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REGULATING
SECURITIES
MARKETS IN INDIA
WHAT IS REGULATION?
Regulation is controlling human or societal behavior
by rules or restrictions.
Regulation can take many forms:
Legal restrictions promulgated by government
Self-regulation by an industry such as through a trade
association .
Social regulations
Co-regulation
Market regulation
Market confidence:
Sustaining confidence in the financial markets is one of the
most important objectives of the Financial regulatory
bodies.
2.
Consumer protection:
Ensuring the most suitable level of consumer protection.
3.
Public awareness:
Encouraging public awareness about the financial markets
through imparting educational programs.
4.
BENEFITS OF REGULATION
Regulations, like any other form of coercive action, have costs for
some and benefits for others. Efficient regulations are defined as
those where the total benefits to some people exceed the total
costs to others.
Markets failures:
Regulation due to inefficiency. Intervention due to a classical
economics argument to market failure.
a) Risk of monopoly
Collective desires:
Regulation about collective desires or considered judgments on
the part of a significant segments of society
Diverse experiences:
Regulation with a with a view of eliminating or enhancing
opportunities for the formation of diverse preferences and beliefs
Social subordination:
Endogenous preferences:
Regulations purpose is to affect the development of certain
preferences on an aggregate level
Irreversibility :
Regulation that deals with the problem of irreversibility the
problem which is a certain type of conduct from current
generations results in outcomes from which the future
generations may not recover from at all.
CONCLUSION
The above slides thus highlight the need for
regulation not only in the markets but also the
aims and objectives of the regulatory bodies
regulating these markets.
I.
II.
III.
IV.
Cumbersome
procedures
Malpractices by
brokers
Lack of investor
protection measures
Lack of adequate
regulations
Lack of market
awareness
I.
II.
III.
IV.
I.
II.
III.
IV.
I.
II.
III.
IV.
Liberalize
the market
Companies
misused
funds
No
supervision
of DCA or
SEBI
Controller
of capital
issue
Investors
allege SEBI
and DCA
Raised
money at
fancy
premium
SEBI
IPO
Promoters
took
advantage