Assignment of Indian Financial System

Capital Market

SUBMITTED TO
Prof. K.L.Chawla

By

Radhika Chitkara PG07050

Ankush Khandelwal PG07006

INMANTEC

Integrated Academy of Management and Technology

Ghaziabad
 Capital Market
Capital market is a sub-part of financial system; it comprises the sources of
long-term finance for Industry and government. It is the market that attract
saving from various sources and make them available to the sectors of
economy requiring funds for productive uses. The savings and funds are
converted into investment through both the primary market for new issues
and the secondary market for existing securities are part of the capital
market.

The market in which corporate equity and longer-term debt securities are
issued and traded.
It is the market for long-term funds where securities such as common stock,
preferred stock, and bonds are traded.

In other word we can say that the capital market in which large amounts of
money (capital) are raised by companies, governments and other
organizations for long term use.

New money is raised in the Primary market by issuing shares or bonds to

investors who can then trade them on the relevant Secondary market

.
 Capital market v/s Money market
The Capital market is different from Money market because Money market
is created by a financial relationship between suppliers and demanders of
short-term funds, which have maturities of one year or less. It exists because
investors have temporarily idle funds that they wish to place in some type of
liquid assets or short-term interest-earnings instruments. At the same time,
other entities/organizations find themselves in need of seasonal/temporary
financing.

Type Of Capital Market: -

The Capital market comprises two components namely: New issues market
where company issues securities directly to the public and the stock market
or Secondary market where the existing securities are bought and sold.

Two type of Capital market…

1 - Primary market.

2 - Secondary market.
Primary market: -
The market in which investors have the first opportunity to buy a newly
issued security.

A market is primary if the proceeds of sales go to the issuer of the securities

sold.

This is part of the financial market where enterprises issue their new shares
and bonds. It is characterized by being the only moment when the enterprise
receives money in exchange for selling its financial assets.

This is part of the financial market where enterprises issue their new shares
and bonds. The market in which investors have the first opportunity to buy a
newly issued security. Investors who buy stocks and bonds in the primary
market usually are not required to pay brokerage commissions because fees
for selling the issue are built into its price and are absorbed by the issuer.

The primary is that part of the capital markets that deals with the issuance
of new securities. Companies, governments or public sector institutions can
obtain funding through the sale of a new stock or bond issue. This is
typically done through a syndicate of securities dealers. The process of
selling new issues to investors is called underwriting. In the case of a new
stock issue, this sale is an Initial public offering (IPO). Dealers earn a
commission that is built into the price of the security offering, though it can
be found in the prospectus.

Methods of issuing securities in the primary market are:

• Initial public offering.

• Rights issue (for existing companies), and
• Preferential issue.
Initial public offering:-
Initial public offering (IPO), also referred to simply as a "public offering",
is when a company issues common stock or shares to the public for the first
time. They are often issued by smaller, younger companies seeking capital to
expand, but can also be done by large privately-owned companies looking to
become publicly traded.

In an IPO, the issuer may obtain the assistance of an underwriting firm,

which helps it determine what type of security to issue (common or
preferred), best offering price and time to bring it to market.

IPOs can be a risky investment. For the individual investor, it is tough to

predict what the stock or shares will do on its initial day of trading and in the
near future since there is often little historical data with which to analyze the
company. Also, most IPOs are of companies going through a transitory
growth period, and they are therefore subject to additional uncertainty
regarding their future value.

IPO is new shares offered to the public in the Primary Market .The first
time the company is traded on the stock exchange.

Securities offered in an IPO are often those of young, small companies

seeking outside equity capital and a public market for their stock.

Investors purchasing stock in IPO generally must be prepared to accept very

large risks for the possibility of large gains.
Rights issue:-
When doing a Secondary Market Offering of shares to raise money, a
company can opt for doing a rights issue to raise capital. With the issued
rights, existing shareholders have the privilege to buy a specified number of
new shares from the firm at a specified price within a specified time. A
rights issue is offered to all existing shareholders individually and may be
rejected, accepted in full or (in a typical rights issue) accepted in part by
each shareholder. Rights are often transferable, allowing the holder to sell
them on the open market.
Rights can be renounceable (can be sold separately from the share to other
investors during the life of the right) or non-renounceable (shareholders
must either take up the rights or let them lapse. Once the rights have lapsed,
they no longer exist).

To issue rights the financial manager has to consider:

• Subscription price per new share

• Number of new shares to be sold
• The value of rights
• The effect of rights on the value of the current share
• The effect of rights to existing and new shareholders

A right to a share is generally issued on a ratio basis (e.g. one-for-three

rights issue). Because the company is getting the shareholders' money in
exchange for issuing rights, a rights issue is a source of funds for the
company issuing it.

Rights issues may be underwritten. The role of the underwriter is to

guarantee that the funds sought by the company will be raised. The
agreement between the underwriter and the company is set out in a formal
underwriting agreement. Typical terms of an underwriting require the
underwriter to subscribe for any shares offered but not taken up by
shareholders. The underwriting agreement will normally enable the
underwriter to terminate its obligations in defined circumstances. A sub-
underwriter in turn sub-underwrites some or all of the obligations of the
main underwriter; the underwriter passes its risk to the sub-underwriter by
requiring the sub-underwriter to subscribe for or purchase a portion of the
shares for which the underwriter is obliged to subscribe in the event of a
shortfall. Underwriters and sub-underwriters may be financial institutions,
stock-brokers, major shareholders of the company or other related or
unrelated parties. The Panel’s guidance covers both non-underwritten and
underwritten rights issues.

Features of primary markets are:

• This is the market for new long term capital. The primary market is
the market where the securities are sold for the first time. Therefore it
is also called New Issue Market (NIM).
• In a primary issue, the securities are issued by the company directly to
investors.
• The company receives the money and issues new security certificates
to the investors.
• Primary issues are used by companies for the purpose of setting up
new business or for expanding or modernizing the existing business.
• The primary market performs the crucial function of facilitating
capital formation in the economy.
• The new issue market does not include certain other sources of new
long term external finance, such as loans from financial institutions.
Borrowers in the new issue market may be raising capital for
converting private capital into public capital; this is known as ‘going
public’.

How Investor Buy Share from Primary Market

When a company floats a public issue or IPO, it prints forms for application
to be filled by the investors.

Public issues are open for a few days only. As per law, any public issue
should be kept open for a minimum of 3days and a maximum of 21 days.

The duly complete application from, accompanied by cash, cheque, DD or

stock invest should be deposited before the closing date as per the
instruction on the form.
In order to buy shares issued by a company in the primary market, you will
have to fill out a special form, which is obtained from the brokers, the
issuing company, or any branch of a commercial bank involved in the
particular issue of shares. Photocopies of such forms could also be used.

In such a primary issue the minimum number of shares that can be applied
for is usually 50, and applications for higher quantities must be for multiple
of hundred.

Application duly perfected and accompanied by check, bank draft or cash as

indicated should be sent to a branch of a bank engaged for the purpose or to
a share broking company or the company issuing the shares as stated in the
prospectus

In the case of the issue of new shares, which have a high demand, it is
possible that the amount of money the company is seeking from the issue
would be found or subscribed fully, before the closing date. Therefore, it is
usually advisable to apply for shares in a primary issue within the stipulated
times of the prospectus.

If the issue is over-subscribed the applicant will in due course receive a

refund of the money paid for not getting shares through lottery. If your
application is accepted and shares are allotted in your name you will be
issued a share certificate by the company. However, you will not be
permitted to withdraw your investment from the company. This is because
share investment as equities has no maturity dates as with debt obligations.
The company in which you have purchased shares has not incurred a debt
obligation by issuing shares. Further the Companies Act prohibits a
company buying back its own shares.

You will in time earn a dividend, when the company declares dividends
depending on its profitability. Or else you may be allotted bonus shares or
entitled to buy more shares on a rights issue. However, if you wish to covert
your shares into cash you can sell in the Stock Exchanges.
Secondary Market: -
The market where securities are traded after they are initially offered in the
primary market. Most trading is done in the secondary market.

A market in which an investor purchases a security from another investor

rather than the issuer, subsequent to the original issuance in the primary
market.
The market where securities are traded after they are initially offered in the
primary market. Most trading is done in the secondary market.

The secondary market is the financial market for trading of securities that
have already been issued in an initial private or public offering.
Alternatively, secondary market can refer to the market for any kind of used
goods. The market that exists in a new security just after the new issue, is
often referred to as the aftermarket. Once a newly issued stock is listed on a
stock exchange, investors and speculators can easily trade on the exchange,
as market makers provide bids and offers in the new stock.

Function:-
In the secondary market, securities are sold by and transferred from one
investor or speculator to another. It is therefore important that the secondary
market be highly liquid (originally, the only way to create this liquidity was
for investors and speculators to meet at a fixed place regularly).

Secondary marketing is vital to an efficient and modern capital market.

Fundamentally, secondary markets mesh the investor's preference for
liquidity (i.e., the investor's desire not to tie up his or her money for a long
period of time, in case the investor needs it to deal with unforeseen
circumstances) with the capital user's preference to be able to use the capital
for an extended period of time. For example, a traditional loan allows the
borrower to pay back the loan, with interest, over a certain period. For the
length of that period of time, the bulk of the lender's investment is
inaccessible to the lender, even in cases of emergencies. Likewise, in an
emergency, a partner in a traditional partnership is only able to access his or
her original investment if he or she finds another investor willing to buy out
his or her interest in the partnership. With a securitized loan or equity
interest (such as bonds) or tradable stocks, the investor can sell, relatively
easily, his or her interest in the investment, particularly if the loan or
ownership equity has been broken into relatively small parts. This selling
and buying of small parts of a larger loan or ownership interest in a venture
is called secondary market trading.

Under traditional lending and partnership arrangements, investors may be

less likely to put their money into long-term investments, and more likely to
charge a higher interest rate (or demand a greater share of the profits) if they
do. With secondary markets, however, investors know that they can recoup
some of their investment quickly, if their own circumstances change.

What are the products dealt in the secondary markets?

Following are the main financial products/instruments dealt in the
secondary market:

Equity: The ownership interest in a company of holders of its common and

preferred stock. The various kinds of equity shares are as follows –

Equity Shares: An equity share, commonly referred to as ordinary share

also represents the form of fractional ownership in which a shareholder, as a
fractional owner, undertakes the maximum entrepreneurial risk associated
with a business venture. The holders of such shares are members of the
company and have voting rights. A company may issue such shares with
differential rights as to voting, payment of dividend, etc.

Rights Issue/Rights Shares: The issue of new securities to existing

shareholders at a ratio to those already held.

Bonus Shares: Shares issued by the companies to their shareholders free of

cost by capitalization of accumulated reserves from the profits earned in the
earlier years.

Preferred Stock/ Preference shares: Owners of these kinds of shares are

entitled to a fixed dividend or dividend calculated at a fixed rate to be paid
regularly before dividend can be paid in respect of equity share. They also
enjoy priority over the equity shareholders in payment of surplus. But in the
event of liquidation, their claims rank below the claims of the company’s
creditors, bondholders / debenture holders.

Cumulative Preference Shares: A type of preference shares on which

dividend accumulates if remains unpaid. All arrears of preference dividend
have to be paid out before paying dividend on equity shares.

Cumulative Convertible Preference Shares: A type of preference shares

where the dividend payable on the same accumulates, if not paid. After a
specified date, these shares will be converted into equity capital of the
company.

Participating Preference Share: The right of certain preference

shareholders to participate in profits after a specified fixed dividend
contracted for is paid. Participation right is linked with the quantum of
dividend paid on the equity shares over and above a particular specified
level.

Security Receipts: Security receipt means a receipt or other security, issued

by a securitisation company or reconstruction company to any qualified
institutional buyer pursuant to a scheme, evidencing the purchase or
acquisition by the holder thereof, of an undivided right, title or interest in the
financial asset involved in securitisation.

Government securities (G-Secs): These are sovereign (credit risk-free)

coupon bearing instruments, which are issued by the Reserve Bank of India
on behalf of Government of India, in lieu of the Central Government's
market borrowing programme. These securities have a fixed coupon that is
paid on specific dates on half-yearly basis. These securities are available in
wide range of maturity dates, from short dated (less than one year) to long
date (upto twenty years).

Debentures: Bonds issued by a company bearing a fixed rate of interest

usually payable half yearly on specific dates and principal amount repayable
on particular date on redemption of the debentures. Debentures are normally
secured/ charged against the asset of the company in favour of debenture
holder.

Bond: A negotiable certificate evidencing indebtedness. It is normally

unsecured. A debt security is generally issued by a company, municipality or
government agency. A bond investor lends money to the issuer and in
exchange, the issuer promises to repay the loan amount on a specified
maturity date. The issuer usually pays the bondholder periodic interest
payments over the life of the loan. The various types of Bonds are as
follows-

Zero Coupon Bond: Bond issued at a discount and repaid at a face value.
No periodic interest is paid. The difference between the issue price and
redemption price represents the return to the holder. The buyer of these
bonds receives only one payment, at the maturity of the bond.

Convertible Bond: A bond giving the investor the option to convert the
bond into equity at a fixed conversion price.

Commercial Paper: A short-term promise to repay a fixed amount that is

placed on the market either directly or through a specialized intermediary. It
is usually issued by companies with a high credit standing in the form of a
promissory note redeemable at par to the holder on maturity and therefore,
doesn’t require any guarantee. Commercial paper is a money market
instrument issued normally for tenure of 90 days.

Treasury Bills: Short-term (up to 91 days) bearer discount security issued

by the Government as a means of financing its cash requirements.
What are the various departments of SEBI regulating trading
in the secondary market?
The following departments of SEBI take care of the activities in the
secondary market.

Sr.No. Name of theMajor Activities

Department
1. Market IntermediariesRegistration, supervision, compliance
Registration andmonitoring and inspections of all market
Supervision departmentintermediaries in respect of all segments
(MIRSD) of the markets viz. equity, equity
derivatives, debt and debt related
derivatives.
2. Market RegulationFormulating new policies and
Department (MRD) supervising the functioning and
operations (except relating to
derivatives) of securities exchanges,
their subsidiaries, and market institutions
such as Clearing and settlement
organizations and Depositories
(Collectively referred to as ‘Market
SROs’.)
3. Derivatives and NewSupervising trading at derivatives
Products Departmentssegments of stock exchanges,
(DNPD) introducing new products to be traded,
and consequent policy changes
What is the difference between the primary market and the secondary
market?

In the primary market, securities are offered to public for subscription for the
purpose of raising capital or fund. Secondary market is an equity-trading
avenue in which already existing/pre- issued securities are traded amongst
investors. Secondary market could be either auction or dealer market. While
stock exchange is the part of an auction market, Over-the-Counter (OTC) is
a part of the dealer market.

Relationship between the primary and secondary market:

1. The Secondary Market provides liquidity for the issued securities, which
are traded in the Secondary Market.

2. The Stock Exchanges, through the listing requirements, exercise control

over the Primary Market.

3. The Marketability and Capital appreciation provided in the Stock Market

are the major factors that attract the investing public towards the stock
market.

4. Being complementary in nature, their healthy functioning depends on

each other.
SEBI

Before the establishment of the Securities ad Exchange Board of India

(SEBI), the principal legislations governing the securities market in India
were the capital Issues Control Act, 1956 (governing the primary market)
and the Securities Contracts (Regulations) Act 1956 (governing the
secondary market). The regulatory powers were vested with the Controller
of capital Issue (for the primary market) and the Stock Exchange Division
(for the secondary market) in the Ministry of Finance, Government of India.
In 1989, SEBI was created by an administrative fiat of the Ministry of
finance. Since then, SEBI has gradually been granted more and more
powers. With the repeal of the Capital issues, Control Act and the enactment
of the SEBI Act in 1992, the regulations of the primary market has become
the preserve of SEBI. Further, the Ministry of Finance, Government of India,
has transferred most of the powers under the Securities Contracts
(Regulations) Act, 1956 to SEBI.

SEBI’s principal tasks are to:

1. Regulate the business in stock exchanges and any other securities

markets. 2. Register and regulate the working of capital market
intermediaries (brokers, merchant bankers, portfolio managers and so on)
3. Register and regulate the working of mutual funds
4. Promote and regulate self-regulatory organizations
5. Prohibit fraudulent and unfair trade practices in securities markets
6. Promote investor’s education and training of intermediaries of securities
markets
7. Prohibit insider trading in securities
8. Regulate substantial acquisition of shares and takeovers of companies
9. Perform such other functions as may be prescribed.

Initiatives: SEBI has taken a number of steps in the last few years to reform
the India capital market. It has covered the entire gamut of capital market
activities through nearly 30 legislations. The important initiatives are
mentioned below.

Freedom in Designing and Pricing Instruments: Companies now enjoy

substantial freedom in designing the instruments of financing as long as they
fully disclose the character of the same. More important, they enjoy
considerable latitude in pricing the same.

Introduction of Stock invests: To save investors from the loss of interest

on the subscription money locked up with the company, SEBI has
introduced the stock invest scheme as an additional facility to the investors.

The financial irregularities of 1992 highlighted the deficiencies of the badla

system permitted excessive leveraging. To rectify the defects in trading
practices the badla system has been banned.

Screen based Trading: Due to the competition posed by the National Stock
Exchange and the insistence or prodding done by SEBI, all the exchanges
have switched to screen based trading.

Electronic Transfer: The traditional method of transfer by endorsement on

security and registration by issuer has been supplanted by electronic transfer
in book entry form by depositories.

Risk Management: A comprehensive risk management system that covers

capital adequacy limits on exposure and turnover margins based on VAR
(value at risk) client level gross margining and online monitoring of
positions has been introduced.

Rolling Settlement: The trading cycle, which was previously one week, has
been reduced to one day and the system of rolling has been introduced.

Corporate Governance Code: A new code of corporate governance has

been defined. It has been made operational by inserting a new clause (clause
49) in the Listing Agreement – the agreement that a listed company enters
into with stock exchange where its securities are listed.

Change in Management Structure: Stock exchanges earlier were broker

dominated. SEBI now requires 50 percent non-broker directors. Further, it
has mandated that a non-broker professional be appointed as the Executive
Director.

Registration and Regulation of Intermediaries: Capital market

intermediaries such as merchant bankers, under writers, bankers to the issue,
registrars to transfer arrangements, brokers and sub brokers are required to
be registered with SEBI. Regulations for these intermediaries have been
prescribed.

What is SEBI and what is its role?

The SEBI is the regulatory authority established under Section 3 of SEBI
Act 1992 to protect the interests of the investors in securities and to promote
the development of, and to regulate, the securities market and for matters
connected therewith and incidental thereto.

What are the regulatory requirements specified by SEBI for corporate

debt securities?

The issue of debt securities having maturity period of more than 365 days by
listed companies (i.e. which have any of their securities, either equity or
debt, offered through an offer document, and listed on a recognized stock
exchange and also includes Public Sector Undertakings whose securities are
listed on a recognized stock exchange) on private placement basis must
comply with the conditions prescribed by SEBI from time to time for getting
them listed on the stock exchanges. Further, unlisted companies/statutory
corporations/other entities, if they so desire, may get their privately placed
debt securities listed on the stock exchanges, by complying with the relevant
conditions. Briefly, these conditions are:

Compliance with disclosure requirements under Chapter VI of the SEBI

(Disclosure and Investor Protection) Guidelines, 2000, Listing Agreement
with the exchanges and provisions of the Companies Act.

Such disclosures may be made through the web site of the stock exchanges
where the debt securities are sought to be listed if the privately placed debt
securities are issued in the standard denomination of Rs. 10 lakhs.

 The company shall sign a separate listing agreement with the

exchange in respect of debt securities.

 The debt securities shall carry a credit rating from a Credit Rating
Agency registered with SEBI.
  The company shall appoint a debenture trustee registered with SEBI
in respect of the issue of the debt securities.

 The debt securities shall be issued and traded in Demat form.

All trades with the exception of spot transactions, in a listed debt security,
shall be executed only on the trading platform of a stock exchange.

Role of Broker and Sub-broker in the Secondary Market

Who is a broker?
A broker is a member of a recognized stock exchange, who is permitted to
do trades on the screen-based trading system of different stock exchanges.
He is enrolled as a member with the concerned exchange and is registered
with SEBI.

Who is a sub broker?

A sub broker is a person who is registered with SEBI as such and is
affiliated to a member of a recognized stock exchange.

What details are required to be mentioned on the Contract

note issued by the Stock Broker?
A broker has to issue a contract note to clients for all transactions in the form
specified by the stock exchange. The contract note inter-alia should have
following:

• Name, address and SEBI Registration number of the Member broker.

• Name of partner /proprietor /Authorised Signatory.
• Dealing Office Address/Tel No/Fax no, Code number of the member
given by the Exchange.
• Unique Identification Number
• Contract number, date of issue of contract note, settlement number
and time period for settlement.
 • Constituent (Client) name/Code Number.
• Order number and order time corresponding to the trades.
• Trade number and Trade time.
• Quantity and Kind of Security brought/sold by the client.
• Brokerage and Purchase /Sale rate are given separately.
• Service tax rates and any other charges levied by the broker.
• Securities Transaction Tax (STT) as applicable.
• Appropriate stamps have to be affixed on the original contract note or
it is mentioned that the consolidated stamp duty is paid.
• Signature of the Stock broker/Authorized Signatory.

Contract note provides for the recourse to the system of arbitrators for
settlement of disputes arising out of transactions. Only the broker can
issue the contract notes

What is the maximum brokerage that a broker/sub broker can

charge?
The maximum brokerage that can be charged by a broker has been specified
in the Stock Exchange Regulations and hence, it may differ from across
various exchanges. As per the BSE & NSE Bye Laws, a broker cannot
charge more than 2.5% brokerage from his clients. This maximum brokerage
is inclusive of the brokerage charged by the sub-broker. Further, SEBI
(Stock brokers and Sub brokers) Regulations, 1992 stipulates that sub broker
cannot charge from his clients, a commission which is more than 1.5% of
the value mentioned in the respective purchase or sale note.

Factor That Impact On Capital Market:

Inflation rate

 Rate of economic growth

 Employment

 Consumer spending

 FDI
Capital Market Regulation:
In keeping with the broad thrust of the ongoing programmes of economic
reform, the mechanism of administrative controls over capital issues has
been dismantled and pricing of capital issues is now essentially market
determined. Regulation of the capital markets and protection of investor's
interest is now primarily the responsibility of the Securities and Exchange
Board of India (SEBI), which is located in Bombay.

Accordingly, SEBI's functions include:

 Regulating the business in stock exchange and any other securities

markets.

 Registering and regulating the working of collective investment

schemes, including mutual funds.

 Prohibiting fraudulent and unfair trade practices relating to securities

markets.

 Promoting investor's education and training of intermediaries of

securities markets.

 Prohibiting insider trading in securities, with the imposition of

monetary penalties, on erring market intermediaries.

 Regulating substantial acquisition of shares and takeover of

companies.

 Calling for information from, carrying out inspection, conducting

inquiries and audits of the stock exchanges and intermediaries and
self-regulatory organisations in the securities market.
Keeping this in view, SEBI has issued a new set of comprehensive
guidelines governing issue of shares and other financial instruments, and has
laid down detailed norms for stock-brokers and sub-brokers, merchant
bankers, portfolio managers and mutual funds.
On the recommendations of the Patel Committee report, SEBI on 27th July
1995, permitted carry forward deals. Some pf the major features of the
revised carry-forward transactions as directed by SEBI are:

 Carry forward deals permitted only on stock exchanges, which have

screen based trading system.

 Transactions carried forward cannot exceed 25% of a broker's total

transactions on any one-day.

 90-day limit for carry forward and squaring off allowed only till the
75th day (or the end of the fifth settlement).

 Daily margins to rise progressively from 20% in the first settlement to

50% in the fifth.

On 26th January 1995, the government promulgated an ordinance amending

the SEBI Act, 1992, and the Securities Contracts (Regulation) Act, 1956.
In accordance with the amendment adjudicating mechanism will be created
within SEBI and any appeal against this adjudicating authority will have to
be made to the Securities Appellate Tribunal, which is to be separately
constituted. These appeals will be heard only at the High Courts.

The main features of the amendment to the Securities Contract (Regulation)

Act, 1956, are:

 The ban on the system of options in trading has been lifted.

 The time limit of six months, in which stock exchanges could amend
their byelaws, has been reduced to two months.

 Additional trading floors on the stock exchanges can be established

only with prior permission from SEBI.
  Any company seeking listing on stock exchanges would have to
comply with the listing agreements of stock exchanges, and the failure
to comply with these, or their violation is punishable.

Conclusion

The capital market is the market for securities, where companies and
governments can raise longterm funds. The capital market includes the stock
market and the bond market. Financial regulators, such as the U.S. Securities
and Exchange Commission, oversee the capital markets in their designated
countries to ensure that investors are protected against fraud. The capital
markets consist of the primary market, where new issues are distributed to
investors, and the secondary market, where existing securities are traded.
Regulation of the capital markets and protection of investor's interest is now
primarily the responsibility of the Securities and Exchange Board of India
(SEBI), which is located in Bombay.