A Visit to SEBI

Department of Economics

The IIS University

Visit to SEBI

A Report

The Department of Economics organized a visit to the Securities and Exchange Board of India (SEBI), Jaipur office on 24th August 2015 for the graduate and post graduate students of the department. A lecture along with a presentation was delivered by Mr. Rajesh Kumar, Assistant Manager, in the training hall of the office.

SEBI is the regulatory body of the securities market in India. As announced in the budget, now it will be also regulating the commodity market, with the merging of the Forward Markets Commission (FMC), the regulator of the commodity market. The head office of SEBI is situated in Mumbai, with 4 regional offices in New Delhi, Kolkata, Ahmadabad and Chennai. It has also started establishing offices in major cities of the country, Jaipur office being one of them.

Investment in shares is the last priority for investment by people, as people prefer other traditional avenues like fixed deposits, property, gold and insurance. Not even four percent of the country's money has been invested in shares. Many reasons are responsible for such preference. Banks are within reach because of presence of large number of branches everywhere as compared to share market offices. This also facilitates direct communication with the bank officials. Moreover, people also seek returns in short run from investment which is not always possible through investment in shares.

Investment in share market requires a deep study of the company as well as analysis of the market risk. Both profit and losses may be possible in short run, but sooner or later, one can get substantial returns if a careful study has been done. There must be a detailed study of the financial statements of the company. SEBI has also made disclosure norms mandatory for all companies in which all important details regarding the company such as its directors, mergers and acquisitions, past performance, etc., have to be mentioned. It has also introduced a system of Initial Public Offering (IPO) grading, on a scale of 1 to 5, based on the company's fundamentals. But several other factors also affect movements in the share market.

The security market comprises of two parts; the Primary Market, which deals with the IPOs and involves merchant bankers; and the Secondary Market, which involves trading between buyers and sellers through brokers. Working in the share market requires a demat (dematerialsed) account. In this account, transactions of shares take place in electronic form. There are various benefits of electronic trading like no wear and tear, theft of share certificates, time delays, inconvenience and other related issues as happened earlier when trading was not done electronically.

The Securities and Exchange Board of India was enacted on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. It is an autonomous, regulating and quasi judicial body. Investor protection through awareness and grievance redressal, development and regulation of the share market are included in its mandate. SEBI has taken various initiatives to promote investor education by organizing visits to SEBI, appointing resource persons in institutions and through mass media campaigns. The investor needs to be aware regarding her investment decisions as returns are never possible in short run. Investors should always invest in entities registered with SEBI and RBI. The investor can also lodge complaints on the online portal 'www.scores.gov.in' of SEBI. Any type of query can be enquired by mailing to 'asksebi@sebi.gov.in'. SEBI has also guidelines for Anti Money Laundering (AML), insider trading and circular trading. SEBI also provides the facility of BSDA (Basic Service Demat Account) for initially starting trading upto 50,000. Another facility started by SEBI is ASBA (Application Suported by Blocked Account), for easy refund in case of IPO.

The students were also shown some video clips on investor awareness, along with the screenshots of screen based trading of BSE and NSE.

Thus the session proved to be very interesting and informative. It provided the students a glimpse of the regulating authority of security market in India, along with important information for being an aware investor.