Foreword I-3

Acknowledgement I-5

About the Author I-5

About NISM certifications I-7

About the Certification Examination for Securities IntermediariesCompliance I-9

PART A

UNDERSTANDING FINANCIALSTRUCTURE IN INDIA

CHAPTER 1

INTRODUCTION TO THE FINANCIAL SYSTEM

1.1 Financial System 3

1.2 Financial Intermediaries 5

1.3 Financial Securities 7

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CONTENTS

I-11

CHAPTER 2

REGULATORY FRAMEWORK -GENERAL VIEW

2.1 Regulatory System 13

2.2 Financial Market Regulators 14

2.3 Role of the other Regulators in the Financial Market 22

2.4 Appellate Authority 28

2.5 Legislative Framework Governing the Financial Market 29

CHAPTER 3

INTRODUCTION TO COMPLIANCE

3.1 Compliance - Introduction 49

3.2 Role and Reporting Structure 51

3.3 Responsibilities of COs towards Stakeholders 53

3.4 Compliance Requirements under the SEBI (Certification ofAssociated Persons in Securities Markets) Regulations, 2007 53

CHAPTER 4

SECURITIES AND EXCHANGE BOARDOF INDIA ACT, 1992

4.1 Salient Features of SEBI Act, 1992 59

CHAPTER 5

SECURITIES CONTRACTS (REGULATION) ACT, 1956 ANDSECURITIES CONTRACTS (REGULATION) RULES, 1957

5.1 Securities Contracts (Regulation) Act, 1956 69

5.2 Securities Contracts (Regulation) Rules, 1957 73

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I-12 CONTENTS

CHAPTER 6

SEBI (INTERMEDIARIES) REGULATIONS, 2008

6.1 Introduction 77

6.2 General Obligations of Intermediaries 78

6.3 Inspection and Disciplinary Proceedings 78

6.4 Action in Case of Default and Manner of Suspension andCancellation of Certificate 79

6.5 Code of Conduct 83

CHAPTER 7

SEBI (PROHIBITION OF INSIDER TRADING)REGULATIONS, 1992

7.1 Introduction 87

7.2 Prohibition on Dealing, Communicating or Counselling 89

7.3 Disclosures and Internal Procedure for Prevention of InsiderTrading 89

CHAPTER 8

SEBI (PROHIBITION OF FRAUDULENT AND UNFAIRTRADE PRACTICES RELATING TO SECURITIES

MARKET) REGULATIONS, 2003

8.1 Introduction 95

8.2 Prohibition of Fraudulent and Unfair Trade Practices 96

8.3 Investigation 98

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CONTENTS I-13

I-14 CONTENTS

CHAPTER 9

PREVENTION OF MONEY LAUNDERING ACT, 2002

9.1 Introduction 101

9.2 Highlights of PMLA, 2002 102

9.3 Highlights of SEBI Circular on AML/CFT 105

9.4 SEBI (Foreign Portfolio Investors) Regulations, 2014 113

CHAPTER 10

SEBI (KYC REGISTRATION AGENCY)REGULATIONS, 2011

10.1 Introduction 123

10.2 Registration as a KRA (Initial and Permanent) 124

10.3 Obligations on Surrendering Certificate of Registration 125

10.4 Functions and Obligations of KRA and Intermediary 125

10.5 Code of Conduct of KRA 128

10.6 Guidelines for Intermediaries, KRAs and In-person Verification 130

PART B

UNDERSTANDING INTERMEDIARYSPECIFIC REGULATIONS

CHAPTER 11

SEBI (STOCK BROKERS AND SUB-BROKERS)REGULATIONS, 1992

11.1 Introduction to SEBI (Stock Brokers and Sub-Brokers)Regulations, 1992 135

11.2 SEBI (Alternative Investment Funds) Regulations, 2012 159

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CHAPTER 12

SEBI (MERCHANT BANKERS) REGULATIONS, 1992, SEBI(DELISTING OF EQUITY SHARES) REGULATIONS, 2009,

SEBI (SUBSTANTIAL ACQUISITION OF SHARES &TAKEOVERS) REGULATIONS, 2011 & SEBI (BUYBACK

OF SECURITIES) REGULATIONS, 1998

12.1 Introduction 177

12.2 SEBI (Merchant Bankers) Regulations, 1992 178

12.3 SEBI (Substantial Acquisition of Shares & Takeovers)Regulations, 2011 189

12.4 SEBI (Delisting of Equity Shares) Regulations, 2009 191

12.5 Obligations under the SEBI (Buyback of Securities)Regulations, 1998 192

CHAPTER 13

SEBI (ISSUE OF CAPITAL AND DISCLOSUREREQUIREMENTS) REGULATIONS, 2009

13.1 Introduction 197

13.2 Allocation of Responsibilities 198

13.3 Role as Advisors 199

13.4 Due Diligence and Compliances 202

13.5 Role as an Underwriter 204

13.6 General Obligations of Merchant Bankers with respect to Publicand Rights Issue 206

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CONTENTS I-15

CHAPTER 14

DEPOSITORIES ACT, 1996

14.1 Introduction 211

14.2 Rights and Obligations of Depositories 212

14.3 Enquiry and Inspection 213

14.4 Miscellaneous Issues 214

CHAPTER 15

SEBI (DEPOSITORIES AND PARTICIPANTS)REGULATIONS, 1996

15.1 Registration of a Depository Participant 217

15.2 Rights and Obligations 218

15.3 Action in case of Default 221

15.4 Code of Conduct for Participants 221

CHAPTER 16

SEBI (BANKERS TO AN ISSUE)REGULATIONS, 1994

16.1 Registration as Banker to an Issue 225

16.2 General Obligations and Responsibilities of Banker to an Issue 226

16.3 Code of Conduct for Bankers to an Issue 227

16.4 Obligations of Banker to an Issue in case of inspection by RBI 231

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I-16 CONTENTS

CHAPTER 17

SEBI (UNDERWRITERS) REGULATIONS, 1993

17.1 Registration as Underwriter 233

17.2 General Obligations and Responsibilities 234

17.3 Code of Conduct 236

CHAPTER 18

SEBI (DEBENTURE TRUSTEES)REGULATIONS, 1993

18.1 Registration as Debenture Trustee 241

18.2 Capital Adequacy Requirements 242

18.3 Responsibilities and Obligations of Debenture Trustees 243

18.4 Code of Conduct for the Debenture Trustees 246

18.5 Dissemination of Information 249

CHAPTER 19

SEBI (CREDIT RATING AGENCIES)REGULATIONS, 1999

19.1 Registration as a Credit Rating Agency 251

19.2 General Obligations of Credit Rating Agencies 253

19.3 Restrictions on Rating of Securities issues by Promoters 257

19.4 Code of conduct of the Credit Rating Agencies 257

19.5 Guidelines for Credit Rating Agencies 259

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CONTENTS I-17

CHAPTER 20

SEBI (CUSTODIAN OF SECURITIES)REGULATIONS, 1996

20.1 Custodian and Custodial Services 263

20.2 Registration and Eligibility 264

20.3 General Obligations and Responsibilities of Custodians 265

20.4 Code of Conduct 267

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I-18 CONTENTS