Capital markets provide for the buying and selling of long term debt or equity backed securitieas.

When they work well, the capital markets channel the wealth of savers to those who can put it to long [1] term productive use, such as companies or governments making long term investments. Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties. 21st century capital markets are almost invariably hosted on computer systems; most can be accessed only by entities within the financial sector or the treasury departments of governments and [2] corporations, but some can be accessed directly by the public. There are many thousands of such systems, most only serving only small parts of the overall capital markets. Entities hosting the systems include stock exchanges, investment banks, and government departments. Physically the systems are hosted all over the world, though they tend to be concentrated in financial centers like London, New York, and Hong Kong. Capital markets are defined as markets in which money is [3] provided for periods longer than a year. A key division within the capital markets is between the primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. The main entities seeking to raise long term funds on the primary capital markets aregovernments (which may be municipal, local or national) and business enterprises (companies). Governments tend to issue only bonds, whereas companies often issue either equity or bonds. The main entities purchasing the bonds or stock include pension funds, hedge funds, sovereign wealth funds, and less commonly wealthy individuals and investment banks trading on their own behalf. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-the-counter, or elsewhere. The existence of secondary markets increases the willingness of investors in primary markets, as they know they are likely to be able to swiftly cash [4] out their investments if the need arises. A second important division falls between the stock markets (for equity securities, where investors [4] accquire ownership of companies) and the bond markets (where investors become creditors). [edit]Difference

between Money Markets and Capital Markets

Finance
Financial markets[show]

Financial instruments[show]

Corporate finance[show]

Personal finance[show]

Public finance[show]

Banks and banking[show]

Financial regulation[show]

Standards[show]

Economic history[show]

The Money markets are used for the raising of short term finance, sometimes for loans that are expected to be paid back as early as overnight. Whereas theCapital markets are used for the raising of long term finance, such as the purchase of shares, or for loans that are not expected to be fully [3] paid back for at least a year. Funds borrowed from the money markets are typically used for general operating expenses, to cover brief periods of illiquidity. For example a company may have inbound payments from customers that have not yet cleared, but may wish to immediately pay out cash for its payroll. When a company borrows from the primary capital markets, often the purpose is to invest in additional physical capital goods, which will be used to help increase its income. It can take many months or years before the [4] investment generate sufficient return to pay back its cost, and hence the finance is long term. Together, money markets and capital markets form the financial markets as the term is narrowly [5] understood. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra Kurla Complex complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi,Kolkata, Chennai and Ahmedabad. Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947. Initially SEBI was a non statutory body without any statutory power. However in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act 1992. In April, 1998 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India. The SEBI is managed by six members, i.e. by the chairman who is nominated by central government & two members, i.e. officers of central ministry, one member from the RBI & the remaining two are nominated by the central government. The office of SEBI is situated at Mumbai with its regional offices at Kolkata, Delhi & Chennai.

Functions and responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities the investors the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by a former Chief Justice of a High court Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court. SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively (e.g. the quick movement towards making the markets electronic and paperless rolling settlement on T+2 basis). SEBI has been active in setting up the regulations as required under law. SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown [citation needed] [when?] and the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian corporate promoters. More recently, in light of the global meltdown,it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI [5] has increased the application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present. [edit]Powers For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. to approve bylaws of stock exchanges. 2. to require the stock exchange to amend their bylaws. 3. inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. inspect the books of accounts of a financial intermediaries. 5. compel certain companies to list their shares in one or more stock exchanges. 6. levy fees and other charges on the intermediaries for performing its functions. 7. grant license to any person for the purpose of dealing in certain areas. 8. delegate powers exercisable by it. 9. prosecute and judge directly the violation of certain provisions of the companies Act. [edit]SEBI

Committees

1. Technical Advisory Committee 2. Committee for review of structure of market infrastructure institutions 3. Members of the Advisory Committee for the SEBI Investor Protection and Education Fund 4. Takeover Regulations Advisory Committee 5. Primary Market Advisory Committee (PMAC) 6. Secondary Market Advisory Committee (SMAC) 7. Mutual Fund Advisory Committee 8. Corporate Bonds & Securitization Advisory Committee 9. Takeover Panel 10. SEBI Committee on Disclosures and Accounting Standards (SCODA) 11. High Powered Advisory Committee on consent orders and compounding of offences

12. Derivatives Market Review Committee 13. Committee on Infrastructure Funds [edit]Controversies Supreme Court of India heard a Public Interest Litigation (PIL) filed by India Rejuvenation Initiative that had challenged the procedure for key appointments adopted by Govt of India. The petition alleged that, "The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which [6][7] directly impacted its balance and could compromise the role of the SEBI as a watchdog." On 21 November 2011 the court allowed the petitioners to withdraw the petition and file a fresh petition pointing out constitutional issues regarding appointments of regulators and their independence. The Chief Justice of India refused to the finance ministrys request to dismiss the PIL and said that the [6][8] court was well aware of what was going on in SEBI. Further, it came into light that Dr KM Abraham (the then whole time member of SEBI Board) had written to the Prime Minister about malaise in SEBI. He said, "The regulatory institution is under duress and under severe attack from powerful corporate interests operating concertedly to undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor Omita Paul, were trying to influence many cases before SEBI, including those relating to Sahara Group, Reliance, Bank [9][10] of Rajasthan and MCX. [edit]Corruption CBI arrested a Deputy General manager (DGM) of SEBI for demanding and accepting a bribe [11] amounting to 10 lakh (US$18,100) on 1st June 2012. The DGM was denied bail by a sessions court on 20 June 2012. Taking a tough stand, the court observed (among other things), "when our country is fighting against the menace of corruption, if a high ranking official of SEBI is granted bail, [12] that will send wrong signals to the society".