Act, 1992 and rights issue. The issue opened on consequently SEBI’s order was perfectly 18.11.2010 and closed on 16.12.2010. ȱ ȱ ȱ ȱ ȱ ȱ ȱ SEBI noticed several complaints from ȱ ȱ ȱ ǯȱ ȱ Ȃȱ ȱ ȱ Ȭȱ ȱ Supreme Court directed the Central Composite Application Forms (CAFs) Bureau of Investigation as well as the during the routine inspection of Knack Department of Income Tax to conduct Corporate Services Private Limited, ȱ ǯȱ ȱ Ȃȱ the Registrar to an issue (RTI) of the Supreme Court also directed SEBI to rights issue of M/s RKIL and it was proceed with its investigation/enquiry noticed during inspection that CAFs ȱȱȱȱȦȱǯ ǯȱȱ were not dispatched as mentioned in the ȱ ȱȱȱȱȱĜȱȱȱ ȱȱ¢ȱȦȱ ȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ the RTI had produced forged records/ carried out in accordance with law, take documents with regard to proof of necessary steps for ensuring the refund dispatch of CAFs and further M/s RKIL ȱȱȱȱ¢ȱȱȦȱǯ ǯȱ ȱȱȱȱȱ Limited in connection with the sale in the rights issue and the promoter of and development of land to its various M/s RKIL A Venkataramani had failed customers. ȱ ȱ ȱ ȱ ȱ ȱ ȱ closure of the rights issue. It was also II. High Courts ȱ ¢ȱ ǰȱ ȱ ȱ ǰȱ ȱ Ȭȱ ȱ ȱ A. M/s. Ram Kaashyap Investment Ltd provisions of the ICDR Regulations, 2009 (RKIL) vs. SEBI & Shri Venkataramani and DP Regulations, 1996, concealment vs SEBI (W. P. Nos. 1214/2013 & of material information and making 1292/2013) - Before Hon’ble Madras misleading disclosures with regard High Court to the rights issue and thus violating ȱȱ ȱǻǼȱǰȱ a.ȱ ȱ ȱ ȱ řŗǯŗŘǯŘŖŗŘǰȱ ȱ ŘŖŖřȱ¢ȱȦȱ ȱȱȱǰȱǯǯǰȱ petitioners (the company and its the petitioners herein. Ǽȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ c.ȱ ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ dismiss the writ petitions on the ground

170 Part Four: Regulatory Changes

ȱ¢ȱȱȱ ȱȱ of appeal as provided in the Act is a bar to since the statutory appellate remedy is entertain these writ petitions. On a perusal ȱȱȱ ȱǯ of the Act and the rules made thereunder, I ȱȱȱȱ ȱȱȱȱĚȱ d. The petitioners argued that one man appeal is provided under the Act, that too, ȱ ȱ ȱ ȱ with a member having special and technical cannot take up the appeal as it lacks the knowledge in the relevant field. In such necessary forum and that Rule 5(2) of the ǰȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ SAT (Procedure) Rules, 2000 deals with waive on the appeal remedy and to entertain ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ the writ petition.” ȱȱȱȱȱȱȱȱ ŗŞȱ¢ȱȱ¢ȱȱȱȱȱ ȱȱȱȱ¢ȱȱȱĜȱ B. Shri Sandeep Jain vs. Union of India ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ and Others (W.P. No. 5847 of 2012) – ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ Before Hon’ble High Court of Bombay ǯ a. A writ petition under Article 226 of the Constitution of India was filed e.ȱ ȱ ȱ ȱ ȱ “the order ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ęȱ SEBI. From this order, the petitioner before the Appellate Tribunal and Section ȱ ȱ ȱ ȱ ȱ ȱ ȱ 29 of the Act enables the Government to ȱ ȱ ȱ ǻǼǯȱ ȱ make Rules for carrying out the purpose this writ petition, the petitioner had ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ¢ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ the Central Government under Rule 5(2) ȱ ȱ ȱ ȱ ȱ Ĝȱ is valid in law. The Petitioners herein have in SAT for hearing appeals including ȱȱȱȱȱȱęȱ ȱ ȱ ęȱ ¢ȱ ȱ ǯȱ ȱ issued thereunder...... The contention that petitioner also prayed for a writ of only one member that too, a non-judicial ȱȱȱȱȱȱ member is functioning as on today would ȱȱȱĜȱȱ not hold water as the Appellate Tribunal is Ĝǯ functioning as on today and discharging its functions as per law. Any rule has to be read b. The Court ruled that there was no meaningfully and what is applicable to two impediment in the petitioner’s appeal members is applicable to one member. It is a ȱȱ¢ȱǰȱ ȱȱȱȱ necessity which has to be accepted.” ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ “unfortunately £ȱ¢ȱȱȱȱȱ the arguments advanced on behalf of over SAT, in accordance with SAT the petitioners are a competency of a ǻǼȱ ǰȱ ŘŖŖŖǯȱ ȱ ¢ȱ single member Appellate Tribunal which ȱȱȱȱȱȱ is not the issue in the writ petition. Both of the SEBI Act and the SAT (Procedure) the petitioners have not challenged nor ǰȱ ŘŖŖŖȱ ȱ ȱ ȱ ȱ questioned the functioning of the single ¢ǯȱ¢ǰȱȱȱȱȱ member Appellate Tribunal. The issue raised ȱ ȱ Ȭȱ ¢ȱ before him is that whether alternative remedy ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ

171 Annual Report 2012-13

ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ǰȱ ¢ȱ ȱ ȱ ȱ ȱȱ ȱȱęȱ ȱȱĜȱȱȱȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ for a short period and that such an refund the collected amount with the ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱǱȱȃǯǯǯŗŗǯȱ ȱ regular presiding officer retires or is regard to the aforesaid, I am of the view ȱȱȱȱȱȱ that the order of the SAT deserves to ǯ ȱ ȱ ǯȱ ȱ ȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ Ĵǰȱ ȱ ȱ ȱ C. SEBI Vs. M/s. A.P.L Industries Ltd. the Chairman SEBI dated 22.05.1998 (C.W. P NO. 1261/02)-Before Hon’ble ȱ ȱ ȱ ȱ ȱ ȱ ȱ High Court of Delhi directions contained therein for refund a. ȱ ȱ ȱ ȱ ȱ ¢ȱ ǰȱ of the money to the share applicants Ȭȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ŗŞǰȱ ŘŖŖŖȱ ȱ ¢ȱ ȱ ordered accordingly. The SEBI shall ȱ ¢ȱ ǻȱ ȱ ǯǼǰȱ ensure that refund is made to the share and also seeking a direction to the ǰȱȱ¡¢ȱȱǰȱ Respondent company to comply with ȱ ȱ ȱ ǯȱ ę¢ǰȱ ȱ ȱȱ¢ȱŘŘǰȱŗşşŞȱȱ¢ȱ ȱ ¢ǰȱȱȱȱȱȱ and refund all the monies collected in ǯŗȦ¢ǰȱ ȱ ǰȱ ¢ȱ ȱ ȱȱȱȱǯ recourse to the relevant provisions of b. ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ law...” ȱ ȱ řŖǰŖŖǰŖŖŖȱ ¢ȱ ȱ ȱ ` 10 D. M/s. DLF Ltd. vs. SEBI and ors. (L.P. A ȱ ȱ ŘŜǰȱ ŗşşŜǯȱ ȱ ȱ ȱ ȱ No. 100 of 2012)- Before Hon’ble High ¢ȱŘŜǰȱŗşşŜȱȱȱȱȱ Court of Delhi 08, 1996. On the date of closure the ȱ ȱ ȱ ǻŗǯŝśȱ Ǽǯȱ ǯȱ ȱ ȱ ȱ ęȱ ȱ ȱ Ȃȱ ¢ǰȱȱ ȱ ȱȱ ȱȱȱȱ ¢ȱŖřǰȱŘŖŗŘȱ ȱ ȱȱȱȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ǯȱ ŞŗŘŞȱ ȱ ȱ ¢ȱ ȱ ȱ of 2011. The Ld. Single Judge vide the ȱ ¢ȱ ȱ ȱ ȱ said order was pleased to upheld SEBI ǯȱ ȱȱȱȱ ȱȱȱŘŖǰȱŘŖŗŗȱȱ ȱ May 22, 1998 directed the company investigation was ordered. to refund the application moneys to b.ȱ Ȧȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ investors. The said order was challenged ȱ ŘŖǯŗŖǯŘŖŗŗȱ ȱ ¢ȱ ǯȱ ȱ ¢ȱ ȱ ¢ȱ ¢ȱ ȱ ȱ ȱ order of SEBI held that investigations ȱ ȱ ȱ ȱ ¢ȱ ȱȱȱ¢ȱȱȱȱȱ ȱ ȱ ȱ ȱ ǰȱ ǯǯȱ ȱ dated 04.06.2007 and 19.07.2007 made ȱ ǯȱȱ¢ȱ ¢ȱ ȱ ȱ ǰȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŞǰȱ ŘŖŖŖȱ Krishna Singha, against M/s DLF, and ȱ ȱ ȱ ȱ ǯȱ ȱ ¢ȱ M/s Sudipti Estates Private Limited, the the said order of the appellate authority third respondent (hereafter “Sudipti”). ȱęȱȱȱ ȱǯ SEBI’s order indicated that investigations

172 Part Four: Regulatory Changes

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ the alleged violations of the erstwhile ȱŖŚǰȱŘŖŗŘǯȱ ȱȱȱ¢ȱ SEBI (Disclosure and Investor Protection) as Respondent no. 9 in the appeal. ȱ ŘŖŖŖȱ ǻȃȱ ȄǼȱ b.ȱ Ȃȱ ȱ ȱ ȱ read with the relevant provisions of the (SAT) noted that the grievance of the Companies Act, 1956. SEBI also indicated appellants was that they made multiple that an investigating authority would representations to various entities ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ¢ȱ¢ȱȱȱȱ violation of various rules and regulations the SEBI’s order, and would complete ¢ȱ ȱ ǯȱ Śȱ ȱ śȱ ǯǯȱ Ȧȱ investigations expeditiously, and if any Network 18 Media & Investment Limited ȱ ȱ ǰȱ ¢ȱ ȱ ȱ ȱ and M/s TV 18 Broadcast Limited, proceeded with in accordance with law. respectively, relating to the said right c.ȱ ȱ ȱ ȱ ȱ ȱ ȱ issue; the concerned entities have failed violations of a particular Section of the to take action necessary to protect the ȱ ȱ ȱ ȱ ȱ ȱ interest of investors. are mentioned and it does not vitiate the ǲȱȱȱęȱȱȱȱȱ c.ȱ ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ¢ȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ¢ȱȱ ǰȱȱ ȱȱȱ aggrieved as they have participated and appoint an Investigating Authority to ęȱȱȱȱȱǯȱȱ further determine the veracity of these the appellants have made no prayer for ǯȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ rights issue. of the SEBI, as long as a deferential d.ȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ review does not reveal any extraneous ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ circumstances. On this aspect too, this ȱ ȱ ǯȱ ȱ ǰȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ Bashir Ahmad & Ors [(AIR (1976) ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ śŝŞǾȱ ȱ ȱ ȱ ȱ ¢ȱ interference. SAT in Appeal no. 142 of 2008 – Mr. ȱ ȱ ȱ ǭȱ ȱ ȱ ȱ III. Securities Appellate Tribunal ǭȱȱȱȱȱŖŜǰȱŘŖŖşȱȱ A. Shri Victor Fernandes & another vs. was of the view that the appellants NSE & Others (Appeal No. 219 of 2012) have failed to show how the listing - Before Hon’ble Securities Appellate ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ Tribunal impugned circular has affected their legal rights or caused legal wrong or a.ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ¢ȱȱȱǯȱ ȱęȱȱȱ the decision of NSE, viz circular dated ȂȱȱȱȱĚ ȱȱ ȱ ŗśǰȱ ŘŖŗŘǰȱ ȱ ȱ ȱ the impugned circular of NSE. and trading approval of the equity ȱ ȱ ¢ȱ ȱ ǯȱ Śǰȱ ǯǯȱ e. SAT was of the view that the appellants M/s Network 18, pursuant to its rights ȱȱȱȱȱȱȱ

173 Annual Report 2012-13

ȱȱȱȱȱěȱȱ ȱ ȱ ¢ȱ ȱ ȱ decision of some of the respondents on its ȱ ȱ ȱ ȱ ȱ Ȧȱ various representations. It has also noted Passport India Investment (Mauritius) that the various representations made to Ltd. (“Passport”) to the appellant at SEBI were examined and appropriately B, who was a connected entity. The responded to the appellants and if the ȱȱȱ ȱ¢ȱȱȱȱ ȱ ȱ ȱ ęȱ ȱ ȱ activities akin to a front running, qua the response/reply received it could have ȱȱȦȱǰȱ ȱȱȱ availed appropriate remedy against those ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ responses. sensitive information. The appellant at C was held to have acted as a conduit to f.ȱ ȱ ȱȱȱǰȱȱȱȱȱ the other two appellants and had acted appellants are seeking multiple reliefs ȱ ȱ ȱ ȱ ȱ ȱ Ȭ against various respondents which are ȱ ȱ ȱ ȱ ȱ in the nature of a direction not covered ȱȱȱȱȱȱȱǯ ȱ ȱ ȱ ȱ ȱ Řřȱ ȱ Securities Contracts (Regulations) Act, b. ȱ Ȃȱȱ ȱȱȱ 1956 and thus dismissed the appeal appeals and set aside the orders of the ȱ ȱ ȱ ȱ ȱ ŗśǰȱ ȱ Ĝǰȱ ȱ ǰȱ ȱ ȱ ŘŖŗŘȱȱȱȱȱǯ following grounds: i. The Securities and Exchange Board B. (A) Dipak Patel Vs. SEBI (Appeal No. ȱ ȱǻȱȱȱ 216/2011); (B) Kanaiyalal Baldevbhai ȱȱȱȱȱ Patel Vs. SEBI (Appeal No. 74/2012); to Securities Market) Regulations, ǻǼȲȱ ȱ ȱ ŗşşśǰȱ ǻȃȄǼȱ ȱ Vs. SEBI (Appeal No. 78/2012 )- In the ȱ ȱ ¢ȱ ¢ȱ ȱ matter of Passport India Investment dealing in the securities market. (Mauritius) Limited- Before Hon’ble ȱ ȱ ȱ ȱ ŘŖŖřȱ Securities Appellate Tribunal ȱ ¢ȱ ȱ ȱ a. The captioned appeals were filed ȱ¢ȱ¢ȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻȱ ŚǻŘǼȱ ǻǼǯȱ ȱ ȱ ȱ ȱ ȱ ȱ řŖǰȱ ŘŖŗŗǰȱ ȱ ¢ȱ ęȱ ȱ ȱ ȱ imposing a penalty of five crore on Securities and Exchange Board of each of the appellants captioned at India Act, 1992, (“SEBI Act”), rules ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ¢ȱȱȱȱȱȱ ȱȱřȱǻǼǰȱǻǼǰȱǻǼȱǭȱǻǼȱȱ ȱ intermediary, the appellants could ǻȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ Trade Practices Relating to Securities as they were not intermediaries Ǽȱ ǰȱ ŘŖŖřȱ ǻȃȱ under the SEBI Act or any rules or ȱ ŘŖŖřȄǼǯȱ ȱ ȱ ȱ ȱ ȱ ȱ regulations. to have acted in manipulative manner ǯȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ£ȱȱ¢ȱȱȱ ȱ ¢ȱ ȱ ǰȱ

174 Part Four: Regulatory Changes

ȱ ȱ ȱ Ĵȱ ȱ Kaul. This trading was allegedly done on Ȧȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱ said to have acted as a fraud on ȱǻ Ǽȱȱ ȱǯȱǯȱ the securities market as a whole, ǯȱ ȱȱȱěȱȱ¡ȱȱȱ especially so when all the trades to invest large amounts in the scrip of of the appellants were executed the target company. ȱ ȱ ȱ ȱ c.ȱ ǯȱ ǯȱ ǯȱ ǰȱ ȱ ȱ ǰȱ system and at the then prevailing ȱ řśŖŖŖȱ ȱ ȱ ȱ ȱ market prices. ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ȃȱ ȱ ȱ of trading in the scrip of the target ȱ ȱ ȱ ȱ Ȃȱ ¢ȱ ¢ȱ ¡ǯȱ ȱ ǰȱ ǰȱ Supreme Court of India on several ȱ ȱ ȱ ǰȱ ȱ ȱ grounds of law and the decision of the ȱ ȱ ȱ ¡¢ȱ ȱ apex court in this regard is awaited. Regulation 2(c) (i) of the Securities and ¡ȱȱȱ ȱǻȱȱ C. Mr. V. K. Kaul and Mrs. Bala Kaul …… Insider Trading) Regulations, 1992, was Appellant versus The Adjudicating ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝǰȱȱȱ¡ȱȱ wife in the scrip of the target company of India…… Respondent ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ a.ȱ ȱĜǰȱ ȱȱȱȱ thus, violated Section 12A (d) and (e) of appellants guilty of violating Section the Act. 12A (d) and (e) of the Securities and d.ȱ ȱ ȱȱ¢ȱȱ ¢ȱȱȱ Exchange Board of India Act, 1992 (the ȱȱȱĜȱȱȱȱ ` Act) and imposing a penalty of 50 lakh has erred in holding that the decision of ` and 10 lakh respectively under Section Solrex to purchase shares of the target ŗś ȱǻǼȱȱȱǯ ¢ȱ ȱ ǯȱȱ ȱ ȱ ęȱ b.ȱ ǯȱ ǯȱ ǯȱ ȱ ȱ ȱ Ȭ¡ȱ of ‘price sensitive information’ under ȱ ȱ ȱ Ȧȱ ¡¢ȱ Regulation 2(ha) of the regulations, only ȱ ȱ ǻ¡¢Ǽǯȱ Ȧȱ ȱ ǰȱ ǰȱ ȱ ǰȱ ¡¢ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ěȱ ȱ ȱ M/s Solrex Pharmaceuticals Limited ȱȱȱȱȱ¢ȱȱȱ (Solrex). SEBI had investigated the treated as price sensitive information. dealings in the scrip of M/s Orchid Further, in terms of Regulation 2(k), Chemicals and Pharmaceuticals Ltd. ȱ ȱ ȱ ȱ ȱ ȱ ȱ (the target company). Solrex made large ȱ ¢ȱ ¢ȱ ȱ ¢ȱ ȱ investments in the scrip of the target ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ company. It was noted that Mrs. Bala ǰȱ ȱ ȱ ȱ ȱ ȱ Kaul wife of Mr. V. K. Kaul had traded ȱ ȱ ȱ ȱ ȱ ȱ ȱ in the scrip of the target company ahead target company and the target company ȱ ȱ ȱ ȱ ¢ȱ ¡ȱ ȱ ȱȱȱȱȱȱȱȱ the target company. The funds for the ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱ ȱȱ¢ȱǯȱǯȱ ǯȱ ¢ȱȱȱȱ ǯȱǰȱ

175 Annual Report 2012-13

according to him, information relating of the company. If the insiders of Solrex to a third party investor seeking to are allowed to trade in the shares of the ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ target company ahead of purchase of ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ¢ȱ¡ǰȱ¢ȱȱȱ ȱ regarding the target company. ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ The decision of Solrex to purchase shares e. The respondent argued that the term ȱȱȱ¢ȱǰȱǰȱ ȱ ȁȱȱȂȱȱęȱȱ for the insiders of Solrex and they are the regulations is wide enough to include ȱȱȱȱȱȱȱ any information relating directly or the target company till such information indirectly to a company. The regulations ȱ ǯȱ ȱ ȱ ǰȱ ȱ ȱ ȱȱȱȱȱ ȱȱȱȱ of ‘the company’ deals in the securities the possession of or in the knowledge of ‘a company’ listed on any stock of the company in whose securities the ¡ȱ ȱ ȱ ȱ ȱ ȱ insider deals. If an insider deals in the relating to that company, the provisions securities of a company listed on any ȱȱřǻǼȱȱȱȱ ȱ stock exchange when in possession of ȱĴǯ ȱȱȱȱ¢ǰȱȱ řǻǼȱȱȱȱ ȱȱĴǯȱ D. Shri N. Narayanan vs. SEBI Regulation 2(ha) of the regulations ęȱ ȁȱ ȱ Ȃȱ ȱ ǯȱ ȱ ȱ Ĵȱ ȱ Ȧȱ ¢ȱ ȱ mean any information which relates Theatre Ltd, investigations revealed directly or indirectly to ‘a company’ that the financial results contained ǰȱȱǰȱȱ¢ȱȱ¢ȱ ȱ ȱ ¢ȱ ȱ ęȱ ȱ ȱ ěȱȱȱȱȱȱ¢ǯȱ stock exchanges contained inflated ȱȱȱȱȱȱȱ ęȱȱȱ¢Ȃȱȱęǰȱ make it clear that the information must ¢ȱ ȱ ȱ ǯȱ ȱ relate to ‘a company’ and not necessarily ȱ ȱ ȱ ęȱ ȱ ȱ ‘the company’ which is dealing into the the company resulted in price rise of the shares. scrip of the company and the promoters ȱȱȱȱȱȱ f. SAT accepted that the term price ȱȱęȱǯȱ ȱ ȱ sensitive information used in also alleged that the company and its regulation 2(ha) is wide enough to ȱ Ȧȱ ȱ ȱ ȱ include information relating directly or ȱ ȱ ȱ ęȱ ȱ indirectly to ‘a company’. The Solrex had ȱ ȱ ¢ǯȱ ȱ ȱ ęȱ decided to purchase shares of the target ȱ ȱ ȱ ¢ȱ ŘŖŖŝȬŖŞȱ ȱ ȱ ¢ǯȱ ǰȱ¡ȱȱȁȱ¢Ȃȱ ȱ ȱ ¡ȱ ȱ Ěȱ and Target Company is ‘a company’. ęȱȱȱ¢Ȃȱȱęǰȱ The decision of Solrex to purchase ¢ȱȱȱȱ ȱ shares of the target company is likely to ȱ ȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ěȱ ȱ ȱ ȱ ȱ making investment decision while the of the target company. Only the insiders ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱěȱȱȱ¢ǯȱ

176 Part Four: Regulatory Changes

ǰȱȬǰȱȱȱ¢ǰȱ ȱȱ ȱȱȱȱ¢ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ selling or dealing in securities in any the company, was found to have violated manner whatsoever or accessing the ȱřȱȱŚȱȱȱȱȱ securities market directly or indirectly ¡ȱ ȱ ȱ ȱ ǻȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ company for a period of two years. The Practices Relating to Securities Market) ȱȱ ȱȱȱȱ Ȃȱ ǰȱ ŘŖŖřȱ ǻȱ Ǽǯȱ ȱ ȱ ȱ Ȃȱ ǰȱ ȱ ȱ Therefore, monetary penalty of ` 50 ȱ ȱ śǰȱ ŘŖŗŘǰȱ ȱ ȱ ȱ lakh was imposed on Shri N Narayanan directions.

177 Annual ReportPART 2012-13 FIVE: ORGANISATIONAL MATTERS

1. SEBI BOARD Table 5.1: Board Meetings during 2012-13 During the financial year 2012-13, Number of Number of Particular Meetings Meetings Shri Prashant Saran, Whole Time Member, ȱ ȱ ȱ Ĵ ȱȱȱȱĜȱȱȱȱ 123 Time Member, SEBI on expiry of his term of (i) Chairman appointment on May 17, 2012. He was again Shri U. K. Sinha 6 6 appointed as Whole Time Member of SEBI (ii) Whole Time Member under clause (d) of sub-section (1) of Section Shri Prashant Saran 5* 6 4 of the SEBI Act, 1992 by Government of Shri Rajeev K. Agarwal 6 6 ȱȱęȱȱȱŞǰȱŘŖŗŘǯȱ Shri S. Raman 2* 2 Shri Saran assumed charge as Whole Time (iii) Members Member on August 9, 2012. Dr. Arvind Mayaram 3* 1 Shri Naved Masood 6 4 Dr. Arvind Mayaram, Secretary, Ministry Shri V. K. Jairath 6 5 ȱǰȱȱȱȱěǰȱ Shri Anand Sinha 6 4 Government of India was nominated as one Shri P. C. Chhotaray 5* 5 of the Members on the SEBI Board in terms * Number of meetings held after assuming the charge. ȱ ȱ ȱ ȱ ęȱ ȱ Note: August 24, 2012 in place of Dr. Thomas Ȋȱ ǯȱ ȱ ȱ Ĵȱ Řȱ ȱ ȱ řȱ ȱ ȱ Mathew. ȱ ȱ ¢ǰȱ ȱ ȱ ȱ Ĵȱ ȱ Ĝȱ ȱ ȱ Part-Time Member. Shri Prakash Chandra Chhotaray, was Ȋȱ ȱ ȱ ȱ Ĵȱ ŗȱ ȱ ȱ ŗȱ ȱ ȱ nominated as a Part-Time Member of SEBI, ȱ ȱ ¢ǰȱ ȱ ȱ ȱ Ĵȱ ȱ Ĝȱ ȱ ȱ under clause (d) of sub section (1) of Section 4 Ȭȱ ȱ ȱ ¢ȱ ŗŝǰȱ ŘŖŗŘȱ ȱ Ĵȱ Śȱ ȱȱŚȱȱȱȱȱ¢ȱȱȱȱ of the SEBI Act, 1992 by Government of India assuming charge again as Whole Time Member on August ȱęȱȱȱŗŘǰȱŘŖŗŘǯ ŖŞǰȱŘŖŗŘǯ

Shri S. Raman, Whole Time Member, ŘŘǰȱ ŘŖŖşǰȱ ȱ ȱȱ Ĵȱ ȱ was appointed as Whole Time Member ¡ȱȱȱ Ȃȱęȱȱ of SEBI under clause (d) of sub-section process and disclosure of its financial (1) of Section 4 of the SEBI Act, 1992 by information. ȱȱ ȱȱęȱȱ ȱ ŘŞǰȱ ŘŖŗŘǯȱ ȱ ȱ ȱ The Committee comprises three charge as Whole Time Member on the same members nominated by the Board. The tenure day. of the members of the Committee is two ¢ǯȱȱĴȱȱ¢ȱȱ¢ȱ During the year 2012-13, SEBI Board met Shri V.K. Jairath. Shri Rajeev Kumar Agarwal ȱ¡ȱȱȱȱȱȱĴȱ (WTM, SEBI) and Shri Prakash Chandra of the meetings are presented in Table 5.1. Chhotaray (Part-time member, SEBI) are the other two members. 2. AUDIT COMMITTEE Shri Prakash Chandra Chhotaray was In pursuit of high standards of ȱ ȱ ȱ Ĵȱ ¢ȱ ȱ ȱ governance and transparency, the SEBI ȱ ȱ ȱ ȱ ȱ ȱ ŖŞǰȱ ŘŖŗřǰȱ ȱ Board, in its 127th meeting held on September place of Dr. Thomas Mathew. During the

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ęȱ ¢ȱ ŘŖŗŘȬŗřǰȱ ȱ Ĵȱ ȱ the information disclosed in the Annual four meetings. Statement of Accounts. The Committee ęȱȱȱȱȱ ȱ ȱĴȱȱȱȱ ȱ its charter. responsibilities: a. Reviewed the internal audit reports 3. ORGANISATIONAL with the management and the internal RESTRUCTURING CELL auditors b. Reviewed the action taken by the ǯȱ ȱĜ ȱ ȱ ¢ȱ ęȱ ȱ SEBI Board in its meeting held on March implement suggestions as pointed out by 25, 2011 had suggested SEBI to explore the the internal auditors ȱȱȱȱȱĜȱȱ the investor should get the services of SEBI at c. Reviewed the investment policy of SEBI his door step to promote a balanced, pan India d. Reviewed and discussed the Quarterly securities market. Physical proximity of SEBI statement of accounts of SEBI for the Ĝȱ ȱ ȱ ȱ ȱ ȱ quarters ended June, September and promote deepening and broadening of the December 2012. securities market. Accordingly it was felt that:

Pursuant to the suggestions made by a. there is a need to strengthen the regional ȱ Ĵǰȱ ȱ ȱ ¢ȱ offices by delegating the additional closing of accounts and e-payment to activities/works to them, and suppliers, contractors etc. The Committee b. ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ě¢ȱȱ ȱȱȱ various state capitals to service investors and the internal auditors and helped in in the locality. bringing the improvement of the internal control systems. ¢ǰȱ ȱ ¢ȱ ŘŞǰȱ ŘŖŗŗǰȱ ȱ Board had approved the proposal relating to ȱĴȱ ȱȱȱ ȱ ȱ ȱ Ĝȱ ǻǼȱ ȱ the annual statement of accounts of SEBI ȱ ȱ ȱ ȱ ȱ Ĝȱ ǻǼȱ for the year 2012-13 with the management in state capitals. The implementation of the of SEBI and internal auditors. Relying on ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ the review and discussions conducted with phases, the details of which are below: the management and internal auditors, the ȱĴȱȱȱ Ȃȱȱ ǯȱ ȱȬ ȱȱęȱ¢ȱŘŖŗŗȬŗŘȱȱ statement of accounts is fairly presented ȱĜȱ ȱȱȱ ¢ǰȱ in conformity with the Generally Accepted Guwahati and Lucknow. Accounting Principles (GAAPs) in all material ǯȱ ȱ Ȭ ȱ ȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬ ǯȱ ȱ Ĵȱ ȱ ȱ ȱ 13 were opened at Jaipur, Chandigarh, internal control systems put in place and Indore, Bengaluru, Kochi, Patna and expressed its satisfaction with the same. Bhubaneshwar. ȱ ȱ ȱ ȱ Ĵȱ ȱ among themselves, without the management ǯȱ ȱ ȱ ǰȱ ȱ ęȱ ¢ȱ ŘŖŗřȬŗŚǰȱ or the internal auditors being present, it has been decided to open the local

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Ĝȱ ȱ ȱ ȱ ȱ ȱ For the monitoring of the project a Project other than North-East. The state capitals ȱ Ĵȱ ǻǼȱ ȱ ȱ included Ranchi, Raipur, Panaji, Shimla, on July 17, 2012 to look into a) Overall Dehradun and Srinagar. project management and communication, b) issues resolution, c) advice and counsel to ȱ ȱ Ĝȱ ȱ ȱ ȱ project team and consultants; and d) thought following activities: leadership and expert input. The designated a. Redressal of investor grievances received Consultant, M/s. Oliver Wyman started directly from investors in writing and working on the project since July 23, 2012. through online mechanism of SCORES The Consultant had several rounds meetings and taking them with listed companies with the PSC also one-on-one meeting with and intermediaries in their state. Whole Time Members and Executive Directors ǯȱ ȱ ȱȱęȱ¢ȱ of SEBI for guidance from time to time. A in their territorial jurisdiction. ȱȱĴȱǻǼȱ ȱ c. Monitoring and processing payment etc. constituted as per the Ministry of Finance/ of empanelled Resource Persons. Central Vigilance Commission’s guidelines. d. Organize and participate in Seminars, To make the project successful, the Conferences on investor awareness and consultant was facilitated to get inputs from ęȱ¢ǰȱȱǰȱǯ ȱ ȱ ȱ ȱ ěȱ ȱ e. Gathering market intelligence from local all functions and seniority levels and to media or through other sources. make presentations to the SEBI Board and International Advisory Board of SEBI. The f. Assisting in investigation, inspection and consultant also met external stakeholders’ litigation related activities. which includes brokerage houses, wealth II. Redesigning SEBI’s Role managers, global and domestic banks active in institutional broking and merchant SEBI felt the need to revisit its banking, leading investor associations, stock organisational capabilities to ensure that exchanges and former SEBI Chairmen. these are relevant in the dynamic market The consultant discussed the preliminary environment. Accordingly, SEBI Board recommendations with Dy. Governor, Reserve approved the proposal to engage an Bank of India, Shri Anand Sinha on December independent reputed consultant to revisit ŘŞǰȱ ŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ the structural and organisational issues, K. Nair, Whole Time Member, Insurance re-prioritize areas of focus and look at the Regulatory and Development Authority on technological and man power needs with December 26, 2012. The Consultant also had the emphasis on attracting and retaining audience of Hon’ble Finance Minister on good quality talent. Consequently, for the March 13, 2013 on their recommendations. appointment of consultant, a Consultant ȱęȱȱȱȱȱǯ ȱĴȱǻǼȱ ȱȱ by SEBI. Based on the recommendations of CEC, M/s. Oliver Wyman was appointed 4. HUMAN RESOURCES for “Redesigning SEBI’s Functions, Role, Human Resources Development (HRD) Structure & Vision”. Division continued to play an important

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role with prime focus on implementation ȱ ǰȱ ȱ ȱ ȱ ȱ ęȱ of policies on capacity building, training, and with XBRL International Inc. for the promotions, placement and transfers. ȱ ęǯȱ Řŝȱ ȱ ȱ ȱ made for the CFA course and 15 for the ǯȱ ěȱǰȱȱȱ XBRL course during the year under the Deputation collaborations. The courses of study available ȱ ȱ ęȱ ¢ȱ ŘŖŗŘȬŗřǰȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱȱŜŖȱĜȱȱ ȱǰȱȱȱ ȱęȱȦȱęȱȱ Grade B and one in Junior Assistant Grade also been revised and updated. ȱ ȱ ěȱ ȱ ȱ ȱ ěȱ ȱ ȱ III. Promotions various areas. As on March 31, 2013, SEBI has a total of 666 employees in various grades Promotion exercise has been completed Ȯȱ śśřȱ ȱ Ĝȱ ȱ ŗŗřȱ ȱ ȱ for the post of Executive Director, CGMs, ȱȱȱěǯ GMs, DGMs and AGMs. The exercise of ȱȱȱěȱȱĜȱȱ ǯȱ ę has also been initiated and is in progress.

Many benefits have been extended ȱśǯŘȱȱȱ ȱĜ or introduced during the year for staff members. Scheme for purchasing computers No. of From To persons / computer-related items has been introduced promoted for all staff members including those on 123 contract/deputation. Paternity leave has Chief General Executive Director 1 been introduced for male staff members. Manager Entitlements of lodging allowance and halting General Manager Chief General 2 allowance have been introduced for staff Manager members transferred at the Board’s instance. Deputy General General Manager 4 Manager Entitlement limit towards reimbursement Assistant General Deputy General 6 of vehicle maintenance expenses has Manager Manager been revised for Executive Directors; also Manager Assistant General 77 reimbursement towards driver’s salary has Manager ȱ ȱ ȱ ȱ ȱ Ĝǯȱ ȱ ȱ ęȱ ȱ ȱ ȱ ¡ȱ ǯȱ ȱȱȱĜ ȱĜȱȱ ȱǰȱ ȱȱȱȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ cadre of Junior Assistants and to secretarial at Guwahati, Hyderabad, Bhubaneswar, ěǯȱ ȱ ȱ ȱ ǻǼȱ ȱ ȱ ȱ ǯȱ ŘŜȱ Ĝȱ ȱ ȱ also been introduced to provide financial ȱȱȱȱȦȱȱĜȱ assistance for meeting a part of medical of SEBI during the year. ¡ȱȱ¢ȱěȱǯ

HRD division always endeavours to V. Job Rotation encourage the employees of the Board to HRD division undertook the exercise pursue higher studies and upgrade their of job rotation during the year. A total of skills. As such, collaborations were made with 222 officers were rotated among different

181 Annual Report 2012-13

ǰȱȱȱȱȱĜǯ ǯȱ ȱ ȱ ȱ ǰȱ ȱ Time Members and Executive Directors ǯȱ ¢ȱĴ Media Training Workshops were During the year, one staff member arranged for Chairman, Whole Time has been placed under suspension in terms Members and Executive Directors. ȱ ȱ ŝŚȱ ǻŗǼȱ ȱ ŞŜȱ ǻŗǼȱ ǻǼȱ ȱ ȱ Securities and Exchange Board of India b. Leadership & People Management (Employees’ Service) Regulations, 2001. Programme for Executive Directors and CGMs VII. Training and Development ȱ ŘřȱȱĜȱȱȱȱȱȱȱ In order to enhance and widen the ȱ Ĵȱ ȱ ¡ȱ ȱ knowledge base and perspective as well as “soft Programme on Leadership & People skills” including motivation, communication Management at the Indian School of ǯǰȱ ěȱ ȱ ȱ ȱ ȱ ȱ Business, Hyderabad. deputed to various behavioural and functional c. ‘Leadership for Professional Excellence’ training programmes both domestic and programme for GM and DGM level international. Several training initiatives were Ĝ undertaken during the year to enhance the ȱ ŚŞȱĜȱȱ ȱȱ ȱȱĴ- ȱȱĜȱȱěȱǯ ed an Executive Education Programme A. DOMESTIC TRAINING on Leadership for Professional Excel- lence at the Management Development Around 404 SEBI officials attended Institute, Gurgaon. various domestic training programmes at NISM and reputed Institutes like ISB, d. Training in Advanced Excel IIM, MDI, ASCI, XLRI, IMF, NIT, BSE ȱ ŗŚşȱ ȱ Ĝȱ Ĵȱ ȱ ȱ ȱ ȱ ǯȱ ȱ Ĝȱ Ĵȱ on Advanced Excel organized by HRD ȱ ȱ ȱ ȱ ȱ ęȱ division. related issues like Derivatives and Forex Risk Management, Credit Default Swaps, e. Workshop on Securities Market Advanced Derivatives, BSE Training Regulations Programmes. Training Programmes related A programme on Securities Market to other diverse areas like Network Security, Regulations was held in co-ordination Banking operations and Fiscal Laws with the NISM and the Enforcement Management, HR related issues, Contract Directorate wherein around 20 SEBI Labour Management related trainings, ĜȱĴȱȱȱȱȱ Management Development Programmes for a cross regulatory perspective. ȱ Ĝǰȱ ȱ ǰȱ Advanced Excel, Judiciary etc. were also f. Executive Development Program on Ĵȱ¢ȱ ȱĜǯȱĜȱ ȱȱ Advanced Derivatives sent to Conferences and Summits on Mergers ȱ ŘŖȱ ȱ Ĝȱ Ĵȱ ȱ ¡ȱ and Acquisitions, Finance, Legal Framework Development Program on Advanced etc. The major training programmes arranged/ Derivatives organised in collaboration conducted during the year were as follows: with NISM.

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B. FOREIGN TRAINING XII. Scheme for recognizing and ȱ ȱ ¢ǰȱ ŗŝŞȱ ȱ ȱ rewarding academic excellence of attended various International Training/ children of employees Seminar/ Meeting/ Conference etc. ȱȱęȱ¢ǰȱŗŘȱȱȱ SEBI employees were rewarded for academic VIII. Internship excellence in 10th /12th standards. They were ȱ ȱ ęȱ ȱ ȱ ¢ȱ SEBI, as an integral part of its policy, the Chairman on Republic Day. ěȱ ȱ ȱ Ȧȱ ȱ ȱ students of reputed management schools and ȱ ǯȱ ȱ ěȱ ȱ ȱ Řŗȱ 5. NATIONAL INSTITUTE OF students from such schools during the year. SECURITIES MARKETS (NISM)

I. School for Securities Education IX. Extracurricular activities within (SSE) & School for Securities SEBI Information and Research (SSIR) Self-defense course for women staff, In 2012-13, the School for Securities women’s day celebrations, Independence Education (SSE) continued to strive towards Day and Republic Day celebrations, Diwali fulfilling NISM’s vision “To be a hub of and Christmas celebrations were organised at knowledge initiatives for playing a strategic ȱ ȱĜǯȱȱřśŖȱěȱȱ role in quality enhancement and capacity Ĵȱ ȁȱ Ȃȱ ȱ ȱ ȱ ȱ building, for transforming the securities ȱ Ĝǯȱ ȱ ŜśŚȱ ȱ ȱ ȱ ȱȱ ȱȱȱȬęȱǯȄȱ ȱȱ ȱ ȱ ȱ ȱ ěȱ Activities and initiatives encompassed the members and their family members. SEBI also following: ȱȱȬȱ£ȱȁȱ Ȃǯ

A. Education X. Prizes won In Academic Year 2012-13, the student Ms. Vishakha More, AGM, was recently ȱ ȱ ȱ ȱ ȱ Şśȱ ǰȱ ȱ felicitated with the National Award in PGPSM (25), PGCSM (20) and CFERM the Category of Best Employee by the (31) and CSL (9). The School successfully Ministry of Social Justice and Empowerment, concluded Batch II (2011-12) of its One- Government of India. year fulltime Post Graduate Programme in Securities Markets (PGPSM), with 27 out of XI. Initiatives in the realm of corporate ŘŞȱȱȱȱȱǯȱ ȱ social responsibility Batch III (2012-13), 25 students were selected SEBI Shakti, in association with ȱ ȱ Ȭ ȱ ȱ ȱ ŚŖŞȱ ǯȱ Mahatma Gandhi Seva Mandir Blood Bank, Campus interviews are in progress, with organised a blood donation drive. It received ȱ Şŗȱ ȱ ȱ ǯȱ ȱ an overwhelming response from staff on date, students have found employment members with about 90 donors voluntarily with Darashaw, India Nivesh, HDFC Bank giving blood. Visits were made to NGOs like and LKP Finance, to name a few. NISM has ȱǰȱĴȱȱȱȱǯ launched the admission process for the Batch

183 Annual Report 2012-13

IV. In addition to the NISM Online Admission trained on various aspects of securities Test, the selection basket has been enhanced markets. by accepting test scores such as GMAT and XAT. NISM had guest faculty from leading C. Research organisations such as Edelweiss, IndiaFirst Research becomes a crucial ingredient in Life, ING, KBC Bank, Prabhudas Liladher, ȱěȱȱȱȱ NSE, and Principal Retirement Advisors and knowledge dissemination is supported by ǯȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ knowledge creation. NISM’s faculty-members their expertise. During the year, pedagogical have been active in Research Papers and Project initiatives included Simulated Trading, Case Research. To name a few, activities carried out Studies from Harvard and other resources, in Academic Year 2012-13 are as under. Reviews of Financial Books and Financial Films, exposure to Database Software such Research papers: as CMIE Prowess, Bloomberg and Statistical a. Uses and Abuses of Credit Default Software such as SAS and WINRATS. The Swaps in the Sub-prime Crisis Period library added several new titles pertaining to – A Critique published in the referred ȱȱęȱǰȱȱ journal International Research Journal, the impressive collection. ȁ ȱ ȱ ȱ Ǳȱ ȱ ȱ ęȱ ȱ ȱ Analyses and Actuarial Computations Law (CSL) as a part-time programme for ǻ ȱŘŖŝŞȬŘŚśŚǼǰȱȱǰȱǰȱ working executives, across 26 Saturdays, in the June 2012 issue. This was after a at Nariman Point. NISM had received double-blind review process. recognition as a Research Centre for PhD b. Published in the International Economics studies, by the Symbiosis International and Finance Journal (IEFJ), a peer- University, Pune and a dialogue has been reviewed publication, Peking University, initiated with Goa University. a paper “Government Securities Auctions in India – A Study on the B. Training Price Discovery Process”, in the July- A two-day programme on Advanced December 2012 issue. The publication Derivatives was conducted for 20 SEBI is listed in EconLit by the American Ĝǯȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ Economic Association. programme held in March 2012. NISM c. Published in the International Economics designed and customized the programme, and Finance Journal (IEFJ), a peer- weaving it with insights from practitioners reviewed publication, Peking University, from rating agencies, stock exchanges, for their paper “Indian Corporate Bond brokerage houses and consulting Market – An Issuer’s Perspective”, organisations. A book by derivatives expert in the July-December 2012 issue. The Prof. Satyajit Das was a part of the course publication is listed in EconLit by the material. The programme was well received. American Economic Association SSE provided support for a 5-day ȱȱĜȱȱ ȱȱ Project Research: ȱ ǻ Ǽǯȱ ȱ ȱ ȱ ŗŗśȱ Ĝȱ ȱ ȱȱȱĚȱ¢ȱȱǰȱ

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NISM faculty is engaged in the following rounds of empanelment have been conducted, research projects: ȱ ȱ ȱ ęȱ ȱ ȱ ŘŖŗŘȬŗřȱ ȱ ȱ in the second half of 2012-13. The strategy a. Completion of Phase II of SEBI Project followed during the year was to focus more “Identifying Colluding Groups in on the unrepresented districts in the country, Market, Using Trade Log”. and as a result, resource persons were b. Quarterly Performance Review of the empanelled from the unrepresented districts. top 100 companies in India (Q1 2012-13). In the first round, empanelment ȱȱȱęȱȱȱȱȱȱ interview and workshops were conducted at studies each quarter. Navi Mumbai, New c. Quality of Disclosures by Merchant Delhi, Chennai, and Kolkata and 244 Bankers. Resource Persons were empanelled. In the d. The NISM academic team was also second round, the programme was held engaged as researchers for the Financial at seven centres viz. Bangalore, Patna, Sector Legislative Reforms Commission Ahmedabad, Lucknow, Bhubaneswar, (FSLRC). NISM and its team-members Chandigarh and Guwahati. have an honorable mention in the Report of March 2013. B. Implementation of Financial Literacy in NISM actively engaged with the Schools – POCKET MONEY Program securities markets participants by organizing NISM has been reaching the students various conferences. The 3rd India ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ Securitization Summit, a Round Table on program during the last two years. The IPOs and a Round Table on Corporate Bonds strategy adopted in this regard was training were three major events conducted during the teachers and through the teachers the year. ȱ ȱ ȱ ęȱ ȱ ȱ ȱ schools. During the year 2012-13, 25 teachers II. School for Investor Education and training programmes were conducted Financial Literacy (SIEFL) ȱ ŗŗŞŖȱ ȱ ȱ ȱ ǯȱ The School for Investor Education & A total of 150 schools have been covered Financial Literacy has been undertaking to reach 5072 students. NISM, through two important activities viz. (a) providing the School for Investor Education and capacity building support to SEBI Financial Financial Literacy (SIEFL), has organised Education Resource Persons Programme and Financial Literacy Quiz for the schools ǻǼȱȱęȱ¢ȱȱȱ in Mumbai. The Quiz programme was under the programme – Pocket Money. open to the students studying in class IX and X in any of the recognised schools in A. Capacity Building Support to SEBI Mumbai. Further, during the year, investor Financial Education Resource Person education programs were held for the Programme: ęȱȱ¢ȱȱ¢ȱȱ During the year 2012-13, NISM has & Fertilizers (RCF) who are about for aggressively moved to empanel new resource superannuation. Four programmes were persons for SEBI Financial Education. Two held in Mahul Village, Mumbai, where in 155

185 Annual Report 2012-13

employees participated. The various risks and the programme. The topics covered under rewards were highlighted to the participants various technical sessions were: Securities to enable them to make sound investment Market – Introduction to FEMA/PMLA, decisions. Regulatory Environment in Securities Market, Regulations under FEMA as relevant to III. School for Regulatory Studies and securities market, Foreign Investments by Supervision (SRSS) FIIs/QFIs, AML and KYC Issues, Trading Practices & Settlement and Offences The School for Regulatory Studies & under section 12A of SEBI Act – A PMLA Supervision has organised various programs Perspective. during the year 2012-13. Some of them are: ǯȱ ȱȱęȱȱ A. Workshop on Crisis Prevention and Intermediaries (SCI) Management in Securities Markets ǯȱęȱȱȱȱȱ ȱ ȱ Ĵȱ ¢ȱ ȱ Ĝȱ ȱ Securities Markets the Ministry of Finance, SEBI, Exchanges, Depositories, Clearing Corporations as NISM launched the following mandatory well as academicians. Technical sessions ęȱ¡ȱȱȱęȱ¢ȱ on Risk Management at Stock Exchanges 2012-13. These are: and Depositories in India and International Ȋȱ ȬȬ Ǳȱ ¢ȱ ȱ Best Practices, Clearing and Settlement ęȱ¡ȱǻ Ǽ Systems: Issues and Way Forward and Crisis Prevention and Management Framework Ȋȱ ȬȬ Ǳȱ ¢ȱ ȱ (CPMF) for Securities Markets were held. ęȱ¡ȱǻ Ǽ Ȋȱ ȬȬ ȬǱȱ ȱ B. Workshop on Advanced Derivatives Intermediaries Compliance (Non-Fund) The program, organised for SEBI ęȱ¡ Ĝǰȱ ȱ ȱ ȱ ȱ ȱ Ȋȱ ȬȬȬǱȱ ȱ ȱ control at exchange derivatives. ȱęȱ¡ C. India Investment Conference 2012-13 Ȋȱ ȬȬ Ǳȱ ¢ȱ ȱ The CFA Institute in collaboration ęȱ¡ with NISM has organised the Third India NISM has also launched the following Investment Conference. The theme of the ¢ȱęȱ¡Ǳ conference was India and the New Financial Ȋȱ ȬȬ Ǳȱ ȱ ȱ Order. Foundation Certification Examination (Voluntary) D. Workshop on Securities Market Regulations – An Anti Money Ȋȱ ȬȬȬǱȱ ȱ ȱ Laundering Perspective Distributors (Level 2) Certification Forty two officers from Securities Examination (Voluntary) and Exchange Board of India (SEBI) and NISM has also launched the following Enforcement Directorate (ED) attended certification examinations on a voluntary

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basis and is awaiting regulatory approval 1. NISM Series-I: Currency Derivatives to make these examinations mandatory for ęȱ¡ certain segments/ associated persons of the 2. NISM Series-II-A: Registrars and securities market: ȱȱǻǼȱęȱ Ȋȱ Ȭȱ Ǳȱ ȱ ȱ Examination ęȱ¡ǰȱ 3. NISM Series-II-B: Registrars and Transfer Agents (Mutual Fund) Certification Ȋȱ ȬȬ Ǳȱ ¢ȱ ȱ Examination ęȱ¡ 4. NISM Series-V-A: Mutual Funds As a part of its periodic examination ȱęȱ¡ review, NISM launched revised exams for 5. NISM-Series-V-B: Mutual Fund ȱ ȱęȱ¡ȱȱȱ ȱęȱ¡ ęȱ¢ȱŘŖŗŘȬŗřǯȱȱǱ 6. NISM Series-VI: Depository Operations Ȋȱ ȱȬ ȬǱȱȱȱȱ ȱ ęȱ¡ and Share Transfer Agents (Mutual 7. NISM-Series-VII: Securities Operations Ǽȱęȱ¡ and Risk Management Certification Ȋȱ ȱ ȬȬǱȱ ȱ ȱ Examination ȱ ęȱ ¡ǰȱ NISM is currently developing the and following CPE Programs which are in Ȋȱ ȬȬ Ǳȱ ȱ ȱ ěȱȱȱǱ and Risk Management Certification 1. NISM-Series-III-A: Securities Examination Intermediaries Compliance (Non-Fund) ęȱ¡ NISM is currently developing various certification examinations for market 2. NISM-Series-IV: Interest Rate Derivatives ȱ ȱ ȱ ȱ ěȱ ȱ ęȱ¡ of development. These include: 3. NISM-Series-VIII: Equity Derivatives Ȋȱ ęȱ¡ȱȱ ȱ ęȱ¡ Advisers During the financial year, NISM Ȋȱ ȱ ¡ȱ ȱ ȱ along with CPE Providers conducted 443 function across market intermediaries CPE programs across different segments like Mutual Fund Distributors, Currency Ȋȱ ȱ ¡ȱ ȱ Derivatives, Depository Operations, RTA- Compliance for Issuers Corporate and Mutual Fund Foundation. In ȱ ŗŞǰŖŞŗȱ ȱ ȱ ȱ Ĵȱ B. Development & Administration of CPE Programs. Continuing Professional Education (CPE) NISM accredited four CPE Providers viz Center for Investment Education Pvt. NISM launched the following two-day Ltd., National Stock Exchange of India ȱȱȱȱ ȱęȱ Ltd., National Securities Depository Ltd. examinations are available: and Financial Technology Knowledge

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Management Company in the 1st and 2nd website to facilitate the stakeholders in the round of CPE Providers accreditation. NISM ȱ ȱ ȱ ȱ ęȱ ȱ undertook an exercise to increase number ȱ ȱ ȱ ěȱ ¢ǰȱ of CPE trainers. Accordingly, 119 new CPE permitting business license etc. NISM trainers were added during the year. NISM is introduced the Skills Registry portal wherein ȱȱȱěȱȱȱ the stakeholders after registration can verify on e- learning platform. ȱ¢ȱȱ ȱęȱȱ by candidates after passing examination/ V. Initiatives on Information and undergoing CPE programme. The application Communication Technology provides access to the current and past NISM Ĵ ęȱȱ¢ȱ¢ȱǯ

A. E-learning Department C. Email Interface for “Online National Institute of Securities Markets ǰȱ ȱ ȱ ȱ (NISM) believes that technology enabled System (ORETS)” learning can play a valuable role in its An email interface was developed and educational, training and literacy initiatives. successfully interfaced with the current Drawing from NISM’s existing experience as “Online Registration, Enrollment and trainers of securities markets professionals, Testing System (ORETS)”. This interface self study courseware is being developed that automatically emails workbooks to candidates can provide high quality, engaging, online enrolled for any certification program. It learning experience, covering a wide variety also emails certificates to the successful of topics. ǯȱȱȱȱȱęȱ Currently, NISM is developing content for cost savings through this initiative by Mutual Fund Distributors’ (MFDs) module as eliminating paper based workbooks and part of our Continuing Professional Education ęǯ ǻǼȱ ǯȱ ȱ ȱ ȱ ȱ ěȱ ȱ customized Learning management system. This D. Patalganga Project course will use a combination of text, image, An Agreement to Lease was executed audio, animation, interactive exercises and by NISM with MIDC for Plot No. IS-1 and assessments to achieve a learning experience ȬŘȱȱŘǰŚşǰŜŞŜȱǯȱȱȱȱ that takes advantage of opportunities inherent No. IS-4 admeasuring 39,005 sq. meters at in online learning. Patalganga Industrial area, District – Raigad In future, NISM plans to deliver for construction of NISM campus. E-learning courses, covering wide variety of topics in the securities markets, as part of its E. NSFE Project various initiatives both in the synchronous To strengthen and institutionalize and asynchronous mode. the mechanism for maintaining financial stability and enhancing inter-regulatory B. Skills Registry coordination, an apex-level Financial Stability A web based application was developed and Development Council (FSDC) was set-up and successfully launched on the institute’s in 2010 by the Government of India.

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A Technical Group was set up by the ȱȱȱȱĜȱȱ ȬĴȱȱȱȱȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ǰȱ ȱ ěȱ and Financial Literacy. The technical Group were made during the year 2012-13. drafted the National Strategy for Financial Education (NSFE). I. Bilingualization National Centre for Financial Education During the year, various documents, (NCFE) under National Institute of Securities £ǯȱ ȱ ęǰȱ ȱ ęȱ Markets (NISM) has been given the granted to various market participants, responsibility of implementing the National intermediaries, etc., were issued in both Strategy. The activities envisaged are: the languages, i.e. Hindi and English. All a) Maintenance of Financial Education ȱ ȱ ȱ Ĵȱ ȱ ȱ website ¢ȱ Ĵȱ ȱ ȱ ǯȱ Further, the reports like Annual Report, Audit b) Development of content for all regulators Report were also issued in Hindi and English. c) Research II. Rajbhasha Competitions and d) Data collection and monitoring of Functions Financial Education programmes across the country ȱȱȱȱȱěȱȱ for the usage of Hindi in day-to-day official work, various Hindi competitions 6. VIGILANCE CELL were announced during the year, namely, Vigilance Awareness Week for the Katha Lekhan Pratiyogita, Kavita Lekhan year 2012 was observed from October Pratiyogita, Lekh Pratiyogita, Rajbhasha 29 – November 03, 2012. The observance Prachar Banner Pratiyogita, Ashubhashan of the week commenced with the pledge Pratiyogita, Bolati Tasveer Pratiyogita, administered by Whole Time Member to Ĵȱ ¢ǰȱ ȱ ¢¢ȱ the Executive Directors and Division Chiefs, Kaamkaaj Pratiyogita, Hindi Tankan who in turn, administered the pledge to their Pratiyogita, Varg Paheli Pratiyogita, Abhinay ěǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱ ȱȱ¢ǯȱěȱ four regional offices – Northern Regional members took part in these competitions with Office, Eastern Regional Office, Southern zeal. During the year, Rajbhasha Samaroh ȱĜȱȱȱȱĜȱ was also organized to honour the winners of administered the pledge to their staff. A various competitions. ȱ ȱ ȁȱ ȱ Ȃȱ ȱ prominently displayed outside the office III. Aaj Ka Shabd premises at Mumbai and all four regional ȱ ȱ ȱ ěȱ ȱ ȱ Ĝȱȱȱȱȱ ǯ with Hindi vocabulary, one new Hindi word daily displayed through SEBI Portal. 7. PROMOTION OF OFFICIAL LANGUAGE IV. Hindi Noting and Hindi Quotes In order to ensure the compliance of A practice to display one phrase, Ĝȱȱ¢ȱȱȱ ȱȱ generally used in Hindi Noting, and one

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Hindi Quote daily through SEBI portal for language policy of the Government of ěȱȱȱ ǰȱȱȱŘŖŗŗȬ India, which includes meetings of the 12, has been continued. Ĝȱȱ ȱĴǰȱ £ǰȱ¢ȱȱ ȱȱȱĴȱ V. Rajbhasha Meetings and Seminars received in Hindi, correspondence in Hindi, In order to ensure compliance and etc. Thus, during the year, besides compliance ȱȱȱĜȱȱ¢ȱ ȱȱĜȱȱ¢ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ Ĝǰȱȱȱěȱ ȱȱȱ ȱǰȱȱȱȱĜȱȱ be made towards the use of Hindi in day-to- ȱĴȱ ȱǯȱ ¢ȱĜȱ ǯ Accordingly, during the year 2012-13, various crucial decisions were taken with regard 8. INFORMATION TECHNOLOGY ȱ ȱ ȱ ȱ ȱ ȱ ¢ȬȬ¢ȱ Ĝȱ The major Information Technology work, and follow-up actions were taken to (IT) initiatives during 2012-2013 ensure the implementation of these decisions. include strengthening of IT Security, ȱ ǰȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ implementation of new Webmail system part in the Rajbhasha Seminars organized by with the complete Disaster Recovery (DR) other institutions. features, implementation of two factor VI. Hindi Magazine authentication system for secured access to ȱ ǰȱ ȱ ȱ ȱ ęȱ With a view to publish the contributions as part of Document Management System of the winners of Hindi Competitions and to (DMS), etc. ȱȱěȱȱȱ ǰȱȱȱ issue of Hindi Magazine (“Viniyamika”) of I. Strengthening of IT security SEBI was published during the year. The existing organisational IT security is reviewed extensively and the following major VII. Information Technology and Hindi steps were taken to strengthen the IT security: In order to provide the facility to work in Hindi more conveniently, advanced multi- a) Conducted network vulnerability lingual software having Unicode facility was assessment and penetration test made available on all the computers. b) Enterprise network architecture was redesigned to include Firewall, Routers, VIII. Investor Website and SCORES Virtual Private Network (VPN) solution, Efforts are in progress to make the Secured access to application through investor website available in Hindi and two factor authentication also to ensure bilingualization of SEBI Complaints Redress System (SCORES), so as II. Implementation of New Webmail to make available the investor website and the System SCORES for investors in their language. The new Webmail system was deployed in High availability mode with complete DR ǯȱ ȱĜ Failover capabilities. The new email systems ěȱ ȱ ȱ ȱ ȱ ȱ ȱ not only secure but also provide seamless offices towards compliance of the official access to corporate email system from

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anywhere, any device. The important features Department embarked on integration of of the project include: various application systems implemented in Ȋȱ ȱȱȱ¢ȱȱ SEBI. The prime motivation for this activity ȱęȱǰȱȱȱȱ was to develop a framework for integrating information, people and processes across Ȋȱ ȱ ȱ ȱ ¢ȱ the organisation. To meet this objective, feature to send encrypted emails specifications for the development of Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ Enterprise Wide Portal (EWP) were designed. emails for compliance The planned solution architecture for SEBI’s Ȋȱ ȱ¢£ȱȱȱȱ ȱ EWP is highly scalable and performance the DR servers driven and will ensure rapid deployment and integration of future systems. The EWP is III. Implementation of two factor planned to be web driven with multi-channel authentication for secured access to ȱ ȱ ȱ ȱ ȱ ęȱ ȱ SEBI Web applications policy. The EWP is designed to harness the To enhance the security of the internet portlet based technology for aggregation facing web applications and to mitigate and personalization of information across the online security threats, the 2-Factor distributed applications in SEBI. authentication system is deployed. Users, apart from the regular user id / password, 9. INTERNATIONAL CO- need to provide the two factor authentication OPERATION code (which is a combination of 4 digit pin During 2012-2013 SEBI played a vital number and 6 digit randomly generated role in the international arena through token code of the physical hardware token). meaningful and significant contributions This system was deployed both at Primary towards its avowed objectives of promoting site, Mumbai and DR site, Chennai. fairness, transparency and efficiency of IV. Internet Connectivity to DR site securities markets. SEBI participated and Chennai ȱ ȱ ȱ ěȱ ȱ ȱ myriad activities of the standard setting To enable DR Failovers and seamless bodies, both at the regional and international connectivity to SEBI applications from the level. Being an active and committed Internet new leased line internet connectivity member of the International Organisation of was provisioned in the DR site Chennai. Securities Commissions (IOSCO), the globally ǯȱ Ĵȱȱȱ ȱ ȱ ȱ £ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱȱĜ securities markets, SEBI had the opportunity to take up several critical and challenging IT Infrastructure was set-up at SEBI leadership roles in the past year, further ȱ Ĝȱ ȱ ǰȱ ǰȱ ǰȱ helping SEBI to consolidate its image as a ¢ȱ ȱ ȱ Ĝȱ ȱ Ĵȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ including leased line connectivity. securities market community. VI. Enterprise Wide Portal SEBI also actively engaged in co- During the year, Information Technology operation on investigation / enforcement/

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supervisory matters with other overseas SEBI is a member of the IOSCO’s regulators under the framework of mutual ȱ ȱ Ĵȱ ǻǼǯȱ ȱ collaboration provided under the IOSCO ȱȱĴȱȱȱȱ Multilateral Memorandum of Understanding the exchange of information and to promote (MMoU) and several bilateral MoUs. Its the efficiency and development of the engagement with the IOSCO apart, SEBI emerging securities markets. continued to make a meaningful contribution as a member of the leading international A. Chair of the Asia- Pacific Regional bodies and forum, such as the Financial Ĵ Stability Board (FSB)- the international During the financial year 2012-2013, body that has been mandated by the G20 to Chairman SEBI, Shri U. K. Sinha was elected ȱ ȱ ȱ ęȱ ȱ ȱȱȱȱ ȱȬȱęȱȱ regulatory reforms in the world, and the Ĵȱ ǻǼȱ ȱ ȱ ȱ ȱ ȱ Joint Forum (JF), a cooperative cross-sector Beijing, China during May 2012. group established in 1996 to deal with issues common to the banking, securities and ȱȱȱȱȱȱĴȱ insurance sectors, including the regulation of constituted by the IOSCO to focus on regional ęȱǯ issues relating to securities regulation. The APRC comprises 25 members representing As a part of its other varying securities market regulators from the Asia- commitments as the securities market ęȱǯ regulator, SEBI on several occasions, provided During the year, APRC met twice under inputs to the Government of India on the Chairmanship of Shri U.K. Sinha. The ȱ Ȧȱ ȱ ȱ ęȱ first meeting was held in Beijing in May sector dialogues, supported programmes on 2012, as part of the IOSCO annual conference. technical assistance to developing countries, The second meeting took place in Bangkok, hosted and organized visits of foreign ȱ ȱ ȱ ŘŞȬřŖǰȱ ŘŖŗŘǯȱ delegates, international seminars and training The three day APRC event aimed at further programs. enhancing mutual cooperation and exchange of information among regulators of one of I. Association with IOSCO the fastest growing regions of the world. The The IOSCO Board, the governing event also highlighted the important role body of the IOSCO, is made up of 32 being played by the regulators of the region securities market regulator and SEBI is one in shaping the global policy framework for of the members of the IOSCO Board. SEBI securities markets and the need to continue participates in the various work streams ȱěȱȱȱǯ of IOSCO and makes contributions to the As APRC Chair, SEBI has brought policy decisions on the different issues dynamism and a sense of mutual camaraderie pertaining to the securities market. SEBI has into the working of APRC through various its representations in 5 out of the 7 policy initiatives. A few such initiatives are as follows: committees of IOSCO. SEBI endeavors to implement the recommendations made by a. An industry roundtable for frank and IOSCO through its reports. constructive exchange of ideas among

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ǰȱ ȱȱȱȱȱȱǰȱȱŘŖŗŘ private sector and regulators of the in growth rates world over was also region. The topic of the roundtable highlighted. held on November 29, 2012 was b. Scheduling an Enforcement Directors ‘identifying and addressing emerging meeting as part of APRC event, with a risks in the securities market in the APRC view to promote mutual cooperation region; particularly in the context of global and share information and insights about ȱȱȱęȱȄǯ The enforcement practices and experiences of roundtable highlighted the importance regulators of the region. This has been of building, nurturing and strengthening well received by members of the APRC investors’ trust and confidence by jurisdictions. addressing the emerging risks in a consistent, prudent, timely and a well- c. Development of a central enforcement nuanced manner. It also underscored database for sharing of information the importance of consistency and on the enforcement actions among predictability in regulatory rule making regulators of the APRC region. and implementation across jurisdictions d. Publication of a quarterly APRC Digest, and regions. The importance of for information sharing on recent appropriate regulatory response in the trends and regulatory developments face of possible risk of contagion for in securities market in the region. The ȱ Ȭęȱ ȱ ȱ ȱ ȱ objective of the digest is to encapsulate

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such regional information at one place, ǯȱ ȱĴ for information and easy reference. Two SEBI plays a leadership role in the volumes of the APRC Digest have been Ȃȱ ȱ Ĵȱ ǻǼȱ ȱ released during the year. ȱ ¢ȱ ȱ Ȭȱ ȱ ȱ Ĵǯȱ e. Public seminar on thematic issues The AC has been formed in February 2012 relevant for the APRC member to drive IOSCO’s key strategic goal of being jurisdictions. Two public panels on a) ȱ £ȱ ȱ Ĵȱ ȱ ȱ Opportunities and challenges for SME regulation. The main objectives of AC are to ęȱ ȱ ȱ ȱ ȱ identify and assess implementation of IOSCO b) capitalizing on Regional Growth Principles and Standards and to promote the Prospects: Enlarging Opportunities for ǰȱ ěȱ ȱ ȱ ȱ Asset Management Companies took of IOSCO Principles and Standards across the place as part of the APRC meeting in IOSCO membership. The main responsibilities Thailand, during November 2012. of AC are (a) To conduct Thematic Reviews of particular IOSCO Principles and IOSCO f. Promoting greater connect among Standards across IOSCO’s membership; (b) regulators of the region. Highlighting To conduct Country Reviews and it involves common issues and concerns relating reviewing Self Assessments prepared by to APRC member jurisdictions to other IOSCO Members about the implementation international bodies.

ȱȱȱȱǰȱǰȱŘŖŗŘ

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of IOSCO Principles; and (c) To maintain and Principles, share experiences of other periodically update the IOSCO Principles and members’ jurisdictions in implementation related Methodology. and identify and assess whether further guidance is needed from IOSCO to support ȱȂȱęȱȱ ȱȱȱȱ implementation. Further, SEBI also has its on the Implementation of Principles 6 and 7: representation as one of its members in the Principle 6: The Regulator should have or Review Team, which is carrying out this contribute to a process to monitor, mitigate review. and manage systemic risk, appropriate to its SEBI plays an important leadership mandate. role in the various activities of AC such as ȱ ŝǱ The Regulator should have coordination with the member jurisdictions or contribute to a process to review the on their participation for the Country Review perimeter of regulation regularly. Program, developing strategies for AC and its SEBI along with 33 other members implementations etc. have participated in this thematic review. This Review is an opportunity for IOSCO ǯȱ ȱȱĴ and members participating in the Review Emerging Markets Committee (EMC) to show progress in implementing these ȱ ȱ ȱ ŞŜȱ ȱ ȱ

ǰȱ ȱȱȱ¢ȱǯȱȱ¢ǰȱ¢ȱ ǰȱȱȱ ¡ȱǰȱȱȱǰȱ

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ȱ ȱ ȱ ŞŖȱ ȱ ȱ Ȃȱ the needs of the real economy. National ordinary membership. The EMC members authorities and international bodies, with also represent the world’s fastest growing the Financial Stability Board (FSB) as a economies and include 10 of the G-20 central locus of coordination, have further members. In the near term it is expected ȱ ȱ ęȱ ȱ ǰȱ that the number of IOSCO members that are based on clear principles and timetables emerging economies will increase as new for implementation. Major international members join. SEBI is a member of EMC – policy reforms of FSB have now globally IOSCO. During 2012-13, SEBI responded to been agreed, to address risks and strengthen various surveys of EMC-IOSCO including ȱȱȱęȱǯ surveys on Financing of SMEs through the FSB adopts, inter-alia, survey / Capital Markets, 5th Annual Survey by the questionnaire methodologies in order to obtain EMC Chairman’s Task Force and IOSCO- inputs for recommending policies, ascertaining World Bank Joint Mutual Fund Industry the feedback and status of the recommended Development Survey. policies. During 2012-13, FSB conducted various surveys/questionnaire including II. Association with G20 / FSB on Client Assets Protection and Resolution The Financial Stability Board (FSB) is Regime Peer Review. SEBI provided responses an international body established to address to these surveys/questionnaires. ęȱ ¢ȱ ȱ ȱ ȱ ȱ the development and implementation of III. Joint Forum strong regulatory, supervisory and other Following the decision of the Joint ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ Forum Coordination Group, in February, One of the main mandates of the FSB is to 2012, SEBI became a new member of the implement G20 Policy announcements on Joint Forum (JF), a cooperative cross-sector ęȱǯ group which was established in 1996 by its SEBI is a member of the Plenary and ȱȱȬȱȱȱĴȱȱ Regional Committee Group- RCG (Asia) Banking Supervision (BCBS), the International of the FSB. During 2012-13, FSB Plenary Organization of Securities Commissions met three times and the FSB RCG Asia met (IOSCO) and the International Association once. SEBI provides comments to the MoF of Insurance Supervisors (IAIS), to deal with on various FSB issues since the MoF is the issues common to the banking, securities and principal country member to the FSB from insurance sectors, including the regulation of India. SEBI is also a member of Indian ęȱǯ Working Group formed by Ministry of SEBI was nominated by the IOSCO as Finance on G20. Further, SEBI also provides ȱ ęȱ ȱ ȱ ȱ ȱ comments to the IOSCO on FSB mandates. of the JF. ȱ ȱ ȱ ȱ ȱ ȱ ęȱ crisis, the G20 has established core elements IV. Bilateral Engagements of a new global financial regulatory Along with its engagements at the framework that will make the financial multilateral levels, SEBI has also entered ¢ȱȱȱȱĴȱȱȱȱ into bilateral MoUs with a cross-section of

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jurisdictions. Such bilateral agreements, while 9, 2012 and followed by India-Australia further strengthening and consolidating the FTA Negotiations, India-EU Broad-based existing communication channels, pave the Trade and Investment Agreement, India- way for enhanced mutual cooperation in Canada Comprehensive Economic Partnership ȱ ȱ ȱ ¢ȱ ȱ Ĵȱ ȱ ȱ Agreement, 2013 and the US-India Regulatory supervision, investigation, enforcement and Dialogue, SEBI provided inputs to overseas technical assistance in the securities markets. regulatory agencies on a host of securities markets issues of interest and/or relevance, Until March 2012, SEBI had entered into ȱ ȱ ȁȱ ȱ ȱ ŗŞȱ ȱ Ȧȱ ȱ Regime’, implications of foreign laws on Agreement and one Letter of Intent with Indian investments and intermediaries and various overseas jurisdictions for mutual other such policy oriented issues. assistance and information sharing. With a view to further strengthen cross border ȱȱĴȱȱȱȱ VI. Participation in International ǰȱ ȱȱȱȱęȱ¢ȱȱ Programs to explore avenues of bilateral association SEBI officials have been invited to with several other countries. participate as Speakers/Panelists at many V. Ministry References- Contribution accredited international seminars and to various International Treaties conferences. During 2012-13, SEBI nominated ȱ Ĝȱ ȱ ȱ Ȧȱ ȱ ȱ and Dialogues training programs/ conferences/ seminars The ever increasing globalization and held by international bodies such as APEC ȱȱ ęȱ ȱ ȱ FRTI, MAS Singapore, CMA Kuwait, ADB, for newer and dynamic levels of regulatory programs conducted by other overseas co-operation at varying stages. Towards this regulators and bodies etc. The purpose to objective, SEBI along with the Government of ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ India and other regulatory bodies, was seen to share their expertise at renowned forums to make its own set of contributions. and to further strengthen the global image of During the year, SEBI continued to SEBI as reliable source of knowledge and its ȱ ȱ ȱ ěȱ ȱ ȱ competent human resources. engagement with the Government of India as regards various international treaties, under VII. MMoU and MoU Requests consideration by the GoI for areas related to As a crucial part of its commitment the securities markets. towards the IOSCO Multilateral Memorandum of Understanding (MMoU), In this direction, SEBI participated and/ to which SEBI has been a signatory since or provided its inputs on various issues, April 2003, SEBI continuously strives to agenda items and topics relating to the provide cooperation and facilitate exchange securities markets, at a number of bilateral of information with its counterparts in other dialogues thorough the year. A few such jurisdictions. treaties and dialogues include the Indo- During the year, SEBI received a total US Working Group Meeting held on Oct

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of 37 “requests for information” from the and interface point which coordinates with overseas securities regulators seeking SEBI’s the various Departments in Government assistance under the aegis of the IOSCO particularly Ministry of Finance and MMoU or the respective bilateral MoUs. ¢ȱȱȱěǯȱȱȱ SEBI addressed and executed such requests, to Parliament Questions, Assurances to subject to the provisions of the MMoU/MoU. Parliament Questions, References from Similarly, nine such requests were made by Honourable Members of Parliament (VIP SEBI to the respective regulatory bodies of references), General references received other countries. through Ministries and other related activities ȱĴȱ¢ȱȱȱȱǯ VIII. Foreign Delegations / Dignitaries to SEBI During the financial year 2012-13, SEBI furnished information and replies in To promote mutual collaboration a time-bound manner to 216 Parliament and establish deeper levels of regulatory Questions and 60 points/queries raised by the cooperation, and to facilitate a better ¢ȱĴȱȱǱ understanding of the Indian securities markets, SEBI played host to a number of During the financial year 2012- important dignitaries and delegations of 13, various references, representations, overseas regulatory bodies / agencies. complaints and news articles were received ȱȱȂȱĜǰȱ ȱ The authorities from which delegations Members of Parliament (VIPs), Ministries visited SEBI during the year include the including Ministry of Finance for action/ –Ministry of Finance, Govt. of Japan; US comments. SEBI’s endeavour has been to Department of Treasury; CMA, Saudi Arabia; furnish replies to Parliament Questions, VIP SC Malaysia; Govt. of Luxembourg; GIZ and references and other queries in a time bound ęǰȱ ¢ǲȱȱǯ manner. IX. Study tours for Overseas Table 5.3: Parliament Queries received/ Regulators raised SEBI facilitated four study tours during 2012-13 2011-12 1 the year, on requests made by BSE Training 23 Institute Ltd., BSE Broker’s Forum, etc., for No. of Parliament study visits for delegations representing Questions received 216 139 ȱȱȱĴȱȱ No. of points/ queries International programs on Securities Markets. raised by Parliamentary Ĵȱ ŜŖȱ şŚ The increasing requests for conducting ¢ȱ ȱ ȱ ȱ ȱ ęȱ India’s growing importance amongst SEBI representatives attended the other jurisdictions for its robust regulatory meeting of the Standing Committee on framework and market practices. Finance on February 13, 2013. The topic of discussion was “Overall Performance of SEBI with particular emphasis on recent 10. PARLIAMENT QUESTIONS measures taken and proposed to strengthen The Parliament Cell of SEBI is the nodal the regulatory mechanism”. The details of

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Table 5.4: Session-wise Parliament Queries Table 5.5: Details on appearance of SEBI received and replied by SEBI representatives before various during 2012-13 Ĵ ȱ ȱ ǯȱȱ Ĵ Queries/ Parliament Session Questions Questions ǯȱ ȱ Ĵȱ received No. Raised 12312 3 Monsoon Session (August – ŗǯȱ ȱĴȱȱ ȱŘŖŗŘǼȱ ŞŖȱȘȱȱ śŝ on selection of subjects for Winter Session (November examination during the year ȮȱȱŘŖŗŘǼȱ ŞŗȱȘȘȱ śŞ 2012-13 – Background Note on Budget Session (February – performance of SEBI - mechanism May, 2013) 55 *** 33 for protection of Investors Rights Total 216 148 and Interests in the Capital Market 0 Řǯȱ ȱĴȱȱ Șȱ ȱŗȱ Technology – Issues related to Paid ** including 5 notices News (January 2013) 1 ȘȘȘȱǯȱȱȱȱȱȱřŗǰȱŘŖŗř 3 List of points raised during the ȱ ȱȱȱĴȱ Ȧȱȱȱ¢ȱȱĴȦ Finance - Overall Performance of Ministry of Finance and replied by SEBI SEBI with particular emphasis on during 2012-13 are as under: recent measures taken and proposed to strengthen the regulatory mechanism – February 2013 32 11. RIGHT TO INFORMATION ACT Śȱ ȱȬĴȱȱ ȱ Ĵȱȱȱ SEBI has been implementing the Right ȱ ĜȱȱȮȱ¢ȱŘŖŗřȱ Ŗ to Information Act, 2005 (RTI Act) in its true spirit since its enactment in the year 2005. As per the provisions of the RTI Whole Time Member, SEBI is the present Act, SEBI has designated a Central Public Appellate Authority. As per the direction of Information Officer (CPIO) at its Head the Central Information Commission (CIC), Ĝȱ ȱ ǯȱ ǯȱ ȱ ȱ ȱ SEBI has also designated the Transparency is the present CPIO of the SEBI. In order Officer and Shri P. K. Nagpal, Executive ȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ Director, SEBI, is the present Transparency manner and keeping the convenience of the Ĝǯ information seeker, SEBI has also appointed Section 4 of the RTI Act casts obligation four Central Assistant Public Information on every Public Authority to make certain Ĝȱ ǻ Ǽȱ ȱ ȱ ȱ ȱ proactive disclosure. SEBI has been Ĝȱ ȱ ȱ ǰȱ ǰȱ ȱ proactively making such disclosure and and Ahmedabad. The role of CAPIOs is ęȱ ȱ ȱ ȱ ȱ ȱ ȱ to receive the applications for information as well as RTI Act. Since its formation, SEBI or appeals under the provisions of the RTI always believes in adequate disclosure of Act and forward them to CPIO. SEBI has the information in the interest of Securities ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ market and the investor. The focus of Authority (AA) where appeal can be made the disclosure is transparency and better against the Order of the CPIO. Shri S Raman, understanding of the functioning of the

199 Annual Report 2012-13

Regulator and SEBI registered intermediaries provisions of RTI Act are not applicable and other market participants. to the non-public entities, viz. Exchanges / market intermediaries, the disclosure policy SEBI has been proactively disclosing of SEBI requires these entities to disclose lots of information about various aspects of on their respective websites and otherwise, securities market including various activities important details and updated information and policy of the SEBI on its website i.e. on the material developments and day-to-day www.sebi.gov.in. Also, Frequently Asked operations including details of redressal of Questions (FAQs) have been uploaded on investor grievances. the SEBI website pertaining to different departments / areas to help the investors In respect of RTI applications received understand the procedures and terminologies by SEBI which are in the nature of complaints of the securities market. SEBI has provided Ȧȱ ȱ ȱ ȱ ǰȱ ȱ Ĝȱ SEBI Act, 1992 and other Acts as well as of CPIO voluntary provides guidance to the various Rules, Regulations. Circulars and information seeker. SEBI endeavors for proper guidelines issued there under on its website and timely redressal of investor complaints under the head “Legal Framework”. Further, for which separate designated website for the all the Orders passed by SEBI, orders of investor viz. ĴǱȦȦǯǯǯ has Securities Appellate Tribunal (SAT) as well been set up. Recent measures taken in this as orders of SEBI Appellate Authority are regard include launching of SCORES (SEBI available on the SEBI website. Complaints Redress System), a web-based, SEBI has also been taking various centralized grievance redress system for the steps for ensuring the transparency in the investors of the securities market where an functioning of the exchanges and other investor can make complaint / grievances market participants. In order to provide a in electronic mode on the SCORES website ȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ (www.scores.gov.in) with facility for online market participants and for the development tracking of his complaint status. of the markets, it has been SEBI’s endeavor to promote transparency in its decision making. SEBI has endeavoured to provide the disclosable information within the stipulated SEBI’s focus has been on disseminating time and there is not even a single case of up-to-date information to the investors / delay, although the information sought, market through various investor education many times, is voluminous and contain and investor awareness programs. SEBI has large number of issues pertaining to various through its various Regulations, such as departments of SEBI in a single application. the ICDR Regulations ensured providing Wherever felt appropriate, SEBI has provided maximum disclosure to the investing public additional information / guidance voluntarily in order to take well informed investment to the information seeker about the securities decisions. The Insider Trading Regulations market. and Takeovers Regulations provide the senior officials / major shareholders of The details of RTI applications and First companies to disclose their holdings on Appeal to SEBI Appellate Authority during a regular basis. Further, even though the 2011-12 and 2012-13 are given as under:

200 ȱǱȱȱĴ

Table 5.6: RTI applications and First Appeal During the year 2012-13 also, the to SEBI Appellate Authority Board took various initiatives to maintain Particulars 2011-12 2012-13 transparency in its functions, including 123disclosure of the information on a regular No. of applications basis. The Board has also taken various received 1,157 975 initiatives /measures for investor education Total no. of issues raised ȱȱ ŚǰŚŜŞȱ ŚǰŗśŘ and protection of the interest of investors No. of appeals received of the securities market. These initiatives/ by the Appellate measures also helped in achievement of the Authority in SEBI 294 216 objectives of the RTI Act. No. of orders passed by the Appellate Authority in SEBI 304 225 No. of appeals rejected / dismissed by the Appellate ¢ȱȱ ȱ ŘŘŝȱ ŗŜŞ No. of appeals allowed 76 57

The details of Appeal before Central Information Commission (CIC) during 2011- 12 and 2012-13 are given as under:

Table 5.7: Appeal before Central Information Commission Particulars 2011-12 2012-13 123 No. of appeals received by CIC 24* 74* No. of appeals rejected / dismissed by CIC 7 31 No. of appeals with directions by CIC to furnish part of information/ to reconsider providing ȱȱ Şȱ Śř

* on the basis of Appeal Memo/hearing notice received from CIC/Appellant.

201 AnnualCHRONOLOGY Report 2012-13 OF MAJOR POLICY INITIATIVES BY SEBI

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ȱŗřǰȱŘŖŗŘȱ Ȋȱ ȱȱȱȱȱȱȱȱ ȱȱ ȱ ¢ȱ ǻǼǰȱ ȱ ȱ ȱ Ĵȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ¢ȱȱ¡ǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ǰȱȱȱȱȱ¢ȱȱǻǼȱȱ ȱ¢ȱȱǻǼȱ ȱǯ ȱŗŜǰȱŘŖŗŘȱ Ȋȱ ȱ ȱ¢ȱȱȱȱ¡ȱȱȱȱȱ ȱ ȱȱȱ¢ȱȱȱȱȱ ȱ¢ȱęȱȱȱȱȱȱȱǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱǯ ȱŘŝǰȱŘŖŗŘȱ ȱȱȱȱȱȱȱ ȱȱȱǯ ¢ȱŖřǰȱŘŖŗŘȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱȱȱȱȱȱ£ȱȱȱ` śŖŖȱǯ ¢ȱŗŘǰȱŘŖŗŘȱ ęȱȱȱȱȱȱǯ ¢ȱŗŚǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱȱȱȱ ȱ ǯ ¢ȱŘřǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ǻǼȱ ȱ ¡ȱ ȱ Ǳ ȱȱȱ ȱ ¢ȱŘśǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ǰȱ ȱ ¢ȱ ęȱȱȱȱȱŘŖȱȱŘŖŖŝǯ ¢ȱřŖǰȱŘŖŗŘȱ ¡ȱ ¢ȱ ȱ Ȭ£ȦȬȱ ȱ ¡ȱ ȱ ǯ ȱŖŝǰȱŘŖŗŘȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ȱ ǰȱ ȱ ȱ ęȱ ȱ ȱ ǻ Ǽȱ ȱȱ¢ȱȱȱȱȱȱ ȱǯ ȱ Ȋȱ ȱȱȱȱȱěȱȱ ȱ ǻ ǼȦȱ¢ȱȱǻǼȱ¢ǯ ȱŗśǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ǻǼȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ĴǱȦȦǯǯȦȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ¢ȱȱǯ ȱŘŜǰȱŘŖŗŘȱ ȱ ȱȱȱȱȱȱȱȱȱȱ ȱȱ¢ȱ ȱǯ

Contd. 202 Chronology of Major Initiatives by SEBI

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¢ȱŖśǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ŗśȱ ¢ȱ ȱ ȱ ǯ ¢ȱŗřǰȱŘŖŗŘȱ ¢ȱȱȬȱ¢ȱȱ ¢ȱŗŞǰȱŘŖŗŘȱ Ȋȱ ȱ ȱ ȱ ěȱ ȱ ȱ ǻǼȱ ȱ ȱ ¢ȱ ȱȱȱȱ¡ȱȱ ȱǯ ȱ Ȋȱ ȱȱ ȱȱ ȱȱ ȱǻ Ǽȱȱ ǰȱ ȱ ȱȱ ȱ ȱȱȱȱ ȱȱȱȱ ȱȱȱȱ ȱȱǯ ¢ȱŘŖǰȱŘŖŗŘȱ ȱȱęȱȱęȱȱ ȱǻ Ǽȱȱ ȱ ȱȱȱȱȱȱ ȱȱȱ ¢ȱŘřǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ¢ǰȱ ǰȱ ȱ ȱ ȱ ȱ ¡ǰȱ ȱ ȱ ¢ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱǯ ¢ȱŘśǰȱŘŖŗŘȱ ȱǰȱǰȱǰȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱǯ ¢ȱŘŝǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱȱȱ ȱȱǯ ȱŖŘǰȱŘŖŗŘȱ ȱȱȱȱȱǻǼȱ ȱęǯ ȱŗřǰȱŘŖŗŘȱ Ȋȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǯ ȱ Ȋȱ ȱĴȱȱ¢ȱȱ ęȱ¢ȱȱ ȱ ǻ Ǽȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱǯ ȱ Ȋȱ ¢ȱȱȱȱęȱȱȱȱęȱ¢ȱ ȱȱȱ ȱȱ¡ǯ ȱŘŚǰȱŘŖŗŘȱ ȱǻ ȱȱȱȱȱǼǰȱ ȱǰȱ ŘŖŖşȱȱȱ Ǳ ȱ Ȋȱ Ȧȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ȱ ȱ ȱ ȱ ȱȱȱ ȱ ȱ ȱȱȱȱȱȦȱȱ ǯ ȱ Ȋȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱ ȱȦ ȱ ǯ

Contd. 203 Annual Report 2012-13

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ȱŘŝǰȱŘŖŗŘȱ Ȋȱ ȱȱȱȱȱȱȱȱ¢ȱ Ȭǯ ȱ Ȋȱ ȱȱ ȱȱȱ ȱęȱǰȱȱȱ ȱȱȱȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ¢ȱ ȱǻǼȱ ȱȱȱȱȱȱȃȱȱ ȱȄȱǻǼȱȱȱŖŗǰȱŘŖŗŘǯ ȱŘŞǰȱŘŖŗŘȱ ȱ Ȭ ¢ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ ǻ Ǽȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ŗŗǰȱ ŘŖŗřǯ ȱŘşǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱ¢ȱȱȱȱ ȱȱȱǰȱȱȱȱȱȱȱ ȱȱǯ ȱŗřǰȱŘŖŗŘȱ Ȋȱ ȱęȱ¢ȱȱǻǼȱ ȱȱȱȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ǻǼȱ¢ȱȱ¢ȱȱȦȱȱȱȱȱ ȱȱȱȱȱȱȱȱǯ ȱ Ȋȱ ȱȱȱȱȱȱȱȱȦȱ ȱ Ǳ ȱ ǯȱ ¢ȱ ȱ ȱ ¡ȱ ȱ ǻǼȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ¢ȱȱ ȱȱǯ ȱ ǯȱ ȱȦȱȱȱȱȱȱȱȱ ȱȱȱȱ ȱȱȱȱȱȱ¡ȱ ǯ ȱ ǯȱ ȱȦȱȱȱȱȱȱȱȱ ǰȱǯǯǰȱȱȱȱȱȱǰȱ ȱ¡ȱȱ ȱȱ ȱǯ ȱ ǯȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ Ȭȱ Ĝǰȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ǻȱ ȱ ȱ Ǽȱ ȱ ¢ȱ ȱ ęȱ ¢ȱ Ȧȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱǯ ȱ ǯȱ ȱȦȱȱ¢ȱȱȱȱȱŘȱȱ ȱȱ¢ȱȱȱ ȱȱ¡ȱȱȱȱ ¡ȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ȱ ǯ

Contd. 204 Chronology of Major Initiatives by SEBI

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ȱ ǯȱ ȱ Ȧȱ ȱ ȱ ȱ ¢¢ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱȱȬ¢ȱȱ ȱǯ ȱ ǯȱ ¡ȱȱǰȱȱ¢ǰȱ ȱȱȱȱȱǯ ȱŘŗǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ǿ ȱ ǻ ȱ ȱ Ǽȱ ȱ ¢Ȁȱ ȱ ȱ ȱ ȱ ȱ ȱȱ ȱ¢ȱȱȱȱĴǱȦȦǯǯ Ȧǯ ȱŘśǰȱŘŖŗŘȱ ȱ ęȱ ¢ȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱǯ ȱŘŜǰȱŘŖŗŘȱ ȱ ȱ ȱȱȱȱȱ¡ȱȱ ȱǻǼȱ ȱ ȱȱęǯ ȱŖŚǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ŗŖŖŖȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯ ȱŖşǰȱŘŖŗŘȱ ȱȱȱȱěȱȱȱȱȱ ȱȱȱȱȱȱȱȱȱȱǯ ȱŗŘǰȱŘŖŗŘȱ Ȋȱ ¢ȱȱȱ ȱ ǯ ȱ Ȋȱ ¢ȱȱȱȱȱěȱȱȱȱȱ Ȭȱȱ¡ǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȃȱ ǯ ȱ Ȋȱ ȱȱȱȱȱȱȱȱȱȱȱȱ ȱȱǰȱ ȱȬęǰȱȱȱŘŖȱǯ ȱ Ȋȱ ȱȱȱȱȱŘśȱȱȱȱȱ ¢ȱȱǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱȱȱȱȱȱȱ ǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱȱȱȱěǯ ȱ Ȋȱ ȱȱ£ȱȱȱȱȱȱ` ŗŖǰŖŖŖȱȬȱ ` ŗśǰŖŖŖǯ ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ£ǰȱȱȱ¢ȱȱȱȱǯ

Contd. 205 Annual Report 2012-13

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ȱ Ȋȱ Ȭȱȱȱȱ ȱȱ ȱȱ£ȱ ȱȱȱ¢ȱǯ ȱ Ȋȱ ¡ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ǻ Ǽǰȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ǰȱĴǯ ȱ Ȋȱ ȱȱȱȱǻǼȱ ȱȱȱȱȱȱ ȱȱȱȱȱȱȱȱȱǯ ȱŖŗǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ Ȃȱ ǻǼȱȱ ȱę ȱŖŝǰȱŘŖŗŘȱ Ȋȱ ȱȱȱȱȱ ȱ ȱǻ Ǽȱ ǯ ȱ Ȋȱ ȱȱȱȱȱȱȱ¡ǰȱȱǰȱ ȱȱȱȦȱȱȱȱ` ŗŖȱȱȱęȱȱ ǰȱȱȱ¡ȱȱȱǯ ȱŗśǰȱŘŖŗŘȱ ǰȱȱȱȱȱȱ¢ȱ ȱȱȱȱǰȱĴȱ ȱȱȱȱȱȱȱ ȱǻǼȱǯ ȱŗşǰȱŘŖŗŘȱ ȱǻȱǼȱǰȱŗşşŜȱȱȱ ȱǱ ȱ ǯȱ ¡ȱȱǰȱȱ¢ǰȱ ȱȱȱȱȱǯ ȱ ǯȱ ȱ¡ȱȱȱȱȱȱȱȱ¡ȱȱ ǰȱȱ¢ǰȱȱȱ ȱȱȱȱȱȱ śŘȱȱȱǯ ȱ ǯȱ ȱȱȱȱȱȱȱȱȱ Ȭȱȱȱȱ ǯ ȱŘŖǰȱŘŖŗŘȱ ȱ ȱ ǻȱ ǭȱ Ǽȱ ȱ ȱ ¡ȱ ǻȱ ǭȱ ¢Ǽȱ ȱ ȱ ȱ ȱ £ȱ ȱ ` ŗȱ ȱ ȱ ǯȱ ¢ǰȱ ȱ ȱ ¡¢ȱ ȱ ȱ ȱ ȱ ǻȱ ǭȱ Ǽȱȱȱ ¡ȱǻ¡ȱǭȱ¢Ǽȱ ȱȱ ¢ȱŘŖŗř ȱŘŘǰȱŘŖŗŘȱ ȱȱȱ ȱǻǼȱ ȱ ȱęȱȱ ȱȬȱ¢ȱȱ¡ȱȱȱ ȱȱȱȱ ȱȱ ¡ȱ¡ȱȱȱǻǼȱȱȱȱ ǯ ȱŘŝǰȱŘŖŗŘȱ ȱȱ ¢ȱȱȱȱȱȱȱȱ ȱȱǻǼȱ¡ȱȦȱǯ ȱŖŜǰȱŘŖŗŘȱ ȱ ȱ ¢ȱ ȱ ǰȱ ȱ ¡ȱ ȱ ǰȱ ȱ ęȱ¢ȱȱ ȱȱȱĚ ȱȱȱȱęȱ

Contd. 206 Chronology of Major Initiatives by SEBI

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ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱȱ ȱǯ ȱŗřǰȱŘŖŗŘȱ Ȋȱ ȱȱȱǰȱ ȱȱȱȱ ȱ¡ȱȱȱǯ ȱ Ȋȱ ȱȱȱ ȱȱ¢ȱȱȱȱȱ ȱȱȱȱȱȱǯ ȱŗşǰȱŘŖŗŘȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ Ȧȱ ȱ ȱ ȱ Ȧȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ęȱ¢ȱȱǻǼǯ ¢ȱŖŗǰȱŘŖŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǻ Ǽȱ ǯ ¢ȱŖřǰȱŘŖŗřȱ ęȱ ȱ ȱ řŜȱ ȱ ȱ ¢ȱ ȱ Ǳȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȧȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱęȱȱȱȱȱ¡ǯ ¢ȱŖŚǰȱŘŖŗřȱ ȱ ȱȱȱ¢ȱȱȱȱȱ ǻǼȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱ¢ȱȱȱȱȱǯ ¢ȱŗŝǰȱŘŖŗřȱ ¢ȱęȱȱȱȱȱȱȱȱȱ ȱ ȱ ǻȱ ȱ Ǽȱ ǰȱ ŗşşşȱ ȱ ȱ ȱ ȱȱȱȱȱ¢ȱǯ ¢ȱŘŚǰȱŘŖŗřȱ Ȋȱ ȱȱȱȱȱ¢ȱȱǰȱŘŖŖśǰȱȱ ȱ ęȱȱęȱ ȱ ȱǯ

ȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱȱȱȱȱȱȱȱ¡ȱ ȱ ǯ

¢ȱŘśǰȱŘŖŗřȱ ȱȱȱȱȱȱȱȱ ¢ȱŗŞǰȱŘŖŗŘȱ ȱęȱȱȱȱȱǰȱĜȱȱǯ

¢ȱŖŚǰȱŘŖŗřȱ ȱȱȱȱȱȱȱȱ¡ȱȱȱ ȱȱȱȱȱȱȱȱȱȱ ǰȱŗşśŜǯ

¢ȱŖŜǰȱŘŖŗřȱ ȱȱȱȱěȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǰȱ ŘŖŗŘȱ ǻ Ǽȱ ȱ¡ȱȱęȱ¢ȱȱ¢ȱ¢ǯ

Contd. 207 Annual Report 2012-13

Date Announcements

¢ȱŖŞǰȱŘŖŗřȱ Ȋȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ǯ ȱ Ȋȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱȱĴǯ ¢ȱŗŚǰȱŘŖŗřȱ ȱȱȱȱȱ ȱȱȱȱȱ ȱ¢ȱȱȱȱȬȱȱ ȱ¡ȱȱȱȱ ȱȱȱ¢ȱǯ ¢ȱŗśǰȱŘŖŗřȱ ȱȱȱ ȱȱȱǻ Ǽȱȱȱȱȱ ȱȱȱȱȱ¢ȱȱȱȱȱȱ ȱ ǯ ȱŖŗǰȱŘŖŗřȱ ȱȱ ȱȱȱȱŘŞǰȱŘŖŗŘǰȱȱȱ ȱ ȱ ȱ ȱ ȱ Ȭ ¢ȱ ¢ȱ ȱ ȱ ¢ȱȱǻ Ǽȱ ȱǯ ȱŗśǰȱŘŖŗřȱ ȱ ȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ǻǼȱ ȱȱȱȱȱȱȱȱ ȱȱǯ ȱŗŞǰȱŘŖŗřȱ Ȋȱ ȱȱȱȱȱȱȱȬǰȱȱȱȱ ȱȱȱȁȂȱȱȱ ȱǯ ȱ Ȋȱ ȱȱȱȱȱȱȱȱȱ ȱȱȱȱȱ¡ǯ ȱŘŖǰȱŘŖŗřȱ ȱ ȱĴȱȱěȱȱǰȱȱǰȱ ȱȱȱȱȱ ȱȱȱȱǰȱ ȱȱȱȱȱȱȱǭȱȱǯ ȱŘŗǰȱŘŖŗřȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱȱǰȱȱ¢ȱȱȱȱ ȱǭȱǰȱ¢ȱ ȱ ǻȱ ȱ ȱ Ǽȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱȱ¢ȱȱȱǯ ȱŘŜǰȱŘŖŗřȱ ȱȱ ȱǻȱȱȱȱȱǼȱ ǰȱŘŖŗŗȱ ȱȱȱȱȱȱȱȱ ȱǯ ȱŘŞǰȱŘŖŗřȱ ȱȱ ȱǿ ȱǻ ȱȱǼȱȱ¢Ȁȱ ǰȱŘŖŗŗǯ

Contd. 208