Capital Market Evolution In India PPT a good

About Capital markets

1. Capital Market Evolution

2. History of Capital Market
●History of Company Law
●In the 15th century, most companies in Belgium dealt solely with promissory
notes.
●Companies like The Dutch East India Company paid regular dividends
annually for 200 years from its set up. It is the first company to issue stocks.
●A system to trade stocks and securities intensified, leading to the
establishment of the New York Stock Exchange (NYSE). Twenty-four
stockbrokers developed it after they signed the Buttonwood Agreement in
1792.
●Corporate Shares Entered the Market when Companies Act 1850.

3. History of Stock Exchange
●Indian securities market is one of the oldest in Asia.
●East India Company used to transact Loan Securities by the end of 18th Century.
●By 1830’s, the trading in shares of banks started.
●The trader by the name of broker emerged in 1830 when 6 persons called themselves as
share brokers. This number grew gradually.
●In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took
place in Bombay.
●Till 1850, they traded in shares of banks and securities of the East India Company in
Mumbai under a sprawling Banyan Tree in front of the Town Hall, which is now in the
Horniman Circle Park. It is no surprise that the majestic Phiroze Jeejeebhoy Towers is
located at the Horniman Circle.

4. Video BSE

5. Timelines of BSE
1875: Native brokers form the native share and stock brokers’ association in
Mumbai. There were 318 members on the list.
1899: Bombay stock exchange acquired its own premises.
1908: The Calcutta Stock Exchange Association was started on June 15
th
of the
year
1921: Clearing houses were established for settlement of trades as volume of
trade increased
1923: K.R.P. Shroff became the honorary president of the BSE (1923 to 66)

6. 1925: Bombay securities contract act (BSCCA) came into force.
1939: Bombay Stock exchange building was acquired.
1943: Forward trading banned till 1946. Only ready –to- delivery and hand
delivery contracts were permitted.
1950: January 26, Stock exchange and Forward Markets came under the
Exclusive authority of the Central Government
1956: Securities Contract Regulation Act, drafted on the lines of BSCCA,
came into force.
1957: BSE became the first exchange in India to get permanent recognition.

7. Till the end of the 19th century, the trading of securities was
unorganized and the main trading centers were Calcutta (now
Kolkata) and Bombay (now Mumbai).
Till late-30s, government securities (shares of government
companies and banks including British banks) were the most
prominently-traded instrument on Indian exchanges.

8. Legal History
●Control of capital issues was introduced through the Defence of India
Rules in 1943 under the Defence of India Act, 1939 to channel
resources to support the war effort.
●The control was retained after the war with some modifications as a
means of controlling the raising of capital by companies and to ensure
that national resources were channeled to serve the goals and priorities
of the government, and to protect the interests of investors.
●The relevant provisions in the Defence of India Rules were replaced by
the Capital Issues (Continuance of Control) Act in April 1947.

9. ●Though the stock exchanges were in operation, there was no legislation for their
regulation till the Bombay Securities Contracts Control Act was enacted in 1925. This
was, however, deficient in many respects.
●Under the constitution which came into force on January 26, 1950, stock exchanges
and forward markets came under the exclusive authority of the central government.
●In the 1950s, there was uncontrollable speculation and the market was known as
'Satta Bazaar'. Speculators aimed at companies like Tata Steel, Kohinoor Mills,
Century Textiles, Bombay Dyeing and National Rayon.
●Following the recommendations of the A. D. Gorwala Committee in 1951, the
Securities Contracts (Regulation) Act, 1956 was enacted to provide for direct and
indirect control of virtually all aspects of securities trading and the running of stock
exchanges and to prevent undesirable transactions in securities.
●SCRA Bill Proposal:
https://www.sebi.gov.in/sebi_data/commondocs/may-2019/nov28_p.pdf

10. ●Need arise after liberalisation of India Market and detection of Major Scams, for new
Law

●The authorities have been quite sensitive to requirements of the development of
securities market, so much so that the last decade (1992-2003) witnessed nine special
legislative interventions, including two new enactments, namely the Securities and
Exchange Board of India (SEBI) Act, 1992 and the Depositories Act, 1996.
●The legal reforms began with the enactment of the SEBI Act, 1992, which
established SEBI with statutory responsibilities to (i) protect the interest of investors
in securities, (ii) promote the development of the securities market, and (iii) regulate
the securities market.
●This was followed by repeal of the Capital Issues (Control) Act, 1947 in 1992 which
paved way for market determined allocation of resources.

11. ●Then followed the Securities Laws (Amendment) Act in 1995, which
extended SEBI’s jurisdiction over corporations in the issuance of capital
and transfer of securities, in addition to all intermediaries and persons
associated with securities market.
●It empowered SEBI to appoint adjudicating officers to adjudicate wide
range of violations and impose monetary penalties and provided for
establishment of Securities Appellate Tribunals (SATs) to hear appeals
against the orders of the adjudicating officers.
●Then followed the Depositories Act in 1996 to provide for the
establishment of depositories in securities with the objective of ensuring
free transferability of securities with speed, accuracy and security.