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...................................................................................