The SEBI regulates various intermediaries in the primary and secondary markets through various regulations framed for respective intermediary. These regulations allow the SEBI to inspect the functioning of these intermediaries and collect registration/renewal fees from them. Details of the registered intermediaries and regulation of the working of intermediaries are presented in the following sub-sections.

Primary Market Intermediaries

Merchant bankers:

During 1997-98, 14 merchant bankers were granted registration. The registration of 44 merchant bankers were cancelled. The cancelled cases include those that were not renewed as they did not fulfil net-worth criteria and those cancelled on completion of enquiry proceedings. Category-wise details of registration of merchant bankers are given in Table III.1 below:

Table III.1 Categorise-wise Registration of Merchant Bankers

 
Source: SEBI

Registrars to an issue and share transfer agents

Registrars to an Issue (RTI) and Share Transfer Agents (STA) are registered and regulated by the SEBI (Registrars To An Issue And Share Transfer Agents) Rules and Regulations, 1993. Under these regulations, registration commenced in 1993-94 and was granted under two categories viz., category I to act as both registrar to an issue and share transfer agent and Category II to act as either registrar to an issue or share transfer agents.

The following table III.2 gives details of registration granted to the registrars to an issue and share transfer agents.

Table III.2 : Total No. of Registered Registrars to an Issue and Share Transfer Agents

 
Source: SEBI

Registrars to an issue and share transfer agents are required to submit quarterly reports in prescribed formats to SEBI, containing details of their activities. On the basis of quarterly reports as well as the inspection reports, the SEBI takes up issues such as delays on part of the registrars to an issue and share transfer agents.

Thus 35 warning letters were issued to registrars to an issue and share transfer agents for not effecting transfers within the stipulated time period of 30 days as laid down in the listing agreement.

Show-cause notices were issued to 12 registrars and share transfer agents for non payment of fees. Enquiry proceedings have been initiated against 7 RTI/STA’s.

The SEBI took action against 5 registrars to an issue and/or share transfer agents for irregularities committed by them.

For effective monitoring and control over their operations, inspection of 9 registrars to an issue and share transfer agents was carried out during the year.

Debenture trustees

Debenture Trustees are registered and regulated by the SEBI (Debenture Trustees) Rules and Regulations, 1993. Under these regulations, registration commenced in 1993-94.

As on March 31, 1998, 32 Debenture Trustees were registered with the SEBI. M/s. CRB Share Custodian Services was issued direction u/s 11B of the SEBI Act prohibiting them from undertaking any activity as a debenture trustee with effect from 28.5.1997.

Bankers to an issue

Bankers to an Issue are registered and regulated by the SEBI (Bankers to an Issue) Rules and Regulations 1994. Under these regulations, registration commenced in 1994-95. The various actions were taken against bankers to issues as on March 31, 1998 are as follows :

• 72 Bankers to an Issue were registered with the SEBI
• 5 warning letters were issued for delay in submission of final certificate to the registrar
• 2 show-cause notices were sent for non compliance of the SEBI directives
• 1 branch each of 2 bankers to an Issue was suspended for violations of the SEBI Rules and Regulations
• 10 bankers who had not entered into agreements with the issuer/client companies as per Regulation 14(1) and (2) of the SEBI (Bankers to an Issue) Rules and Regulations 1994 were referred to adjudication in Feb. 1998.

The number of underwriters registered with the SEBI in terms of SEBI (Underwriters) Rules and Regulations, 1993 was 43 at the end of 1997-98 and was 38 for 1996-97 and 6 underwriters were granted registration/renewal during the year 1997-98 and one was cancelled.

Portfolio Managers

During the year 1997-98, one portfolio manager w.as granted registration and one was cancelled. Thus the number of portfolio managers. remained the same .at 16 for the year 1997-98 as well as for 1996-97.

Secondary Market Intermediaries

Stock brokers

All stock brokers are registered with the SEBI in terms of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992.

The total number of registered brokers as on March 31, 1998, stood at 9005. During the year 1997-98 there was a significant increase in the number of corporate brokers, as approximately 529 brokers corporatised their membership on the stock exchanges in order to avail of the capital gains on account of exemption on transfer of individual membership granted by the Finance Bill 1997:

The number of registered brokers at the end of the year 1996-97 and as on March 31, 1998 is given in the Table III.3:

Table III.3 : Details of Registered Brokers

 
Source: SEBI

The stock exchange-wise breakup of total and corporate brokers registered with SEBI as on March 31, 1998 is presented in table III.4.

Table III.4 : Exchange-wise brokers registered with SEBI

Source : SEBI

An exchange-wise analysis reveals that relatively a large number of brokers registered with Mumbai, Delhi, Hyderabad, Bangalore, Vadodara and Uttar Pradesh Stock Exchanges converted into corporate broker to avail of the benefit of exemption. Maximum advantage was taken by brokers of the Stock Exchange, Mumbai, where the corporate percentage share went up to 47.77 per cent from 15.46 per cent.

Sub-Brokers

Sub-brokers are an important link between retail or small investors and the capital markets. The SEBI initiated a number of measures for bringing sub-brokers under the regulatory framework in the interest of the investors. In July 1997, the SEBI decided as a policy measure that share transfer deeds not bearing the rubber stamp of a registered sub-broker would be considered bad delivery of shares in the market. As a result there has been a substantial increase in the number of applications received for registration as sub-brokers.

Table III.5 : Stock Exchange wise Break-up of Registered Sub-Brokers

*The figure includes multiple registration granted to the sub-brokers.

Source: SEBI

Table III.6 : Sub-Brokers registered with SEBI

 
Source: SEBI

Broker Database

During the year a format for a comprehensive database of brokers which would be useful to the stock exchanges as well as the SEBI, was finalised and issued to the stock exchanges in February 1998. The database would give at a glance the historical profile of the brokers business, his multiple membership, the relatives and associate concerns of the brokers in the capital markets and track record of the broker’s business. The information is expected from all the stock exchanges by end of April 1998.