New products and procedures

• New products and procedures

  SEBI's activities in the area of market development in 1996- 97 also focused on the introduction of securities lending and on initiating the process of introduction of derivatives trading in India.
  
  

• The Securities Lending Scheme, 1997

  The B D Shah Committee on short selling set up by SEBI was also requested to consider and recommend modalities for the introduction of a securities lending scheme. The securities lending scheme provides for lending of securities through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same type and class at the end of the specified period along with any corporate benefits accruing on the securities borrowed. The scheme facilitates the timely delivery of securities which in turn is likely to improve efficiency of the settlement system. It also provides an avenue for investors to earn additional return by lending them. As on March 31, 1997, two applicants were granted authorisation to act as approved intermediary.
  
  

• Committee on regulation of derivatives trading

  For some time, a need has been expressed by market participants for introducing formal derivatives markets to provide a mechanism of hedging risks. In response, SEBI appointed a committee under the chairmanship of Dr. L C Gupta, former Member, SEBI, to recommend an appropriate regulatory framework for the introduction of derivatives trading in India.