 MEANING

The capital market is the market for securities, where companies and the
government can raise long-term 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.

Security (finance)

A security is a fungible, negotiable instrument representing financial value.

Securities are broadly categorized into debt securities, such as banknotes,
bonds and debentures, and equity securities, e.g. common stocks. The
company or other entity issuing the security is called the issuer. What
specifically qualifies as a security is dependent on the regulatory structure in
a country. For example private investment pools may have some features of
securities, but they may not be registered or regulated as such if they meet
various restrictions.

Securities may be represented by a certificate or, more typically, by an

electronic book entry. Certificates may be bearer, meaning they entitle the
holder to rights under the security merely by holding the security, or
registered, meaning they entitle the holder to rights only if he or she appears
on a security register maintained by the issuer or an intermediary. They
include shares of corporate stock or mutual funds, bonds issued by
corporations or governmental agencies, stock options or other options,
limited partnership units, and various other formal investment instruments
that are negotiable and fungible.

 CLASSIFICATION OF CAPITAL MARKET

1) Primary market
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. Features Of Primary Market are:-

1. 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).

2. In a primary issue, the securities are issued by the company directly to

investors.

3. The company receives the money and issue new security certificates to the
investors.

4. Primary issues are used by companies for the purpose of setting up new
business or for expanding or modernizing the existing business.

5. The primary market performs the crucial function of facilitating capital

formation in the economy.

6. 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’.

Methods of issuing securities in the Primary Market

1. Initial Public Offer;

2. Rights Issue (For existing Companies); and

3. Preferential Issue.

2) 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 Of secondary market

 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. This is how
stock exchanges originated, see History of the Stock Exchange).

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.

 Financial market
In economics, a financial market is a mechanism that allows people to
easily buy and sell (trade) financial securities (such as stocks and bonds),
commodities (such as precious metals or agricultural goods), and other
fungible items of value at low transaction costs and at prices that reflect the
efficient market hypothesis.

Financial markets have evolved significantly over several hundred years and
are undergoing constant innovation to improve liquidity.

Both general markets, where many commodities are traded and specialised
markets (where only one commodity is traded) exist. Markets work by
placing many interested sellers in one "place", thus making them easier to
find for prospective buyers. An economy which relies primarily on
interactions between buyers and sellers to allocate resources is known as a
market economy in contrast either to a command economy or to a non-
market economy that is based, such as a gift economy.

In Finance, Financial markets facilitate:

• The raising of capital (in the capital markets);

• The transfer of risk (in the derivatives markets); and
• International trade (in the currency markets).

They are used to match those who want capital to those who have it.

Typically a borrower issues a receipt to the lender promising to pay back the
capital. These receipts are securities which may be freely bought or sold. In
return for lending money to the borrower, the lender will expect some
compensation in the form of interest or dividends

Types of financial markets

 The financial markets can be divided into different subtypes:

• Capital markets which consist of:

o Stock markets, which provide financing through the issuance of
shares or common stock, and enable the subsequent trading
thereof.
o Bond markets, which provide financing through the issuance of
Bonds, and enable the subsequent trading thereof.
• Commodity markets, which facilitate the trading of commodities.
• Money markets, which provide short term debt financing and
investment.
• Derivatives markets, which provide instruments for the management
of financial risk.
o Futures markets, which provide standardized forward contracts
for trading products at some future date; see also forward
market.
• Insurance markets, which facilitate the redistribution of various risks.
• Foreign exchange markets, which facilitate the trading of foreign
exchange.

The capital markets consist of primary markets and secondary markets.

Newly formed (issued) securities are bought or sold in primary markets.
Secondary markets allow investors to sell securities that they hold or buy
existing securities.

 Stock market
The expression 'stock market' refers to the system that enables the trading of
company stocks (collective shares), other securities, and derivatives. Bonds
are still traditionally traded in an informal, over-the-counter market known
as the bond market. Commodities are traded in commodities markets, and
derivatives are traded in a variety of markets (but, like bonds, mostly 'over-
the-counter').

Importance of stock market

1) Function and purpose

The stock market is one of the most important sources for companies to
raise money. This allows businesses to go public, or raise additional capital
for expansion. The liquidity that an exchange provides affords investors the
ability to quickly and easily sell securities. This is an attractive feature of
investing in stocks, compared to other less liquid investments such as real
estate.

History has shown that the price of shares and other assets is an important
part of the dynamics of economic activity, and can influence or be an
indicator of social mood. Rising share prices, for instance, tend to be
associated with increased business investment and vice versa. Share prices
also affect the wealth of households and their consumption. Therefore,
central banks tend to keep an eye on the control and behavior of the stock
market and, in general, on the smooth operation of financial system
functions. Financial stability is the raison d'être of central banks.

Exchanges also act as the clearinghouse for each transaction, meaning that
they collect and deliver the shares, and guarantee payment to the seller of a
security. This eliminates the risk to an individual buyer or seller that the
counterparty could default on the transaction.

The smooth functioning of all these activities facilitates economic growth in

that lower costs and enterprise risks promote the production of goods and
services as well as employment. In this way the financial system contributes
to increased prosperity.

2) Relation of the stock market to the modern financial system

The financial system in most western countries has undergone a remarkable

transformation. One feature of this development is disintermediation. A
portion of the funds involved in saving and financing flows directly to the
financial markets instead of being routed via banks' traditional lending and
deposit operations. The general public's heightened interest in investing in
the stock market, either directly or through mutual funds, has been an
important component of this process. Statistics show that in recent decades
shares have made up an increasingly large proportion of households'
financial assets in many countries. In the 1970s, in Sweden, deposit accounts
and other very liquid assets with little risk made up almost 60 per cent of
households' financial wealth, compared to less than 20 per cent in the 2000s.
The major part of this adjustment in financial portfolios has gone directly to
shares but a good deal now takes the form of various kinds of institutional
investment for groups of individuals, e.g., pension funds, mutual funds,
hedge funds, insurance investment of premiums, etc. The trend towards
forms of saving with a higher risk has been accentuated by new rules for
most funds and insurance, permitting a higher proportion of shares to bonds.
Similar tendencies are to be found in other industrialized countries. In all
developed economic systems, such as the European Union, the United
States, Japan and other developed nations, the trend has been the same:
saving has moved away from traditional (government insured) bank deposits
to more risky securities of one sort or another.

3) The stock market, individual investors, and financial risk

Riskier long-term saving requires that an individual possess the ability to

manage the associated increased risks. Stock prices fluctuate widely, in
marked contrast to the stability of (government insured) bank deposits or
bonds. This is something that could affect not only the individual investor or
household, but also the economy on a large scale. The following deals with
some of the risks of the financial sector in general and the stock market in
particular. This is certainly more important now that so many newcomers
have entered the stock market, or have acquired other 'risky' investments
(such as 'investment' property, i.e., real estate and collectables).

With each passing year, the noise level in the stock market rises. Television
commentators, financial writers, analysts, and market strategists are all
overtalking each other to get investors' attention. At the same time,
individual investors, immersed in chat rooms and message boards, are
exchanging questionable and often misleading tips. Yet, despite all this
available information, investors find it increasingly difficult to profit. Stock
prices skyrocket with little reason, then plummet just as quickly, and people
who have turned to investing for their children's education and their own
retirement become frightened. Sometimes there appears to be no rhyme or
reason to the market, only folly.

This is a quote from the preface to a published biography about the well-
known and long term value oriented stock investor Warren Buffett.[1] Buffett
began his career with only 100 U.S. dollars and has over the years built
himself a multibillion-dollar fortune. The quote illustrates some of what has
been happening in the stock market during the end of the 20th century and
the beginning of the 21st.

The behaviour of the stock market

From experience we know that investors may temporarily pull financial
prices away from their long term trend level. Over-reactions may occur— so
that excessive optimism (euphoria) may drive prices unduly high or
excessive pessimism may drive prices unduly low. New theoretical and
empirical arguments have been put forward against the notion that financial
markets are efficient.

According to the efficient market hypothesis (EMH), only changes in

fundamental factors, such as profits or dividends, ought to affect share
prices. (But this largely theoretic academic viewpoint also predicts that little
or no trading should take place— contrary to fact— since prices are already
at or near equilibrium, having priced in all public knowledge.) But the
efficient-market hypothesis is sorely tested by such events as the stock
market crash in 1987, when the Dow Jones index plummeted 22.6 percent
— the largest-ever one-day fall in the United States. This event
demonstrated that share prices can fall dramatically even though, to this day,
it is impossible to fix a definite cause: a thorough search failed to detect any
specific or unexpected development that might account for the crash. It also
seems to be the case more generally that many price movements are not
occasioned by new information; a study of the fifty largest one-day share
price movements in the United States in the post-war period confirms this.[2]
Moreover, while the EMH predicts that all price movement (in the absence
of change in fundamental information) is random (i.e., non-trending), many
studies have shown a marked tendency for the stock market to trend over
time periods of weeks or longer.

Various explanations for large price movements have been promulgated. For
instance, some research has shown that changes in estimated risk, and the
use of certain strategies, such as stop-loss limits and Value at Risk limits,
theoretically could cause financial markets to overreact.

Other research has shown that psychological factors may result in

exaggerated stock price movements. Psychological research has
demonstrated that people are predisposed to 'seeing' patterns, and often will
perceive a pattern in what is, in fact, just noise. (Something like seeing
familiar shapes in clouds or ink blots.) In the present context this means that
a succession of good news items about a company may lead investors to
overreact positively (unjustifiably driving the price up). A period of good
returns also boosts the investor's self-confidence, reducing his
(psychological) risk threshold.[3]

Another phenomenon— also from psychology— that works against an

objective assessment is group thinking. As social animals, it is not easy to
stick to an opinion that differs markedly from that of a majority of the group.
An example with which one may be familiar is the reluctance to enter a
restaurant that is empty; people generally prefer to have their opinion
validated by those of others in the group.

In one paper the authors draw an analogy with gambling.[4] In normal times
the market behaves like a game of roulette; the probabilities are known and
largely independent of the investment decisions of the different players. In
times of market stress, however, the game becomes more like poker (herding
behavior takes over). The players now must give heavy weight to the
psychology of other investors and how they are likely to react
psychologically.

The stock market, as any other business, is quite unforgiving of amateurs.

Inexperienced investors rarely get the assistance and support they need. In
the period running up to the recent NASDAQ crash, less than 1 per cent of
the analyst's recommendations had been to sell (and even during the 2000 -
2002 crash, the average did not rise above 5%). The media amplified the
general euphoria, with reports of rapidly rising share prices and the notion
that large sums of money could be quickly earned in the so-called new
 economy stock market. (And later amplified the gloom which descended
during the 2000 - 2002 crash, so that by summer of 2002, predictions of a
DOW average below 5000 were quite common.)

Irrational behavior

Sometimes the market tends to react irrationally to economic news, even if

that news has no real effect on the technical value of securities itself.
Therefore, the stock market can be swayed tremendously in either direction
by press releases, rumors and mass panic.

Over the short-term, stocks and other securities can be battered or buoyed by
any number of fast market-changing events, making the stock market
difficult to predict.

 Capital markets development supported by

steady infrastructure reforms
India’s financial market began its transformation path in the early 1990s.
The banking sector witnessed sweeping changes, including the elimination
of interest rate controls, reductions in reserve and liquidity requirements and
an overhaul in priority sector lending1.
Persistent efforts by the Reserve Bank of India (RBI) to put in place
effective supervision and prudential norms since then have lifted the country
closer to global standards.
Around the same time, India’s capital markets also began to stage extensive
changes. The Securities and Exchange Board of India (SEBI) was
established in 1992 with a mandate to protect investors and usher
improvements into the microstructure of capital markets, while the repeal of
the Controller of Capital Issues (CCI) in the same year removed the
administrative controls over the pricing of new equity issues. India’s
financial markets also began to embrace technology. Competition in the
markets increased with the establishment of the National Stock Exchange
(NSE) in 1994, leading to significant rise in the volume of transactions and
to the emergence of new important instruments in financial intermediation.

A. Innovations have strengthened market infrastructure

Market infrastructure has strengthened markedly heralded by steady reforms.

The government bond and equity markets have moved to T+1 and T+2
rolling settlement cycles in recent years2, which significantly compressed
the transfer of cash and securities to the relevant counterparties, thereby
reducing settlement risks. The seamless move toward shorter settlement
periods has been enabled by a number of innovations. The introduction of
electronic transfer of securities brought down settlement costs markedly and
ushered in greater transparency, while “dematerialization” instituted a paper-
free securities market. Together, these mechanisms eliminated forgery of
share certificates. Straight-through processing automated the complete
workflow (i.e. front, middle and back office and general ledger) involved in
the financial transaction, thus doing away with multiple data re-entry and
avoiding delays and errors. On the initiative of the Reserve Bank of India
and the cooperation of public and private institutions, the Clearing
Corporation of India Limited (CCIL) was established in 2001 to facilitate the
clearing of trades and transactions in the foreign exchange and fixed income
markets, catalyzed by the extensive use of information technology.
 B. Good corporate governance, but overall legal framework needs
improving

Continuing efforts by the SEBI to upgrade the corporate governance

framework have positioned India at an above-average level against other
emerging market economies, according to the Institute of International
Finance (IIF), the global association of financial institutions3. Since March
2006, listed companies have been required to submit quarterly compliance
reports to the SEBI, facilitating the valuation of companies and bringing it in
line with the Sarbanes-Oxley Act. Notwithstanding, enforcement remains a
challenge due to a still limited number of adequately trained staff to
implement the rules. Nor are companies subject to substantial fines or legal
sanctions, which reduce their incentives to comply. In turn, this reflects the
ongoing gaps in India’s legal system, and somewhat undermines the steps to
promote India’s capital markets further. Although India does have a
functional legal system, the country’s law enforcement still lags behind the
more advanced economies of Hong Kong and Singapore according to the
World Bank (see chart 4). This implies that efforts to raise corporate
governance need to be accompanied by a stronger.

 REVIEW OF CAPITAL MARKET

Capital Markets Year in Review 2005

 Capital Markets Year in Review 2006

 STOCK EXCHANGE
A stock exchange, share market or bourse is a corporation or mutual
organization which provides facilities for stock brokers and traders, to trade
company stocks and other securities. Stock exchanges also provide facilities
for the issue and redemption of securities as well as other financial
instruments and capital events including the payment of income and
dividends. The securities traded on a stock exchange include: shares issued
by companies, unit trusts and other pooled investment products and bonds.
To be able to trade a security on a certain stock exchange, it has to be listed
there. Usually there is a central location at least for recordkeeping, but trade
is less and less linked to such a physical place, as modern markets are
electronic networks, which gives them advantages of speed and cost of
transactions. Trade on an exchange is by members only. The initial offering
of stocks and bonds to investors is by definition done in the primary market
and subsequent trading is done in the secondary market. A stock exchange is
often the most important component of a stock market. Supply and demand
in stock markets is driven by various factors which, as in all free markets,
affect the price of stocks (see stock valuation).

There is usually no compulsion to issue stock via the stock exchange itself,
nor must stock be subsequently traded on the exchange. Such trading is said
to be off exchange or over-the-counter. This is the usual way that bonds are
traded. Increasingly, stock exchanges are part of a global market for
securities.

VARIOUS STOCK EXCHANGE OF THE WORLD

1)

Bombay Stock Exchange

The Bombay Stock Exchange Limited (Marathi: मुंबई शेयर बाजार Mumbaī
Śeyar Bājār) (formerly, The Stock Exchange, Mumbai; popularly called The
Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. It is
located at Dalal Street, Mumbai, India.

The Bombay Stock Exchange was established in 1875. There are around
4,800 Indian companies listed with the stock exchange, and has a significant
trading volume. As of August 2007, the equity market capitalization of the
companies listed on the BSE was US$ 1.11 trillion, making it the largest
stock exchange in South Asia.[2] The BSE SENSEX (SENSitive indEX), also
called the "BSE 30", is a widely used market index in India and Asia.

2)
 Frankfurt Stock Exchange

3)

Hong Kong Stock Exchange

4)
 London Stock Exchange
5)

New York Stock Exchange

6)
 Osaka Securities Exchange
7)

Philippine Stock Exchange

8)
 Taiwan Stock Exchange

 ROLE OF STOCK EXCHANGES

Stock exchanges have multiple roles in the economy, this may include the
following:

1) Raising capital for businesses

The Stock Exchange provides companies with the facility to raise capital for
expansion through selling shares to the investing public.

2) Mobilizing savings for investment

When people draw their savings and invest in shares, it leads to a more
rational allocation of resources because funds, which could have been
consumed, or kept in idle deposits with banks, are mobilized and redirected
to promote business activity with benefits for several economic sectors such
as agriculture, commerce and industry, resulting in a stronger economic
growth and higher productivity levels.

3) Facilitating company growth

Companies view acquisitions as an opportunity to expand product lines,

increase distribution channels, hedge against volatility, increase its market
share, or acquire other necessary business assets. A takeover bid or a merger
agreement through the stock market is one of the simplest and most common
ways for a company to grow by acquisition or fusion.

4) Redistribution of wealth

Stocks exchanges do not exist to redistribute wealth although casual and

professional stock investors through stock price increases (that may result in
capital gains for the investor) and dividends get a chance to share in the
wealth of profitable businesses.

5) Corporate governance
By having a wide and varied scope of owners, companies generally tend to
improve on their management standards and efficiency in order to satisfy the
demands of these shareholders and the more stringent rules for public
corporations imposed by public stock exchanges and the government.
Consequently, it is alleged that public companies (companies that are owned
by shareholders who are members of the general public and trade shares on
public exchanges) tend to have better management records than privately-
held companies (those companies where shares are not publicly traded, often
owned by the company founders and/or their families and heirs, or otherwise
by a small group of investors). However, some well-documented cases are
known where it is alleged that there has been considerable slippage in
corporate governance on the part of some public companies (Pets.com
(2000), Enron Corporation (2001), One.Tel (2001), Sunbeam (2001),
Webvan (2001), Adelphia (2002), MCI WorldCom (2002), or Parmalat
(2003), are among the most widely scrutinized by the media).

6) Creating investment opportunities for small investors

As opposed to other businesses that require huge capital outlay, investing in

shares is open to both the large and small stock investors because a person
buys the number of shares they can afford. Therefore the Stock Exchange
provides the opportunity for small investors to own shares of the same
companies as large investors.

7) Government capital-raising for development projects

Governments at various levels may decide to borrow money in order to

finance infrastructure projects such as sewage and water treatment works or
housing estates by selling another category of securities known as bonds.
These bonds can be raised through the Stock Exchange whereby members of
the public buy them, thus loaning money to the government. The issuance of
such municipal bonds can obviate the need to directly tax the citizens in
order to finance development, although by securing such bonds with the full
faith and credit of the government instead of with collateral, the result is that
the government must tax the citizens or otherwise raise additional funds to
make any regular coupon payments and refund the principal when the bonds
mature.
 8) Barometer of the economy

At the stock exchange, share prices rise and fall depending, largely, on
market forces. Share prices tend to rise or remain stable when companies
and the economy in general show signs of stability and growth. An
economic recession, depression, or financial crisis could eventually lead to a
stock market crash. Therefore the movement of share prices and in general
of the stock indexes can be an indicator of the general trend in the economy.

Stock Exchange

Capital markets and securities transactions are regulated by the Capital

Markets division of the Department of Economic Affairs.

The Indian Financial system is regulated and supervised by two government

agencies under the Ministry of Finance - They are:
(a) The Reserve Bank of India [RBI] and
(b) The Securities Exchange Board of India [SEBI].

Regulatory authorities
 Australian Securities and Investments Commission, (Australia);
 Financial Supervision Commission, (Bulgaria);
 Canadian Securities Administrators, (Canada);
 Financial Supervision Authority, (Finland);
 Autorité des marchés financiers, (France);
 Bundesanstalt für Finanzdienstleistungsaufsicht, (Germany);
 Securities and Futures Commission, (Hong Kong);
 Comision Nacional del Mercado de Valores, (Spain);
 Securities and Exchange Surveillance Commission, (Japan);
 Financial Services Authority, (UK);
 Securities and Exchange Commission, (Pakistan);
 Securities and Exchange Board of India, (India);
 U.S. Securities and Exchange Commission, (US);
 Capital Markets Board of Turkey, (Turkey);
  ABOUT SEBI

ESTABLISHMENT OF SEBI

The Securities and Exchange Board of India was established on April 12,
1992 in accordance with the provisions of the Securities rand Exchange
Board of India Act, 1992.

PREAMBLE

The Preamble of the Securities and Exchange Board of India describes the
basic functions of the Securities and Exchange Board of India as

“…..to protect the interests of investors in securities and to

promote the development of, and to regulate the securities market
and for matters connected therewith or incidental thereto”

Securities and Exchange Board of India (SEBI) is a board (autonomous

body) created by the Government of India in 1988 and given statutory form
in 1992 with the SEBI Act 1992. Its head office is in Mumbai, and other
offices in Chennai, Kolkatta and Delhi. SEBI is the regulator of Securities
markets in India. It is chaired by Mr. M. Damodaran, a respected civil
servant credited with turning around large public sector companies from
near death scenarios, including the famous Unit Trust of India. The Board
comprises whole time members and outside members (representing the
finance ministry, RBI and experts). The present whole time members are
Mr. G Anantharaman, Dr. TC Nair and Mr. VK Chopra. Below the Board,
the staff/officers of the organization are led by Executive Directors (EDs).
The present EDs are Mr. RK Nair, Ms. Usha Narayanan, Mr. Sandeep P
Parekh and Mr. P. K. Nagpal. Also, Mr. MS Ray, a senior IRS officer on
deputaion, is an Officer on Special Duty (equivalent to an ED). The
organisational structure of SEBI can be found under the SEBI website by
clicking on the RTI Act 2005 at the top

SEBI has three functions rolled into one body: quasi-legislative, quasi-
judicial and quasi-executive. It drafts rules in its legislative capacity, it
conducts enquiries and enforcement action in its executive function and it
passes rulings and orders in its judicial capacity. Though this makes it very
powerful, there is an appeals process to create accountibility. There is a
Securities Appeallate Tribunal which is a three member tribunal and is
presently headed by a former Chief Justice of a High court - Mr. Justice NK
Sodhi. A second appeal lies directly to the Supreme Court(where important
questions of law arise.

SEBI has had a mixed history in terms of its success as a regulator. Though
it has pushed systemic reforms aggressively and successively (e.g. the quick
movement towards making the markets electronic and paperless), it lacked
the legal expertise, till recently, needed to sustain prosecutions/enforcement
actions. SEBI has taken its present executive director in charge of
enforcement from the market on a contract besides several other officers
taken from leading firms and corporates also on contract. It has recently
inducted around 40 officers from the five leading law schools in the country.
These measures are expected to improve the speed and quality of the success
rate of SEBI in courts.
LEGAL FRAMEWORK OF SEBI
Acts

28 May , 2007 Securities Contracts (Regulation) Amendment Act, 2007

September, 1995

20 September, 1995 The Depositories Act 1996

January , 1992

30 January , 1992 Securities and Exchange Board of India Act

February , 1957

16 February , 1957 The Securities Contract (Regulations) Act 1956 [Updated upto 2004]
 Acknowledgement

We would like to thanks Principal Sir A.K

Lakdawala & Kamala Ma’am who has given us
an opportunity to prepare this project. Also we
would like to thanks to Jalpa miss & other
teachers who given us a valuable guidelines &
constantly evaluating our project time to time.
Also we would like to thanks to our friends,
family & lastly a lot of thanks to God who help
us for preparing this project, without which this
project cannot be possible.
 INDEX

SR.NO INDEX PAGE NO.

1) MEANING OF CAPITAL MARKET 1

2) CLASSIFICATION OF CAPITAL MARKET 2-4
3) FINANCIAL MARKET 5-6
4) STOCK MARKET 6-10
5) CAPITAL MARKET DEVELOPMENT 11-12
6) REVIEW OF CAPITAL MARKET 12-13
7) STOCK EXCHANGE 13-17
8) ROLE OF STOCK EXCHANGES 18-20
9) REGULATORY AUTHORITIES 20
10) About SEBI 21-23
11) CONCLUSION 24
 CONCLUSION

LASTLY, WE conclude that financial market

consists of commodity market, capital market
(securities market) etc from which people or
companies can raise the long term funds from public.
Capital market is the market of securities where there
is buying & selling of stock like shares, debentures or
bonds takes place.SEBI is the highest authorities to
control & regulate capital market in India. SEBI also
have a right to control various stock exchanges of the
country India.
 BIBLIOGRAPHY

BOOKS-

1) A TEXT BOOK OF P&P B/I BY VIPUL PRAKASHAN.

WEBSITES-

1) http://www.google.com
2) http://www.wikepedia.en.com
3) http://www.capitalmarket.com