Page 234 - DCOM510_FINANCIAL_DERIVATIVES

Unit 14: Regulation and Securities Markets in India

However this intervention was not without cost. The country had to pay a price in terms Notes
of loss of the export earnings and domestic dissatisfaction amongst exporters. Still, the
total value of trade was in excess of 500 million USD.
Question:
Analyse the case and list down the reasons behind market failure in Ethiopian coffee
market.

Source: Kulkarni B. (2011). “Commodity Markets & Derivatives”. Excel Books.
14.4 Summary

The Securities and Exchange Board of India (SEBI) is the regulator charged with the orderly
functioning of the securities market in India, protect the interests of investors and ensure
development of the securities market.
The securities markets in India have witnessed several policy initiatives, which have
refined the market micro-structure, modernised operations and broadened investment
choices for the investors.
The securities market has two interdependent and inseparable segments, the new issues
(primary market) and the stock (secondary) market.
The primary market provides the channel for sale of new securities. Secondary market
refers to a market where securities are traded after being initially offered to the public in
the primary market and/or listed on the Stock Exchange.
Efficiency of the financial system is governed by the role of markets in mobilising and
allocating financial resources, in providing liquidity and payment services and in gathering
information on which to base investment decisions.

Various segments of the domestic financial market are getting increasingly integrated.
There have also been progressive linkages between the domestic and international capital
markets.

The SEBI Act provides for promotion and regulation of SROs (i.e., stock exchanges).
The stock exchanges are empowered to make rules and regulations for their members and
for regulating the conduct of respective members.

SEBI has framed regulations under the SEBI Act and the Depositories Act for the registration
and regulation of all market intermediaries, and for the prevention of unfair trade practices,
insider trading, etc.
The Central Government has constituted a Board by the name of SEBI under Section 3 of
SEBI Act. The head office of SEBI is in Mumbai. SEBI may establish offices at other places in
India.

14.5 Keywords

Fixed Income Money Market and Derivatives Association of India (FIMMDA): It is an Association
of Commercial Banks, Financial Institutions and Primary Dealers. FIMMDA is a voluntary
market body for the bond, Money and Derivatives Markets.

Market capitalisation: Market capitalisation (or market cap) is the total value of the
issued shares of a publicly traded company; it is equal to the share price times the number
of shares outstanding.

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