Securities Exchange Board Of India Research Articles

A comparative study on sustainability standards with specific reference to GRI standards and BRSR framework

PurposeThe main objective of the study was to compare Business Responsibility and Sustainability Report (BRSR) norms with Global Reporting Initiative (GRI) standards, so as to establish whether BRSR norms match the global standards and best practices or not. Additionally, an effort was made to ascertain and highlight areas where BRSR norms are more comprehensive, just match, or require further refinement to be at par with the GRI standards. The study highlights the similarities and dissimilarities between the internationally accepted GRI standards and the BRSR framework; thereby suggesting areas of improvement for the BRSR framework.Design/methodology/approachScrutinised all the 36 standards of the Global reporting initiative and BRSR format and guidelines of the Securities Exchange Board of India. The Content Analysis Technique was used to ascertain the percentages of similarities between the two frameworks.FindingsThe content analysis found that there are 52.30% similarities between BRSR norms and GRI standards. Further, this study shows the factors that led to the dissimilarities between BRSR and GRI standards. This study found 18 areas where BRSR is more informative than GRI, and 7 areas where BRSR could be further refined.Originality/valueThis study contributes to research in the sustainability reporting framework to be adopted by Indian listed companies. There are a few Indian listed companies who are already reporting as per the GRI framework and might perceive the BRSR as a separate reporting altogether. But as found in this study, more than half of the BRSR framework is similar to the GRI framework; thus, half the work is almost done. As such this study helps Indian firms in developing an understanding of the BRSR and puts in perspective its standing among global sustainability reporting standards. This study shall help institutional investors, rating agencies, and external assurers to better visualize an Indian entity, by referring to its Business Responsibility and Sustainability Reporting.

Analysis of Variation in Foreign Inflows by Different Categories of Foreign Portfolio Investors

The liberalisation of Indian financial markets has smoothened the capital flows of international institutional investors, resulting in rising foreign investor participation in the domestic equity and debt markets. Since the reforms of the 1990s, India has become one of the favourite investment hubs of foreign institutional investors (FIIs) across the globe. The research aims to analyse the variation in contribution to foreign inflows by the three different categories of foreign portfolio investments (FPIs) and the determinants of inflows of the categories of FPIs. The study is based on the use of secondary data collected from the National Securities Depository Limited and the Securities Exchange Board of India. One-way ANOVA has been employed to examine the variation in inflows by different categories of FIIs. Autor regressive distributed lag model has been used to understand the factors determining the inflows of FPIs. The results of the study revealed that there exists variation in the inflows of investments among the different categories of FIIs. The variation in inflows by different categories into equity instruments was significant, while the inflows into debt instruments were not significant. Furthermore, the highest inflows were seen from the second category of FIIs. JEL Codes: C32, G2

Corporate social responsibility and sustainable development goals: evidence from responsible business leaders

PurposeThis study aims to provide a framework aligning corporate social responsibility (CSR) initiatives with sustainable development goals (SDGs) 2030, applying the triple bottom line (TBL) approach. The research examines and evaluates the reach of Maharatna Central Public Sector Enterprises’ (CPSE) CSR spending towards sustainability and maps them with SDGs focusing on economic, social and environmental aspects. In addition, state-wise spending for CSR of all eligible Indian companies has been discussed.Design/methodology/approachThe study used secondary data related to CSR spending and disclosure from the annual reports and sustainability reports accessible on the official websites of CPSE, Global Reporting Initiative standards, CSR Guidelines of Department of Public Enterprises and Securities Exchange Board of India, Government of India’s National Guidelines on Responsible Business Conduct (NGRBC) (2018) research papers, financial dailies and websites. The study includes the CPSEs awarded with the status of Maharatna companies under the Guidelines of Maharatna Scheme for CPSEs.FindingsThe top CSR initiatives focused on by Maharatna companies were related to poverty, hunger, sanitation and well-being, promotion of education and contribution to the Prime Minister’s National Relief Fund. These initiatives aligned with the top SDGs related to life on land, education and health care, which proved responsible business leadership (RBL) through TBL. The alignment indicates that India is moving towards sustainable development achievements systematically.Practical implicationsThe practical consequences can be understood through the CSR spending of Maharatna Public Sector Undertakings towards economic, social and environmental aspects. The spending demonstrates their commitment, which other public and private sector organizations can adopt.Social implicationsThe Government of India’s NGRBC’s guidelines towards inclusive growth and equitable development, addressing environmental concerns, and being responsive to all its stakeholders is a thorough indication of driving the business towards being more responsible. This research has developed a framework aligning CSR and SDG through the TBL approach, which other developing countries can adopt as a model.Originality/valueThere is dearth of research among public sector company’s contribution towards attaining SDGs and demonstrating RBL. This research fulfils this gap. Mapping CSR activities to SDG’s also has not been clearly carried out in previous research, which is a contribution of this study.

Developments in trust law in India through the SEBI lens

Abstract Although the Indian Trust Act is an 1882 act which has not seen any change since its enactment, the law on the subject has evolved over time with changes in other laws/regulations. The article analyses the Indian securities/capital market regulator’s Securities Exchange Board of India (SEBI) perspective on the transfer of promoter shareholdings of a listed entity into private trust structures. The article discusses and examines SEBI regulations, circulars and orders to understand the contours of structuring an SEBI-compliant private trust. It also explores and analyzes SEBI’s thought process and the requirements that a structure must ensure in order to qualify for exemption.

Legality of usage of Artificial Intelligence and Machine Learnings by Share Market Intermediary

Artificial Intelligence (AI) and Machine Learning (ML) are increasingly utilized in share market services due to significant efficiencies and benefits for companies and investors across the globe. This has resulted in an alteration in the firm’s business models and has a potential impact on the effectiveness of the share market and could harm investors. Indian share market is also witnessing the usage of this technology by market intermediaries. The present regulatory framework of Securities Exchange Board of India (SEBI) on share market intermediaries is not dealing with the Fintech/ technology 2.0-based products and services offered in retail trading and investment advisor platforms in India. The research is primarily based on the normative method presenting a qualitative analysis of the usage of AI & ML in various business models by share market intermediaries. How various share market regulators are addressing and regulating this technology usage and their judicial exposition. The paper concludes that the Indian share market is no exception & SEBI require to look at this new transformation and address the challenges posed by it. SEBI needs to take a proactive step to promote, guide & regulate usages of AI & ML which is gradually seeking the attention of Indian share market intermediaries into their business models and get the maximum benefit out of these technologies.

Liquidity Impact of Novel Market Surveillance Measures—An Evidence from India

Stock price manipulation can be defined as trading behaviour that distorts stock prices with the intent of personal gains. Securities market regulators around the world undertake market surveillance to prevent market manipulation protect investors and ensure market integrity. The Securities Exchange Board of India along with stock exchanges has implemented a novel additional surveillance measure (ASM) which tracks stocks on a daily basis for abnormal price and volume activity accompanied by the participation of market-dominating investors in trading activity. Stocks that breach predefined limits of the above parameters are categorized as ASM category and subject to overall additional margins and selective additional margins for the dominating investor. There are mainly two types of ASM, Long term additional surveillance measures (LTASM) and short-term additional surveillance measures (STASM). STASM consider a shorter duration time (5/15 days) for share price observation LTASM considers a longer duration (1 month/1 year) for screening of the stock for surveillance measures as per ASM criteria. This study is based on STASM. The mechanism, on the one hand, is expected to deter manipulators and on the other, warn investors about suspicious activity in the stock, which is not supported by fundamentals. This article analyses the impact of surveillance actions on a price return and liquidity. The article also looks at the degree of speculative activity surrounding the event. This study used regression analysis for impact assessment. The study results show that the prices of the stock stabilize after inclusion and there is an overall fall in liquidity post-inclusion. However, the liquidity impact is different for stocks with positive abnormal returns as compared to those with negative abnormal returns. The result of the study gives insight into the effectiveness of STASM which will be useful for regulators and investors to prevent market manipulations.

Burger King India IPO: Investment Dilemma

Burger King India (BKI), a master franchisee of the leading global quick service restaurant (QSR) chain Burger King US, filed its red herring prospectus (RHP) on 5 November 2019, with the Securities Exchange Board of India (SEBI) expressing its interest in going public. BKI was a major franchise of a multinational QSR, and its going public in India showed the confidence that large global QSRs had in the Indian markets. Despite the volatility caused by the global COVID-19 pandemic, BKI launched its IPO on 2 December 2020. The case study captures the complexity and challenges faced by the growing Indian QSR market and its diverse players and provides information for industry analysis. The case also provides strategic and financial information along with initial public offer (IPO) information to assess BKI’s performance and debate whether the price set is appropriate given that BKI was a loss-making firm and the uncertainty surrounding the pandemic continued.

DISCLOSURES OF KEY PERFORMANCE INDICATORS IN OFFER DOCUMENT

The amendments made to the Securities Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 [SEBI ICDR] dated 21st November, 2022 included certain provisions of great relevance to the profession of CMA mandating disclosure of Key Performance Indicators (KPI) in the offer document under the section dealing with “Basis for Issue Price” in addition to disclosures of financial indicators. This article after giving a brief introduction to the subject covers the amendments in the regulatory framework.

An overview of anti-money laundering practice in the indian financial system

Money laundering is a menace to economies and a central concern globally. The financial system remains the primary target of money launderers. While the risk of money laundering cannot be entirely eliminated, it can be mitigated through specific preventative measures. In this regard, FATF took its initial international step by presenting its 40 recommendations to combat Money Laundering and Terrorist Financing. These recommendations have since evolved into a model for successful national and global Anti Money Laundering and Countering Financing of Terrorism (AML/CFT) controls. This paper aims to assess and describe the anti-money laundering (AML) practice and framework within the Indian financial system, as well as to examine how the Indian financial system has addressed FATF's recommendations on AML. The study utilizes secondary data obtained from books, annual reports, and selected websites to achieve its objectives. The findings of the study demonstrate that the Anti-Money Laundering (AML) regime in the Indian financial system is regulated by the Prevention of Money Laundering Act (PMLA) along with an established regulatory and supervisory framework to address FATF Recommendations. The AML framework of the Indian financial system includes FIU-India, which operates as a national agency for receiving, processing, analyzing, and disseminating information related to suspicious transactions. Additionally, the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), and Insurance Regulatory Development Authority (IRDA) serve as the regulatory and supervisory bodies for financial institutions in India. Regulating, supervising, and developing Anti-Money Laundering (AML) policies and practices for the Indian financial sector fall under the responsibilities of these three authorities.

REGULATORíS DECISION AND RISK MANAGEMENT: THE CASE OF INDIA

Whenever Indian Economy had to tackle signiÖcant ináationary pressure, Secu- rities Exchange Board of India (SEBI), which is the apex regulator of capital and commodity markets, has time and again resorted to stop the trade in futures of essential agricultural commodities while allowing trade in futures of essential energy commodities. SEBI has jus- tiÖed the step on the grounds that, doing so prevents volatility in agricultural spot market. Our study tries to analyze the nature of correction in the two segments with the help of vec- tor error correction model in the backdrop of ináationary and non-ináationary periods. In energy segment, among select commodities, the speed of error correction was 1to 2 days more as compared to non-ináationary period. With regards to commercial agricultural segment, the rate of error correction among select commodities was 4 to 7 days more as compared to non-ináationary period. Given the underdeveloped nature of agricultural futures market, SEBIís action seems bit too stringent. Although prior studies have been undertaken about Indian spot and derivative markets, empirical studies which have focused on analyzing eco- nomic rationale of SEBIís decision of restricting trade in agricultural futures during ináation are scarce. Our study tries to bridge the gap regarding the same.

Factors Influencing Investors Preference to Mutual Funds with reference to Indiabulls securities Limited

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want. This paper focuses on market share of mutual fund, performance of mutual fund, future potential of mutual fund industry and emerging trends of mutual fund.the two insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. The maximum number was of the business-class (43%) as most of the respondents were Bank’s customers. 19% were students and 11% of service category as the research was also done in college campus. 14% and 13% being Retired and professionals respectively, as it was an open market operation in High Court area. Hence, most of the professionals are Lawyers and Doctors.

Enforcement and Compliance: The Case of Mandated CSR Provisions in an Emerging Economy

This study is an insight into Securities Exchange Board of India’s (SEBI) mandatory corporate social responsibility (CSR) provisions for corporates and the status of their implementation in an emerging economy. We have analysed a sample of listed Indian companies with regard to expenditure on CSR activities, that is, whether they meet the legislative requirements for CSR spend. The study examines relevant data from 2015 to 2020 post the introduction of the mandatory 2% CSR bill. We have assessed the implementation status of mandatory CSR reforms introduced by The Companies Act, 2013 and followed up in the amendment bills. The results show that there is a substantial increase in the expenditure on CSR after acquiring the mandatory status. Although all sample companies have made disclosures on CSR norms, some companies have not fulfilled the mandatory CSR expenditure norms under Section 135. Corporate entities are cognisant of the legislation on CSR and the level of compliance is exemplary. The mandated CSR policy in India has shown remarkable results in terms of CSR spend but to set further norms in this area, it should be analysed whether this ideology of incurring expenses on socially responsible activities has any adverse corollaries. In this study, we have discussed the practical implications of the regulatory amendments in CSR provisions on the Indian corporate sector.

An Evaluation of Financial Performance of Merchant Banking Activities of SBI Capital Markets Limited

Merchant Banking is a function that work as a financial intermediary between investor and corporate customer. Along with these it helps various corporate companies, financial instructions and others for issue management. Merchant banking are playing vital role in the growth of economies. Due to merchant banking the needs of the investors, entrepreneurs and corporate sector are identified and advise them what to do to be successful. Merchant banking is a service-oriented function, that transfer capital from who owns to those who can use it. Some companies have built their strong image and some are trying in this field to be successful. Now it is also important to study the financial performance of merchant banking in India. This study aims to explore the existing financial health of merchant banking services of SBI Capital Markets Ltd. in merchant banking activities. The selected merchant bank emphasizes on categorization of merchant bankers and in this direction the merchant bank which comes under the purview of category-I registration with Securities Exchange Board of India has been chosen to appraise the performance.

Performance evaluation of treasury bills traded in the money market

The financial market is combined with many instruments, which supports to function the market without any deviation and helps to develop the economy. The present paper aims to investigate the various types of treasury bills traded in the money markets and its performance and growth from the year 2011-12 to 2020-21. The secondary data were collected from various websites of Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), and Centre for Monitoring Indian Economy (CMIE). The collected data were analysed by applying simple percentage analysis, Annual Growth Rate (AGR), and Compound Annual Growth Rate to assess the performance of Treasury bill (T-Bills).

IPOs In Compulsory Demat Mode. How Fair For The Small Investors?

The SEBI ruling requiring issue houses to issue public offerings (IPO's, new issues, etc.) in compulsory demat mode has created an anomaly which keeps the small and long-term investor out of the game. The benefits that would have accrued to small investors are snatched away by the larger & powerful players. The IPOs of banks and companies like Maruti Udyog, NTPC and TV Today etc. had claimed to target the small investor, but the small investor had in fact been a mere conduit to channel the holdings to larger players. This defeated the objective of creating wide-spread public participation and holding in the disinvestment of profitable stocks. Based on actual market study and observations of the author, this case study raises vital and provocative policy issues such as: Who is the beneficiary of IPOs in compulsory dematerialised mode? It also highlights the failure of SEBI (the Securities Exchange Board of India), depositories and the major stock exchanges in addressing the cause of the small and marginal investors beyond lip-service and cosmetic efforts like framing rules for orderly 'development' and 'regulation' of the capital market. This study suggests some practical solutions to correct the anomaly.

Appointment of Independent Directors in India: A Critique

The mode of appointment of independent directors has gained traction in recent years and has recently been in the limelight since the Securities Exchange Board of India (SEBI), (the regulatory body for listed securities in India) proposed reforms for the process of appointment/removal of independent directors. This article has explored the accountability cast on independent directors and safeguards provided to them within the ambit of the Companies Act, 2013, along with the concerns and recourses available to minority shareholders from proceeding against the independent directors. The article has attempted to resolve the fallacies in the current modus of appointment of independent directors and has examined alternate modes of appointment, including the feasibility of adopting the dual voting structure followed in the United Kingdom which was proposed in the SEBI reforms. Independent directors, appointment, dual voting structure, the United Kingdom, Securities Exchange Board of India Consultation Paper, Companies Act, 2013, cumulative voting and minority shareholders.

Critical Assessment of Infrastructure Investment Trusts (InvITs) in India and Suggesting measures to increase their Efficiency in comparison with International Instruments

Indian economy, like any other economy, relies heavily on the infrastructure sector. However, by end of 12th five-year plan (2012-2017) private sector investment in infrastructure started declining causing increase in government spending through budgetary support. To boost investment in infrastructure, Securities Exchange Board of India (SEBI) came up with Infrastructure Investment Trust (InvIT) regulations in 2014. InvIT’s are trust holding infrastructure assets that generate steady cash flow with long term concession. The structure of InvIT is similar to Master-Business Trusts instruments that are prevalent in many developed countries like UK, USA, Singapore, Australia & Hong-Kong. They are listed on stock exchange by issuing their units to investors. While interest of investors have increased in recent past, India's progress in InvIT is still at a relatively nascent stage. As on date, around 10 (ten) InvITs are registered with SEBI. In this study we have attempted to do a critical assessment of the market for InvIT in India. We have also evaluated regulations that regulate InvIT in India and compared them with similar International instruments in order to enhance its attractiveness.

Investor protection: effects of takeover convergence

PurposeTakeovers play a critical role as an external corporate governance mechanism to ensure investor protection. There is a long-standing debate on whether the convergence of corporate governance to global standards can enable emerging economies to ensure investor protection. This paper aims to analyse the evolution of the takeover code, namely, Securities Exchange Board of India’s Substantial Acquisition of Shares and Takeovers (2011) in India from the lens of investor protection. It then compares the takeover provisions in India, the USA, the UK, Singapore and Australia to examine the extent of convergence and its implications for investor protection.Design/methodology/approachUsing a cross-national comparative analysis of takeover mechanisms in common law countries, the study analyses the extent and relevance of convergence in form. The focus of the comparison is on regulations governing offer size, offer price, creeping acquisition and initial trigger limit for the mandatory open offer.FindingsThe findings suggest that certain provisions such as the initial trigger threshold for the mandatory offer and the offer prices of the Indian takeover code are converging with the standards in common law countries. However, the offer price determination based on market prices may not reflect true market value in an inefficient market like India. Other provisions such as creeping acquisition and offer size are not only diverging from the international standards but are also inconsistent with the key objective of investor protections of the Indian regulator.Research limitations/implicationsIndian takeover regulation needs to converge to higher global standards to ensure adherence to improved investor protection. This needs to be done for the initial trigger limit for mandatory bid and offer prices, after accounting for the differences in institutional structure. The Indian regulators need to revisit provisions on the initial trigger, creeping acquisition to converge to the broader principle of investor protection.Originality/valueThis technical paper provides a comprehensive depiction of takeover mechanisms in an emerging economy context as a means of investor protection. Further using a comparative lens, it analyses the relevance of convergence of takeover laws. Thus, advances the theoretical knowledge of limited extant work on external corporate governance mechanism in an emerging economy context.

The Need to Legalize and Regulate Insider Trading - An Analysis

Insider trading is perceived as a problem across capital mar-kets. The Securities Exchange Board of India (SEBI) created the SEBI (Prohibition of Insider Trading) Regulations, 2015, which criminalizes insider trading. However, insider trading laws have faced several problems at the implementation and enforcement stage. This article considers these problems from the viewpoint of the economic rationale that insider trading should be permitted in capital markets and thus le-galized. These economic arguments have largely been ig-nored by regulators who have continued to come down hard upon insider trading, despite limited success. Moreover, due to concerns related to privacy, insider trading investigations may face greater hurdles in the future. This article takes these factors and economic arguments into consideration and balances them against the regulators' concerns to suggest that insider trading be not only prima facie legalized, but also regulated when there is a breach of fiduciary duties or when there is a dissemination of positive information.

Ponzi Scheme and Indian Laws

Ponzi scheme, multi-level marketing (MLM) programs or pyramid schemes disguised as direct selling companies are India's nightmare. The problem is huge. In fact, it's so good that the massive redemptions ordered by the Securities & Exchange Board of India (SEBI) in the case of Sahara group companies (Rs 25,000 crore plus interest) or PACL (Rs 49,100 crore) don't even start the surface of money stolen from ordinary savers. The Indian Legislature has sadly been extremely slow on the uptake and as a result many well-known ponzi schemes have been able to thrive undetected. This paper will tend to discuss the laws pertaining to the ban of Ponzi like schemes in India.