3_Indian Secu-2

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BSE Limited.

Past, Present & Future

Indian Securities Market

May 29, 2012


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Section Contents Page

2

Outline

1 On the Origin of Indian Securities Market 3

2 7

3 Present 9

4 Regulatory Evolution 11

2

5 Future 14

Market Development Phase


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3

On the Origin of the Indian SecuritiesMarket

1


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4

Pre-Independence

Corporate stocks and shares in Bank and Cotton presses started in Bombay, trading carried out under

Banyan Tree

1830s Stock Trading in Calcutta practiced under Neem Tree 1830s

Share Maniain India due to advent of Civil War 1860-61

Native Share and Stock BrokersAssociation of India formed July 9, 1875

Membership through Card System

Admission Fee (Price of Card) in 1900s Rs. 51; Annual Subscription Fee Rs. 5

Committee of Management, Arbitration Committee, Defaulters Committee, Corner Committee

English translation of Rules available to public for Re. 1 Tentative Scheduled Hours of Operation 2 hours a day on 144 days and 3 hours a day on 66

days

Short Selling allowed vis--vis Cash Market in Calcutta and Madras Stock Exchange

Admission for Quotations

Clearing House Bank of India

Formation of The Calcutta Stock Exchange Association 1908

Incorporation of Bombay Stock Exchange Limited (not BSE Ltd.) 1918

Madras Stock Exchange 1920

Madras Stock Exchange reconstituted 1938


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1992 - A Mixed Bag

Cons &Conmen

A NewBeginning

6


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7

Market Development Phase: 19992003

2


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Introduction of New Products

Interest RateSwaps (IRS) /Forward Rate

Agreements (FRA)

June 1, 1999

Equity Derivatives

June 9, 2000

Index Options

June, 2001

Options onIndividual

Securities

July, 2001

Futures onIndividualSecurities

November, 2001

Exchange TradedFunds

January 2002

Retail Debt Market

January, 2003

Interest RateFutures

June, 2003

8

VaR Model for Margin Calculation - July, 2001


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Present

3


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Regulatory Evolution

4


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Acts, Rules and Regulations

Bombay Securities Contracts Control Act 1925 The Capital Issues (Control) Act 1947

Repealed on May 29, 1992

Securities Contract (Regulation) Bill 1954

Securities Contract (Regulations) Act 1956

Bombay Securities Contracts Control Act, 1925 repealed

Securities Contract (Regulations) Rule 1957

SEBI Act May 1, 1992

Corporatisation & Demutualization Scheme 2005

Manner of Increasing and Maintaining Public Shareholding (MIMPS) in

recognised stock exchanges, Regulations 2006


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Final Rules expected in 2-3 months

MIIs must form independent Board Committees for regulatory oversight

Main exchanges already have an independent surveillance committee which can berepurposed

Regulatory Functions of all MIIs must report to independent committees of their Boards

CRC to be formed by SEBI

Handle conflicts of interest

Regular interaction with Independent Committees of MIIs

SEBI proposing future creation of industry-wide SRO along the lines of FINRA in the US

SEBI Board Press Release: Regulatory Implications

13


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The Future

5


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Future Initiatives

Interoperability of Clearing Corporations Complete Physical Segregation of Client Securities

Prevent misutilisation of Client securities

Securities of one client not used to offset default of another

Seamless Portability of Client from one member to in case of default of

member or otherwise


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Thank You

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