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In February 2017, the SEBI laid out a roadmap of reforms for the year 2017- 18 in various segments including primary market, commodities and foreign investors among others:
• To reduce the listing time gap by bringing down the public issue timeline from the existing requirement of T+6. In other words, shares of a company are currently listed within six days from the day of the issue closure.
• To allow institutional participation in the commodity derivatives markets in a phased manner. Further, it will work towards integration between the commodity spot market and the derivatives segment.
• To initiate consultation with various stakeholders and also design a system of risk-based supervision for commodity brokers.
• To set up a cyber security lab for the securities market together with a facility for online registration of intermediaries.
• To allow listing and trading of securitisation receipts issued by Assets Reconstruction Companies.
• To introduce a common application form for registration, opening of a bank and demat account, and issue of PAN for Foreign Portfolio Investors.
• In what could be a major reform for institutions like exchanges, depositories and clearing corporations, the regulator plans to review the regulations pertaining to such Market Infrastructure Institutions.
To begin with, the board of the regulator approved the proposal for comprehensive review of Securities Contracts (Regulation) (Stock Exchanges
and Clearing Corporations) Regulations, 2012 and SEBI (Depositories and Participants) Regulations, 1996 by releasing a consultation paper and seeking public comments.
Meanwhile, the Union Budget 2017-18 has announced to set up an expert committee to study and promote creation of an operational and legal framework to integrate spot market and derivatives market in the agricultural sector, for commodities trading—e-NAM to be an integral part of the framework
1. Marc Levinson, Guide to Financial Markets (London: The Economist, 2006), p. 152.
2. V. Raghunathan, Stock Exchanges and Investments (New Delhi: Tata McGraw Hill, 1994).
3. Marc Levinson, Guide to Financial Markets, pp. 153–54;
Ministry of Finance, Economic Survey 2005–06 (New Delhi: Government of India, 2006).
4. MoF, GoI, dated 22 April, 2013.
5. This section is based on various sources—the, SEBI, NSE, BSE, ‘World Federation of Exchanges’, select issues of The Economist and news reportings of The HT Live Mint, The Business Line and The Economic Times.
6. P. Chidambaram while presenting the Union Budget 2006–07, (New DelhI; Government of India, 2006).
7. Surendra Sundararajan, Book of Financial Terms (New Delhi: Tata McGraw Hill, 2004), p. 117.
8. Tim Hindle, op. cit., p. 129.
9. Surender Sundararajan, Book of Financial Terms,
p. 134.
10. As per the Ministry of Finance, Economic Survey 2012–13, p. 121.
11. ‘Fiscal cliff’ is a term used to describe the crisis that the US government faced at the end of 2012, when the terms of the Budget Control Act of 2011 were scheduled to go into effect – a combination of—i). expiring tax cuts and ii). across-the-board government spending cuts scheduled to become effective December 31, 2012. The idea behind the fiscal cliff was that if the federal government allowed these two events to proceed as planned, they would have a detrimental effect on an already shaky economy, perhaps sending it back into an official recession as it cut household incomes, increased unemployment rates and undermined consumer and investor confidence [As per the conservative
estimates by some US experts, it would have meant a tax increase to the size of which the country had never seen in the last in 60 years].
Who first use the term is not clear – some believe that it was first used by Goldman Sachs economist, Alec Phillips, while some others credit Federal Reserve Chairman Ben Bernanke, still others credit Safir Ahmed, a reporter for the St. Louis Post-Dispatch, who in 1989 used the term while writing a story detailing the state’s education funding. Sources: The contemporary news reportings and articles which appeared during the time in The Economist, The Guardian, The New York Times and The Newsweek.
12. ‘Long-term investors’ include SEBI-registered ‘sovereign wealth funds’ (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks.
13. As per the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations), Category I AIF are: those AIFs with ‘positive spillover effects’ on the economy, for which certain incentives or concessions might be considered by SEBI or the Government of India or other regulators in India; and which shall include Venture Capital Funds, SME Funds, Social Venture Funds, Infrastructure Funds and such other Alternative Investment Funds (AIFs) as may be specified.
14. P.A. Samuelson and W.D. Norhdaus, Economics (New Delhi: Tata McGraw Hill, 2007), p. 207.
15. Ministry of Finance, Economic Survey 2011–12 (New Delhi: Government of India, 2012), 34; quotes many contemporary references to bring the point home – a). R. Rajan, and L. Zingales, ‘Financial Dependence and Growth,’ American Economic Review, vol. 88, 1998;
b). S. Banerji, K. Gangopadhyay, I. Patnaik, and A, Shah, ‘New Thinking on Corporate Debt in India’, mimeo.;c). C. K. G. Nair, 2012; ‘Financial Sector Reforms: Refining the Architecture,’ in R. Malhotra (ed.), A Critical Decade: Policies for India’s Development, (New Delhi: Oxford University Press, 2012) d). T.
A. Bhavani, and N. R. Bhanumurthy, Financial Access in Post-Reform India; e). P. Bolton, and X. Freixas, ‘How can Emerging Market Economies Benefit from a Corporate Bond Market?’, in E. Borzenstein, K. Cowan, B. Eichengreen, and U. Panizza (eds), Bond Markets in Latin America, (Massachusetts: MIT Press, 2008).
16. Haircut is the difference between prices at which a market maker can buy and sell a security. The term comes from the fact that market makers can trade at such a thin spread. It also means that the percentage by which an asset’s market value is reduced for the purpose of calculating capital requirement, margin and collateral. When they are used as collateral, securities will generally be devalued since a cushion is required by the lending parties in case the market value falls.
17. Unwind is used to close out a position that has offsetting investments or the
correction of an error. Unwinds occur when, for example, a broker mistakenly sells part of a position when an investor wanted to add to it. The broker would have to unwind the transaction by selling the erroneously purchased stock and buying the proper stock. One type of investing that features unwind trading is arbitrage investing (as happens in the CDS). If, for the sake of illustration, an investor takes a long position in stocks, while at the same time selling puts on the same issue, he will need to unwind those trades at some point. Of course, this entails covering the options and selling the underlying stock. A similar process would be followed by a broker attempting to correct a buying or selling error.
18. RBI, 16th January, 2013
19. The FSB was established in April 2009 as the successor to the Financial Stability Forum (FSF). The FSF was founded in 1999 by the G–7 for enhancing cooperation among the various national and international supervisory bodies and international financial institutions so as to promote stability in the international financial system. In November 2008, the leaders of the G–20 countries called for a larger membership of the FSF. As announced in the G–20 Leaders Summit of April 2009, the expanded FSF was re-established as the Financial Stability Board (FSB) with a broadened mandate to promote financial stability. The FSB is chaired by Mark Carney, Governor of the Bank of Canada. Its secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.
Its objective is to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. [Source: Financial Stability Board Secretariat, Bank for International Settlements, Basel , Switzerland].
20. The BCBS (Basel Committee on Banking Supervision) provides a forum for regular cooperation on banking supervisory matters. The Committee’s members, today, come from 27 nations including India. The present Chairman of the Committee is Stefan Ingves, Governor of Sveriges Riksbank. It is located at the Bank for International Settlements (BIS) in Basel, Switzerland.
Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on Capital Adequacy (i.e Basel I, Basel II and Basel III, by now); the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking
supervision.
The Committee encourages contacts and cooperation among its members and other banking supervisory authorities. It circulates to supervisors throughout the world both published and unpublished papers providing guidance on banking supervisory matters. Contacts have been further strengthened by an International Conference of Banking Supervisors (ICBS) which takes place every two years. [Source: BIS, Basel, Switzerlad].
21. See Chapter 16 for detailed discussion on the IMF (International Monetary Fund).
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♤ Definition
O Foret Reserves
O External Debt
O Fixo:lcllll'Cllcy Regime
□ FloatingCl.urcncy Regjmc
□ Managed Exchange Rates
♤ Forcis,:t Exchange Market
O Exchange Rate in India
♤ Trade Balance
♤ Trade Policy O Depreciation O Devaluation
♤ Devaluation O Revaluation O Appreciation
O Current Account
□ Capi ta.I Accouot
□ Balanceof Payment (BoP)
□ CoovcrtibiLity
♤ LERMS
♤ NEER
♤ REER
:l EFF
♤ IMF Conditions oo India
♤ Han!Cum:ocy
O Soft Currency
♤ Hot Cuacucy
O Heated Currency
□ Cheap eurrmcy
□ DearCurrency
♤ Sp::cial E.conomicZonc