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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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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
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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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9
Present
3
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11
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Repealed on May 29, 1992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
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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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