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| PRESS RELEASE
PR No.188/2006
ANNUAL REPORT OF SEBI FOR 2005-06
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The following are the highlights of the Annual Report of the Securities and Exchange Board of India (SEBI) for 2005-06:
Development of Corporate Bond Market:
The Honourable Union Finance Minister in his budget speech for 2005-06 announced the setting up of an expert committee on corporate bonds. Subsequently, a high level expert committee was constituted under the Chairmanship of Dr. R. H. Patil, Chairman, Clearing Corporation of India Limited (CCIL) to suggest appropriate measures for the development of corporate debt market in India. The Expert Committee submitted its report to the Government on December 23, 2005. The recommendations of the Committee have been accepted by the Government. SEBI had set up an internal committee for the implementation of Patil committee recommendations under the chairmanship of Dr. T.C. Nair, Whole Time Member, SEBI.
Corporatisation and demutualization of Stock Exchanges:
The Honourable Union Finance Minister in his budget speech for 2005-06 had announced the corporatisation and demutualization of stock exchanges. Accordingly SEBI had notified the demutualization of stock exchanges except the Coimbatore Stock Exchange and Mangalore Stock Exchange.
In the post demutualization period, it has become crucial to decide the future role of Regional Stock Exchanges (RSEs). A committee was set up under the Chairmanship of Shri G. Anantharaman, Whole Time Member, SEBI to study the future of RSEs in the Indian context. The Committee has submitted the report and the report has been put in SEBI website for public comments. SEBI will decide on the future of RSEs on the basis of the recommendations of the Anantharaman Committee.
National Institute of Securities Markets (NISM):
The Honourable Union Finance Minister in his budget speech for 2005-06, authorized SEBI to set up a National Institute of Securities Markets (NISM), for teaching and training intermediaries in the securities market and promoting research. A plot of land measuring more than 60 acres has been purchased at Patalganga, near Panvel, Mumbai to build a world class infrastructure for NISM. Details of the blue print for NISM, including sourcing of funds, business model, possible collaboration, physical and human capital, curriculum, course design and delivery of education and training etc. are being worked out to make the NISM operational at the earliest. The NISM would design and implement the entire gamut of educational initiatives, including education, training, certification, research and consultancy in the area of securities market and allied subjects for securities market professionals in India and the neighbouring countries.
Primary Market:
Some of the policy initiatives taken by SEBI include introduction of proportionate allotment and margin requirement for the Qualified Institutional Buyers (QIBs) and special allocation to mutual funds within the QIB category, Electronic Clearing Services (ECS) facility for public issue refunds, introduction of optional grading of IPO, rationalization of disclosure requirements for listed companies, corporate governance of listed companies etc.
Secondary Market:
Rationalization of dmat charges, separate window for execution of block deals, activation of International Securities Identification Numbers (ISINs) of IPOs only on the commencement of trading on the stock exchanges, constitution of committee under the chairmanship of Shri Jagdish Capoor to examine various operational issues related to MAPIN database and suggest appropriate measures in this regard, discontinuation of hand delivery bargains I delivery versus payment, revision of Trading Member/ FII/ Mutual Fund limits in stock based derivatives, eligibility criteria for introduction of derivatives on stocks of companies undergoing corporate restructuring are some of the policy initiatives in the secondary market.
Mutual Funds:
Introduction of Gold Exchange Traded Funds, review of time limit for updating NAV on AMFI website, permission for Venture Capital Funds to invest in securities of foreign companies subject to conditions issued by Reserve Bank of India and SEBI are the highlights of the policy initiatives for Mutual funds in the last financial year.
Foreign Institutional Investors:
The Honourable Union Finance Minister in his budget speech for 2005-06, announced the enhancement of the sub-ceiling for FII investment in debt securities within the overall limit of External Commercial Borrowings (ECBs). While such limit for Government securities (including Treasury Bills) was raised from US$ 1.75 billion to US$ 2 billion, the same for the corporate debt had been increased from US$0.5 billion to US$1.5 billion. The sub-ceilings continued to remain separate and not fungible.
Corporate Restructuring:
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1976 were amended with twin objectives of providing flexibility to the companies to restructure their capital in an orderly manner and maintaining the minimum public shareholding which is required for continuous listing. The amendments, inter alia, include removal of restrictions on market purchases and preferential allotments.
SEBI amended provisions of compulsory delisting in the SEBI (Delisting of Securities) Guidelines thereby providing a mechanism for determining fair value of shares, in case of compulsory delisting, by an expert group appointed by the stock exchanges.
Surveillance Activities:
In order to further enhance efficacy of the surveillance function, SEBI decided to put in place a world-class comprehensive Integrated Market Surveillance System (IMSS) across stock exchanges and across market segments (cash and derivatives markets).The Integrated Surveillance Department of SEBI monitored market movements, analysed trading pattern in scrips and indices and initiated appropriate actions in co-ordination with stock exchanges and depositories.
Investor Awareness, Assistance and Investor Education / Protection:
During 2005-06, 1000 workshops were conducted by different agencies under the aegis of the Securities Market Awareness campaign. These workshops were arranged throughout the country to reach the common investors and educate them about the functioning of the capital market.
An investors' complaint status module on the SEBI website, is being implemented in a phased manner. SEBI proposes to conduct an investors’ survey, shortly.
Regulations:
SEBI shall endeavour to simplify and rationalize securities market regulations. An Expert group was constituted under the Chairmanship of Mr. Justice M. H. Kania for suggesting amendments to SEBI Act, 1992. The expert group has submitted its report and steps are being taken to implement the recommendations.
International Co-operation:
SEBI signed a Letter of Intent (LOI) with the Securities and Futures Commission (SFC), Hong Kong on the enhancement of regulatory co-operation between the two jurisdictions. The LOI was signed by Mr. Andrew Sheng, then Chairman, SFC, Hong Kong and Mr. M.Damodaran, Chairman, SEBI.
SEBI has also become one of the signatories of the "South Asian Securities Regulators Forum". The other members of the forum include the securities market regulators from Bangladesh, Bhutan, Mauritius, Nepal, Pakistan and Maldives. SEBI shall be hosting the 32nd Annual Conference of the International Organization of Securities Commissions (IOSCO) during April 9-12, 2007 at Mumbai.
Do you know?
During the year 2005 - 2006
- 139 companies accessed the primary market and mobilized Rs.27,382 crore.
- Turnover in cash segment was Rs. 23,90,103 crore a rise of 43.4 percent over the previous year.
- The market capitalization to GDP ratio was 85.6%.
- The net mobilization of resources by all mutual funds was Rs.52,779 crore – the highest ever in a single year.
- The net investment by FIls in equity was Rs. 48,801 crore - the highest ever in a single year.
- SEBI granted tenure period renewal to one stock exchange and yearly renewal to 10 stock exchanges.
- 224 new FIls were registered with SEBI.
- 165 new cases were taken up for investigation and 81 cases were completed.
- 411 orders were passed / reports submitted, hearings for 196 cases were conducted and 247 show-causes were issued to different entities.
As on March 31, 2006
- The total assets under management by all mutual funds were Rs.2,31,862 crore – a rise of 55% over the previous year.
- BSE Sensex and S&P CNX Nifty appreciated by 73.7 per cent and 67.1 per cent respectively over March 31, 2005
- There were 592 mutual fund schemes
- Number of brokers registered with SEBI was 9335.
- Number of FIIs registered with SEBI was 882.
- There were 38 mutual funds registered with SEBI.
- Number of indigenous venture capital funds increased to 80.
- The number of companies signed up for dematerialization at NSDL was 6022 and at CDSL was 5479
The detailed Annual Report for 2005-06 along with summary is available in the website www.sebi.gov.in under “News / Publications”.
Mumbai
August 22, 2006