Page 218 - DCOM510_FINANCIAL_DERIVATIVES

Unit 13: Regulatory Framework

infrastructure, including the satellite earth station and a high-speed optical fiber link with Notes
its main site at Mumbai. This site is a replica of the production environment at Mumbai.
The transaction data is backed up on near-real-time basis from the main site to the disaster
back-up site through the 4 STM-4 (2.4 GB) high-speed links to keep both the sites
synchronised with each other all the time.
Questions:
1. Analyse the case and write down the role of NSE in Indian securities market.
2. “Technology has been the backbone of the NSE”. Discuss.

Source: http://www.nseindia.com/content/us/ismr_full2011.pdfCase: Developing-a-career-path-in-
retail

13.5 Summary

The four main legislations governing the securities market are: (a) the SEBI Act, 1992; (b)
the Companies Act, 1956; (c) the Securities Contracts (Regulation) Act, 1956; and (d) the
Depositories Act, 1996.
Government has framed rules under the SCRA, SEBI Act and the Depositories Act.
SEBI has framed regulations under the SEBI Act and the Depositories Act for registration
and regulation of all market intermediaries, and for prevention of unfair trade practices,
insider trading, etc.

The responsibility for regulating the securities market is shared by Department of Economic
Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank of India (RBI) and
SEBI.

The activities of these agencies are coordinated by the High Level Committee on Capital
Markets. Most of the powers under the SCRA are exercisable by DEA while a few others by
SEBI.
The powers of the DEA under the SCRA are also concurrently exercised by SEBI.
The powers in respect of the contracts for sale and purchase of securities, gold related
securities, money market securities and securities derived from these securities and ready
forward contracts in debt securities are exercised concurrently by RBI.

The SEBI Act and the Depositories Act are mostly administered by SEBI. The rules and
regulations under the securities laws are administered by SEBI.
The powers under the Companies Act relating to issue and transfer of securities and non-
payment of dividend are administered by SEBI in case of listed public companies and
public companies proposing to get their securities listed.

The SROs ensure compliance with their own rules as well as with the rules.
13.6 Keywords

Calendar spread: Calendar spread is a spread trade involving the simultaneous purchase
of futures or options expiring at particular date and the sale of the same instrument expiring
another date.
Companies Act: It deals with the issue, allotment, and transfer of securities, as well as various
aspects relating to company management.

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