Page 232 - DCOM510_FINANCIAL_DERIVATIVES

Unit 14: Regulation and Securities Markets in India

(ii) The manner in which such matters, shall be disclosed by the companies; and Notes
(b) By general or special orders,
(i) Prohibit any company from issuing of prospectus, any offer document, or
advertisement soliciting money from the public for the issue of securities,
(ii) Specify the conditions subject to which the prospectus, such offer document or
advertisement, if not prohibited may be issued. (Section 11A).

SEBI may issue directions to any person or class of persons referred to in section 12, or associated
with the securities market or to any company in respect of matters specified in section 11A. if it
is in the interest of investors, or orderly development of securities market to prevent the affairs
of any intermediary or other persons referred to in section 12 being conducted in a manner
detrimental to the interests of investors or securities market to secure the proper management
of any such intermediary or person (Section 11B).

Did u know? SEBI regulates the business in stock exchanges and any other securities markets
and the working of collective investment schemes, including mutual funds, registered by
it. SEBI promotes investor’s education and training of intermediaries of securities market.
It prohibits fraudulent and unfair trade practices relating to securities markets, and insider
trading in securities, with the imposition of monetary penalties, on erring market
intermediaries, It also regulates substantial acquisition of shares and takeover of companies
and can call for information from, carry out inspection, conduct inquiries and audits of the
stock exchanges and intermediaries and self regulatory organisations in the securities
market.

Self Assessment

Fill in the blanks:
11. SEBI has framed regulations under the SEBI Act and the ………………………. for the
registration and regulation of all market intermediaries.
12. The………………………., like the stock exchanges, have also laid down their own rules
and regulations.
13. The Central Government has constituted a Board by the name of SEBI under Section 3 of
……………………….
14. SEBI has been obligated to protect the interests of the ………………………. in securities.
15. SEBI specify the matters relating to issue of capital, ………………………. and other matters
incidental thereto.

Case Study Market Failure in Ethiopian Coffee Market

he coffee market of Ethiopia, when analysed by the government suggested that the
existing mechanism of the coffee auction system is increasingly becoming a market
Tfailure. Coffee was traded through a government-run auction system. The auction
was carried out in the supervision of the Ministry of Agriculture. However, the process of
sale was that the sellers would bring their produce to the central market in the capital City
Contd....

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