FINANCIAL MARKETS AND

SERVICES
CIA – 3 Compare and contrast various financial services/instruments offered by Financial
Institutions in India with the services/instruments offered by financial institutions in some other
country.

SUBMITTED TO :

Dr. ROSHNA THOMAS

RIDDHIMA ANAND – 2123568

3 BBA FIB – B

CHRIST (DEEMED TO BE UNIVERSITY)

SCHOOL OF BUSINESS AND MANAEGENT
 Table of Contents

INTRODUCTION AND OVERVIEW ........................................................................................................ 2

PART 1 ......................................................................................................................................................... 2
INTRODUCTION TO SEBI (Securities and Exchange Board of India) ................................................. 2
INTRODUCTION TO SEC (U.S Securities and Exchange Commission) ............................................... 3
COMPARABLE PARAMETERS ................................................................................................................ 4
COMPARISON ............................................................................................................................................ 5
FUNCTIONS AND SERVICES ............................................................................................................... 5
AUTHORITY AND POWER................................................................................................................... 5
ORGANISATIONAL STRUCTURE ....................................................................................................... 7
ACHEIVEMENTS ................................................................................................................................... 8
REGULATIONS AND GUIDELINES .................................................................................................... 9
CONCLUSION AND INFERENCE ...................................................................................................... 11
PART 2 ....................................................................................................................................................... 12
INTRODUCTION TO RBI (Resverve Bank of India) ........................................................................... 12
INTRODUCTION TO DANMARKS NATIONALBANK ................................................................... 12
COMPARISON BETWEEN THE POLICIES OF RBI AND Danmarks Nationalbank ........................ 13
CHALLANEGES AND LIMITATIONS OF BOTH THE BANKS .......................................................... 14

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 INTRODUCTION AND OVERVIEW

In this CIA we will compare the instruments and services offered by Indian financial bodies with
those offered abroad. We will also evaluate the positive and negative aspects based on the
comparison and give suggestions. For part 1 of this CIA, we have chosen the stock market
regulatory bodies of two different countries, namely SEBI (Securities and Exchange board of
India) and SEC (U.S Securities and Exchange commission). For the second part of the CIA, we
have chosen the central banks of India and Denmark, namely The Reserve Bank of India and
Danmark’s National Bank. We will start by providing a general introduction of the chosen
organisations. Then, we'll compare the institutions based on the criteria we've established for
comparison between them. Finally, we will have a conclusion for the entire report where we will
examine the room for development, any loopholes, and solutions to address these likely issues.
We will also summarize and draw conclusions from the comparisons' findings. The bibliography
part of the report will allow the reader to find all the sources consulted for the report.

What do you mean by a stock market regulatory body?

Various agencies of the federal and state governments oversee and regulate the financial markets
and commercial enterprises. Each of these organisations is given a distinct set of obligations and
responsibilities that enable them to function independently while pursuing comparable
objectives. Although there are varying views on these organizations’ efficacy, efficiency, and
even need, they were all created with a specific purpose in mind.

PART 1
INTRODUCTION TO SEBI (Securities and Exchange Board of India)

In India, SEBI plays a significant regulatory role in the financial markets. In order to oversee the
securities market, the Securities and Exchange Board of India (SEBI) was founded as a non-
governmental organisation in 1988. The SEBI Act, 1992, which was passed by the Indian
Parliament, gave it legislative authority and allowed it to become a self-governing organisation
on January 30, 1992. With its main headquarters in Mumbai's Bandra Kurla Complex, SEBI also

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maintains regional offices in New Delhi, Kolkata, Chennai, and Ahmedabad in the north, east,
south, and west. The business established regional offices in Chandigarh, Bangalore, Guwahati,
Patna, Bhubaneswar, Jaipur, and Patna in 2013-2014. Before SEBI was created, the regulator
was the manager of capital matters. The Capital Issues (control) Act 1947 gives it authority.

The major regulator of the Indian stock market is the Securities and Exchange Board of India
(SEBI). SEBI is equivalent to the US Securities and Exchange Commission (SEC). Its mission
is to "protect investors' interests in securities and to encourage and oversee the growth of the
securities market."

INTRODUCTION TO SEC (U.S Securities and Exchange Commission)

Securities trading was governed by what are referred to as "blue sky legal guidelines" prior to the
adoption of the federal securities laws and the founding of the SEC. To protect the public from
fraud, these laws that governed the imparting and sale of securities were passed and put into
effect at the national level. Although the specifics of these laws varied from state to state, they all
required the registration of all sales and services of securities as well as every stockbroker and
brokerage business operating in the United States. Blue sky legal guidelines, however, had
typically been regarded as useless. For instance, the Investment Bankers Association began
informing its members in 1915 that they could avoid blue sky legal guidelines by performing
securities services across national borders through the mail. The Securities Act of 1933 and
Securities Exchange Act of 1934, both of which are regarded as components of Franklin D.
Roosevelt's New Deal policy, were crucial in establishing the SEC's jurisdiction.

The Securities Act of 1933, which federally regulates genuine issues of securities across national
lines, was passed by Congress in response to the Pecora Commission hearings on abuses and
frauds in the securities markets. In general, it does this by requiring that issuing groups sign
distributions prior to sale so that investors can also have access to basic economic information
and make informed decisions. The Federal Trade Commission was in charge of enforcing the
law during its first year of operation.

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 COMPARABLE PARAMETERS

The five comparable parameters that have been chosen for this assignment are as follows:

1) FUNCTIONS AND SERVICES –

Although there are some similarities between the roles and services each of these
organisations performs, there are also significant differences owing to factors like
geography, demographics, and politics. A stock market regulatory body's main goal is to
uphold ethics and decorum in the capital and financial markets while also keeping an eye
on businesses' financial operations to safeguard the interests of investors.

2) AUTHORITY AND POWER –

These entities are given authority and power by the national government to carry out their
tasks, including overseeing the capital and financial markets. Depending on the
circumstances and how the financial services are used, as well as previous experiences or
occurrences that may have happened in the past, these abilities may differ from one
nation to another. These might be statutory or not. These facts provide as justification for
varying capital and financial market regulatory regimes in various nations.

3) ACHEIVEMENTS –
Each nation's regulatory body has accomplished something in the past, and these
accomplishments set them apart since they demonstrate the many ways in which they
have used their authority as well as their efficacy and efficiency.

4) REGULATIONS AND GUIDELINES –

To maintain financial discipline across the nation, the stock market regulatory
organisations of each of these nations have separate laws, regulations, and
recommendations for consumers of their services. Each of them has a unique set of laws
and regulations in place to safeguard the welfare of investors and make sure that there is
no unfairness in the financial markets.

5) STRUCTURE –
Different countries have different regulatory intermediary structures. Some have an
intrinsic structure that differs from others, as does the hierarchy of power within the
organisation, depending on whether they are statutory or not.

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 COMPARISON

FUNCTIONS AND SERVICES

A) SEBI –
"To protect the interests of investors in securities and to promote the development of, and to
regulate, the securities market and for matters connected therewith or incidental thereto," is how
the Securities and Exchange Commission of India's Preamble explains the organization's core
responsibilities.

The three segments that make up the market must be catered to by SEBI:

 Security Issuer
 Investor and
 market agent

B) SEC –
 They are responsible for approving the underwriter's book runner.
 Financial services organisations such as brokers, consulting firms, and money managers
must register with the SEC in order to trade, ensuring full information, fair dealing, and
protection from deceptive and manipulative market activities.
 Through its internet database, the SEC gives investors access to registration statements,
periodic financial reports, and other securities filings.

AUTHORITY AND POWER

A) SEBI –

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 Being a regulatory organisation, SEBI India has a range of authority to carry out essential
duties. A list of these authority granted to the regulatory body is included in the SEBI Act
of 1992.
 Quasi-Judicial powers: SEBI has the authority to issue rulings in cases of
securities market scams and unethical behaviour. This authority makes it easier to
keep the market for securities transparent, accountable, and fair.
 Quasi-Executive powers: In order to find or compile evidence against violations,
SEBI has the authority to inspect the book of accounts and other crucial
documents. The regulatory body has the authority to enforce rules, render
judgments, and pursue legal action against violators if it discovers someone
violating the regulations.
 Quasi-Legislative powers: The authoritative body has been entrusted with the
authority to create appropriate rules and regulations in order to safeguard
investors' interests. These regulations frequently cover disclosure requirements,
insider trading restrictions, and listing obligations. Such rules and regulations are
developed by the body to eradicate fraud that is common in the securities market.

The Supreme Court of India and the Securities Appellate Tribunal tend to have an
upper hand when it comes to the powers and functions of SEBI. All its functions and
related decisions have to go through the two apex bodies first.

B) SEC –
The SEC has extensive power over all facets of the securities sector. This includes the
power to authorise, licence, and manage the nation's securities self regulatory
organisations as well as brokerage firms, transfer agents, and clearing agencies. It also
has disciplinary powers over regulated entities and connected parties.

Example depicting a comparison on the powers of sebi and sec:

Taking the Raj Rajaratnam case (Raj Rajaratnam and Insider Trading, n.d.) , the SEC was
forced to file a complaint with a court, requesting that it issue orders requiring the

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 accused to forfeit gains allegedly made through insider trading, bar them from serving as
officers or directors of any issuer of securities, and pay civil monetary penalties in
accordance with US securities laws. SEBI is empowered to take each of the
aforementioned acts in absolute terms in India, not merely as temporary measures. The
SEBI Act of 1992's Chapter VIA gives SEBI the authority to impose financial penalties
without the involvement of a court. (Varottil, 2009)

ORGANISATIONAL STRUCTURE

A) SEBI :

SEBI adheres to a corporate framework. Senior management, department heads, a board

of directors, and numerous important departments are all present.
More specifically, it consists of more than 20 departments, each of which is run by a
department head who in turn reports to a general hierarchy.
The SEBI's hierarchy is made up of the 9 designated officers listed below:
The chairman – Nominated by the central government.
Two members belonging to the Indian Finance ministry
One member belonging to the RBI
5 members nominated by central government (SEBI – Securities and Exchange Board of
India, n.d.)

Committees of SEBI are as follows:

 Technical Advisory Committee
 Committee for review of structure of infrastructure institutions
 Advisory Committee for the SEBI Investor Protection and Education Fund
 Takeover Regulations Advisory Committee
 Primary Market Advisory Committee (PMAC)
 Secondary Market Advisory Committee (SMAC)
 Mutual Fund Advisory Committee
 Corporate Bonds & Securitization Advisory Committee

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 B) SEC –

Five Commissioners make up the Securities and Exchange Commission. With the approval of
the US Senate, the President of the United States appoints them. Regarding the SEC's
organisational structure, there are five divisions, nineteen offices, and about 3,800 employees.
The SEC's divisions are:

 Corporation Finance
 Trading and Markets
 Investment Management
 Enforcement
 Economic and Risk Analysis

ACHEIVEMENTS

A) SEBI –
Successful regulator SEBI actively and persistently seeks logical improvements. By
implementing a rolling cycle of T+5 from July 2001, T+3 from April 2002, and T+2 from
April 2003, SEBI evaluated the quick shift to electronic and paperless
markets. Settlement happens within two days of the trading date in a rolling cycle of T+2.
SEBI made a concerted effort to create statutory rules. Due to mail delays, theft, and
fraud, physical certificates were discontinued by SEBI, and the Deposit Storage Act of
1996's enactment made payments more complicated and time-consuming.
In response to the global financial crisis and the Satyam fiasco, SEBI also aided in taking
quick and decisive action. She promoted investment by reducing regulatory barriers and
loosening acquisition norms in the midst of a worldwide financial crisis. In one of these
actions, SEBI raised the Rs. 100,000 application cap for individual investors to Rs.
200,000.
SEBI Executive Director Shri G. P. Garg released a book on financial literacy at World
Investor Week 2022. His CASI New York and The Metropolitan Stock Exchange India
Limited collaborated on this publication.

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B) SEC –
Over 50 major regulation packages, including significant improvements to safeguard
investors and markets from the goods and conduct directly linked to the financial crisis,
have been proposed or implemented by the European Commission since April 2013.
Money market funds, rating organisations, asset-backed securities, proprietary trading,
executive remuneration, systematic clearing houses, securities swaps, and investment
advice to local governments are some of the things that these changes will impact.
Additionally, the European Commission has significantly improved key market
structures.
The Commission has concentrated its enforcement efforts on important issues of rising
concern, such as accounting and bookkeeping fraud, inappropriate behaviour by
significant market participants, and improper behaviour by broker-dealers and investment
advisors.
The Commission's personnel performed more than 2,400 audits in 2016. Compared to
2015, there has been an increase of more than 20%. She earned investors more than $60
million as a result of these evaluations.
The Commission's personnel carried out over 2,000 investigations in 2015. More than
any other fiscal year in the previous five years, that. An estimated $120 million in returns
were generated for investors as a consequence of these investigations. More than 1,850
investigations were conducted by Commission officials in 2014, and more than $40
million in investor funds were voluntarily refunded. Additionally, as a consequence of
enforcement proceedings concluded in his fiscal year 2014, including remittances from
audits, more than $300 million in fines, penalties, and exploitation were assessed.

REGULATIONS AND GUIDELINES

A) SEBI –
The most significant of SEBI's many laws, rules, regulations, and regulations are:
 SEBI (Issuance of Capital and Disclosure Requirements) Regulations, 2009:

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 In order to guarantee that securities transactions are accurate and advantageous to
both listed businesses and investors, these regulations offer procedures for handling
issues and matters pertaining to capital and disclosures made by Indian listed
companies.

 SEBI (Significant Acquisitions and Acquisitions) Regulations 2011:

These SEBI Regulations were created to address concerns with fair and legal share
acquisitions and takeovers.

 SEBI (Prohibition of Insider Trading) Regulations 2015:

The SEBI (Prohibition of Insider Trading) Regulations of 1992 are repealed by this
statute. The bill intends to enhance India's legal foundation for complete and fair
securities trading by introducing new rules and regulations that forbid insider trading
in stocks. Anyone connected to a publicly listed firm or another employee who has
access to non-public, price-sensitive information is considered a "insider." This
legislation includes provisions for both initial and continuous disclosure of insider
information (relating to trading in securities and securities derivatives).
 Equity contract:
The terms of this Agreement (including those added by any future amendments to
this Listing Agreement) are largely concerned with the legal requirements that firms
listed on the Registered Stock Exchange of India must follow.

B) SEC –

This 2023 edition considers all of the SEC's relevant rulemaking that was posted through
October, including:

 Amendments to numerous documents and regulations under the Securities Act of

1933 and the Securities Exchange Act of 1934 to reflect, among other things,
rulemaking regarding proxy vote casting advice, pay as opposed to performance,
and standard proxy cards.
 Amendments that require (1) the use of Inline extensible Business Reporting
Language ("Inline XBRL") for the submission of the financial statements and
accompanying notes to the financial statements required in Form 11-K, allowing
for the electronic submission of certain foreign language files, and

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 (2) the electronic submission or submission of files that are currently permitted
for electronic submission, such as the "glossy" annual file to security holders
 Amendments that enforce the disclosure and submission requirements of the
Holding Foreign Companies Accountable Act (HFCA Act) for registrants that the
SEC identifies as having filed an annual report with an audit file issued by a
registered public accounting corporation based in a foreign country, and that the
PCAOB is unable to fully look at or inspect due to a function taken by a
professional in that country.

CONCLUSION AND INFERENCE

I now have a better grasp of the stock market regulating organisations in four distinct nations on
four separate continents thanks to this research. I gained knowledge about how they operate and
how crucial they are to the financial and capital markets thanks to the comparative research. The
fact that authorities established for the same goal might differ so greatly on a few essential and
fundamentally important grounds, such as their services, functions, powers, authority, structure,
rules, affiliations, etc., was noteworthy to observe.

The study suggests that the primary causes of the difference are the various lives, upbringings,
natures, mentalities, habits, cultures, norms, etc. As a result, choosing diverse continents for this
study was the best choice, and our initial idea has been confirmed.

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 PART 2

INTRODUCTION TO RBI (Resverve Bank of India)

The Reserve Bank of India, commonly known as RBI, is the country's central bank and the
regulatory organisation in charge of overseeing the country's banking industry. It is under the
ownership of Ministry of Finance, Government of India. Control, issuance, and supply
maintenance of the Indian rupee are its duties. It also oversees the primary payment networks for
the nation and tries to further its economic growth. In two of its currency printing presses located
in Nashik (Western India) and Dewas, the Reserve Bank of India (RBI) manufactures and mints
Indian currency notes (INR) through Bharatiya Reserve Bank Note Mudran (BRBNM) (Central
India). in order to control the payment and settlement systems in India, the RBI created the
National Payments Corporation of India as one of its specialised divisions.

INTRODUCTION TO DANMARKS NATIONALBANK

The Kingdom of Denmark's official bank is called Danmarks Nationalbank. It belongs to the
European System of Central Banks as a non-eurozone member (ESCB). The Nationalbank's goal
as a legitimate and independent organisation from its founding in 1818 has been to issue the
Danish krone and maintain its stability. The Board of Governors is alone in charge of monetary
policy. All duties pertaining to the administration of the debt held by the Danish central
government are handled by Danmarks Nationalbank. An agreement between the Danish Ministry
of Finance and Danmarks Nationalbank outlines the duty split. (Danmarks Nationalbank, n.d.)

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 COMPARISON BETWEEN THE POLICIES OF RBI AND Danmarks
Nationalbank

DANMARKS NATIONALBANK

 The Danmarks' Nationalbank is also tasked with partially maintaining

government projects (especially education)
 The Danmarks' Nationalbank's primary role is to maintain and facilitate
international trade
 The Danmarks Nationalbank has traditionally focused on improving
infrastructure that facilitates international trade. Their current monetary policy
heavily encourages FDI and import/export businesses.
 More than 80% of the Danish workforce is employed in the service sector and
53% of their GDP is from exports
(nationalbanken.dk, n.d.)

RESERVE BANK OF INDIA

 Focus on building infrastructure for international trade.

 Focus on employment policies, which have proven to boost the economy.
 Prioritize equitable growth all over the country in order to not have certain regions
become a resource sink.
 With India being such a diverse country, the RBI needs to deal with a lot more than TDN.
Perhaps, it might not be fair to compare them both with hard data without taking such
nuances into account
 the national bank of India is called RBI. While its basic functions are the same, its
outlook and priorities differ drastically with that of TDM, for good reasons

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 CHALLANEGES AND LIMITATIONS OF BOTH THE BANKS

 The Indian monetary system (and therefore the RBI) are in serious need of fair growth
due to the effects of a constantly evolving monetary system as well as the expense to
states that must keep up with them due to inflation and price stability.
 the lack of domestically manufactured items in the country implies that the Danish
economy and the Danmarks National bank need a lot of cash. Given that the majority of
the output is in the form of services contracted by foreign firms, the Danmarks
Nationalbank is making considerable efforts to stimulate the development of businesses
for local purposes through its monetary policy.
 More than most other nations, India is overflowing with small and medium-sized
businesses, which need funding and supportive policies to take off. To meet the many
needs of the enterprises and the economy, a good monetary policy must be established
(and updated frequently).
 The Danish Nationalbank is going through a separate issue as a result of the Danish
Krone's peg to the Euro, which makes it more difficult to attract foreign direct
investment. Furthermore, the Danish monetary policy is strongly focused on promoting
 import and export (because of need), which is not very beneficial for self-sustainability.

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 References

COMMISSION, U. S. (2004). Protecting Investors . Retrieved from SEC.gov:

https://www.sec.gov/about/secpar/secparsumm04.pdf

Danmarks Nationalbank. (n.d.). Retrieved from Wikipedia :

https://en.wikipedia.org/wiki/Danmarks_Nationalbank

nationalbanken.dk. (n.d.). Retrieved from nationalbanken.dk:

https://www.nationalbanken.dk/en/Pages/Default.aspx

PART ONE: POLICIES AND PROGRAMMES. (n.d.). Retrieved from sebi.gov.in :

https://www.sebi.gov.in/sebi_data/commondocs/part1_p.pdf

Raj Rajaratnam and Insider Trading. (n.d.). Retrieved from Seven Pillars Institute :
https://sevenpillarsinstitute.org/case-studies/raj-rajaratnam-and-insider-trading-2/

SEBI – Securities and Exchange Board of India. (n.d.). Retrieved from Groww:
https://groww.in/p/sebi-securities-and-exchange-board-of-india

Varottil, U. (2009, October 29). Powers of SEBI and SEC Compared. Retrieved from
IndiaCorpLaw : https://indiacorplaw.in/2009/10/powers-of-sebi-and-sec-compared.html

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