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8/3/2019 Fii Sebi Guidline Impact on Indian Capial Market Final
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Institute of Management & ComputerInstitute of Management & ComputerStudies (IMCOST), Thane, MumbaiStudies (IMCOST), Thane, Mumbai
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Name Seat No. Course
MANIGANDAN
MUDHALIAR
F091025 MFM
RAJESH MAITY F091021 MFM
SUMIT DAS F091006 MFM
Presented by
8/3/2019 Fii Sebi Guidline Impact on Indian Capial Market Final
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INTRODUCTION
The Securities and Exchange Board of India (SEBI) is the regulator
for the securities market in India.
It was formed officially by the Government of India in 1992 withSEBI Act 1992 being passed by the Indian Parliament. SEBI is
headquartered in the business district of Bandra-Kurla complex in
Mumbai, and has Northern, Eastern, Southern and Western regional
offices in New Delhi, Kolkata, Chennai and Ahmadabad.
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OBJECTIVES OF SEBI
1. To protect the interest of the
investors in securities.
2. To promote the development of
securities market.
3. To regulate the securities market.
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Promoting investors education and training ofintermediaries in securities market.
Regulating the business in stock exchange and any
other securities market
Prohibiting insiders trading in securities.
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SEBIregulates
Primary
Market
Secondary
Market
Mutual
Funds
ForeignInstitutional
Investment
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FII include:FII include:--1. Overseas pension funds.1. Overseas pension funds.
2. Mutual funds.2. Mutual funds.
3. Investment trust.3. Investment trust.
4. Asset management company.4. Asset management company.
5. Nominee company.5. Nominee company.
6. Bank.6. Bank.
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Cont.
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On 17.10.07. The benchmark Sensex had fallen by 1,507.71
points and touched 17,544.15 as soon as the opening of the
market. Nifty had fallen by 524.15 points to touch 5,143.90. Asthe circuit filters were triggered, trading was suspended for an
hour.
At the end of the day, Sensex closed at 18,715.82, down 336.04
The turmoil in the markets was caused by a SEBI proposal to
regulate the foreign inflows through Participatory Notes.
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SEBI issued a discussion paper on 16.10.07 and the proposals areas follows:
1. FIIs and sub-accounts will not issue/renew PNs issued againstderivatives. They have to wind up their current positions over 18months.
2. Sub-accounts can not issue PNs; have to wind up their currentpositions over 18 months .
3. FIIs with more than 40% of assets in PNs will issue PNs onlyagainst redemption/cancellation
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Currently, 34 FIIs and their sub-accounts issuePNs and the notional value of outstanding PNshas risen from Rs 31,875 crore (March 2004)to Rs 3,53,000 crore (August 2007),constituting 51.6% of Assets under custody ofall FIIs/sub-accounts. The value of outstandingPNs with underlying as derivatives stands at
Rs 1,17,071 crore, approximately 30% of totalPNs outstanding. The notional value ofoutstanding PNs, excluding derivatives asunderlying, is 34.5% of AUC.
STATUS
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PP--NotesNotes areare financialfinancial instrumentsinstruments usedused byby investorsinvestors oror hedgehedge fundsfundsthatthat areare notnot registeredregistered withwith thethe SecuritiesSecurities andand ExchangeExchange BoardBoard ofofIndiaIndia toto investinvest inin IndianIndian securitiessecurities.. IndianIndian--basedbased brokeragesbrokerages buybuy IndiaIndia--basedbased securitiessecurities andand thenthen issueissue participatoryparticipatory notesnotes toto foreignforeign
investorsinvestors..
AnyAny dividendsdividends oror capitalcapital gainsgains collectedcollected fromfrom thethe underlyingunderlying securitiessecuritiesgogo backback toto thethe investorsinvestors.. ParticipatoryParticipatory notesnotes areare likelike contractcontract notesnotes..TheseThese areare issuedissued byby FIIsFIIs toto entitiesentities thatthat wantwant toto investinvest inin thethe IndianIndianstockstock marketmarket butbut dodo notnot wantwant toto registerregister themselvesthemselves withwith thethe SEBISEBI..
SEBISEBI waswas notnot veryvery happyhappy aboutabout participatoryparticipatory notesnotes becausebecause theythey havehavenono wayway toto knowknow whowho ownsowns thethe underlyingunderlying securities,securities, itit fearedfeared thatthathedgehedge fundsfunds actingacting throughthrough participatoryparticipatory notesnotes willwill causecause economiceconomicvolatilityvolatility inin India'sIndia's exchangesexchanges..
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Exemption from attaching copy of RBI approval with each
market lots.
Allowed to invest in unlisted stocks of any company.
Allowed to invest up to 100% in debt instruments.
Mandatory to settle transactions thru dematerialized mode forFIIs having securities more than Rs.10 cr.
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THANK YOU