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Questions and Answers
What type of securities are referred to as gilt edged securities?
What type of securities are referred to as gilt edged securities?
- Government securities (correct)
- Treasury bills
- Corporate bonds
- Debentures
Who primarily issues government securities?
Who primarily issues government securities?
- Non-governmental organizations
- Private corporations
- State governments (correct)
- Corporate firms
Which of the following is NOT a major investor in the government securities market?
Which of the following is NOT a major investor in the government securities market?
- Banks
- Insurance companies
- Provident funds
- Retail customers (correct)
What are the two main types of government securities?
What are the two main types of government securities?
What is the primary purpose of issuing corporate bonds?
What is the primary purpose of issuing corporate bonds?
What characterizes debentures and bonds in the corporate bond market?
What characterizes debentures and bonds in the corporate bond market?
What is a characteristic feature of corporate bonds?
What is a characteristic feature of corporate bonds?
Which entities participate in the securities market by developing and issuing securities?
Which entities participate in the securities market by developing and issuing securities?
Who is responsible for formulating a code of conduct for regulating trading by employees?
Who is responsible for formulating a code of conduct for regulating trading by employees?
What is the primary role of the compliance officer as mentioned?
What is the primary role of the compliance officer as mentioned?
Which groups must be designated by the board of directors to be covered by the code of conduct?
Which groups must be designated by the board of directors to be covered by the code of conduct?
Which employees are specifically included in the designated persons for the code of conduct?
Which employees are specifically included in the designated persons for the code of conduct?
Which type of staff is explicitly mentioned as having to follow the code of conduct?
Which type of staff is explicitly mentioned as having to follow the code of conduct?
What requirements must a listed company, intermediary, or fiduciary adhere to when formulating their code of conduct?
What requirements must a listed company, intermediary, or fiduciary adhere to when formulating their code of conduct?
Promoters of which types of companies are covered under the regulations?
Promoters of which types of companies are covered under the regulations?
What is the minimum percentage of equity shares that must be offered to the public if the post issue capital is less than or equal to 1,600 crore rupees?
What is the minimum percentage of equity shares that must be offered to the public if the post issue capital is less than or equal to 1,600 crore rupees?
Which of the following is true for companies with a post issue capital between 1,600 crore rupees and 4,000 crore rupees?
Which of the following is true for companies with a post issue capital between 1,600 crore rupees and 4,000 crore rupees?
What is the primary purpose of the code of conduct according to the provided information?
What is the primary purpose of the code of conduct according to the provided information?
For a company with a post issue capital greater than 4,000 crore rupees but less than or equal to 1 lakh crore rupees, what is the minimum percentage of shares that must be offered?
For a company with a post issue capital greater than 4,000 crore rupees but less than or equal to 1 lakh crore rupees, what is the minimum percentage of shares that must be offered?
If a company has a post issue capital of more than 1 lakh crore rupees, what is the minimum percentage of shares that must be offered?
If a company has a post issue capital of more than 1 lakh crore rupees, what is the minimum percentage of shares that must be offered?
Which rule requires a public company to make an application for securities listing on a stock exchange?
Which rule requires a public company to make an application for securities listing on a stock exchange?
What happens if a company's share offering does not comply with the conditions stipulated in SCRR?
What happens if a company's share offering does not comply with the conditions stipulated in SCRR?
SCRR needs to be read in conjunction with which regulation?
SCRR needs to be read in conjunction with which regulation?
Which of the following best describes the purpose of Rule 19(2)(b)?
Which of the following best describes the purpose of Rule 19(2)(b)?
What powers does the SAT have according to Section 15U (2) of the SEBI Act, 1992?
What powers does the SAT have according to Section 15U (2) of the SEBI Act, 1992?
Which of the following statements is true regarding the judicial nature of proceedings before SAT?
Which of the following statements is true regarding the judicial nature of proceedings before SAT?
Who may represent an appellant before the SAT as per Section 15V of the SEBI Act?
Who may represent an appellant before the SAT as per Section 15V of the SEBI Act?
Which act's provisions apply to appeals made to the SAT according to Section 15W?
Which act's provisions apply to appeals made to the SAT according to Section 15W?
What jurisdictional limitations does Section 15Y of the SEBI Act establish regarding civil courts?
What jurisdictional limitations does Section 15Y of the SEBI Act establish regarding civil courts?
What is the time limit for a person aggrieved by a SAT decision to appeal to the Supreme Court as per Section 15Z?
What is the time limit for a person aggrieved by a SAT decision to appeal to the Supreme Court as per Section 15Z?
Which of the following is included in the definition of 'securities' under the Securities Contracts (Regulation) Act, 1956?
Which of the following is included in the definition of 'securities' under the Securities Contracts (Regulation) Act, 1956?
Which option is NOT a power held by the SAT as laid out in Section 15U (2)?
Which option is NOT a power held by the SAT as laid out in Section 15U (2)?
In the context of trading decisions made by non-individual insiders, which statement is a requirement according to the regulations?
In the context of trading decisions made by non-individual insiders, which statement is a requirement according to the regulations?
What is the minimum period during which trades can commence after a trading plan is publicly disclosed?
What is the minimum period during which trades can commence after a trading plan is publicly disclosed?
Which of the following is not a requirement for a trading plan as per the regulations?
Which of the following is not a requirement for a trading plan as per the regulations?
What is the role of the compliance officer in relation to a trading plan?
What is the role of the compliance officer in relation to a trading plan?
During which period are trades not allowed according to the regulations?
During which period are trades not allowed according to the regulations?
What is the minimum duration for which a trading plan must entail trading?
What is the minimum duration for which a trading plan must entail trading?
Which of the following describes a requirement for trading plans under the regulations?
Which of the following describes a requirement for trading plans under the regulations?
Which trading activity is explicitly prohibited under the formulated trading plans?
Which trading activity is explicitly prohibited under the formulated trading plans?
Study Notes
Government Securities Market
- The government raises short-term and long-term funds through the government securities market.
- Government securities are considered "gilt-edged" because they carry no default risk due to government guarantees.
- Issuers of government securities include:
- Central Government
- State Government
- Semi-Governmental Authorities
- Major investors in this market are:
- Banks
- Insurance Companies
- Provident Funds
- State Governments
- Foreign Portfolio Investors (FPIs)
- The two main types of government securities are:
- Treasury Bills (short-term)
- Government Dated Securities (long-term)
Corporate Bond Market
- Corporate bonds are issued by companies to raise capital for:
- Expansion
- Modernization
- Restructuring
- Mergers and Acquisitions
- Corporate bonds are traded in the corporate bond market by investors such as:
- Banks
- Financial Institutions
- Insurance Companies
- Mutual Funds
- FPIs
- Companies can issue bonds through:
- Public Offering
- Private Placement
- Corporate bonds can either have:
- Periodic interest payments (Coupons)
- Cumulative terminal payments (Zero Coupons)
Securities Market Participants
- The Securities Market is comprised of participants who develop, issue, register, and sell securities for financing purposes.
- Investors are also key participants, buying securities to generate returns.
- Intermediaries provide crucial services such as trading and brokerage.
Securities and Exchange Board of India (SEBI) Act, 1992
- The SEBI Act establishes the Securities Appellate Tribunal (SAT) to handle appeals against SEBI decisions.
- The SAT has the same powers as a civil court, including:
- Summoning witnesses
- Requiring document production
- Receiving evidence through affidavits
- Issuing commissions for examinations
- Reviewing its own decisions
- Dismissing applications for default or deciding cases ex-parte
- The SAT's proceedings are considered judicial proceedings, and it is deemed a civil court.
- Appeals can be filed to the Supreme Court within 60 days of the SAT decision or order.
Securities Contracts (Regulation) Act, 1956 (SCRA)
- The SCRA defines "securities" to include:
- Shares, stocks, bonds, debentures, and other marketable securities of a company
- Derivatives
- The SCRA outlines listing requirements, including:
- Minimum public offering percentage
- Minimum public shareholding requirement
- Rule 19(1) requires companies seeking listing to submit applications and required documents.
- Rule 19(2)(b) defines minimum offer and allotment percentages to the public for various post-issue capital sizes.
Insider Trading Regulations
- Regulation 5 lays out the process for insiders to formulate and disclose trading plans, including:
- A minimum six-month delay before trading
- No trading during specific periods (20 days prior to financial results disclosure and 2 days after)
- Minimum 12-month trading duration
- No overlapping trading plans
- Specification of trade value, security number, and trading intervals
- Prohibition of trading for market abuse
- The trading plan needs to be approved and monitored by the company's compliance officer.
Code of Conduct for Trading
- Listed companies, market intermediaries, and other entities handling confidential information must establish and implement codes of conduct:
- These codes should follow minimum standards outlined in Schedule B (for listed companies) and Schedule C (for intermediaries).
- A designated compliance officer must be appointed to manage the implementation and reporting of the code.
- The code must specify designated individuals covered based on their roles and function within the organization, including:
- Employees with access to sensitive information
- Employees of subsidiary companies
- All promoters of listed companies
- Chief Executive Officer and employees two levels below
- Support staff with access to sensitive information
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Description
Test your knowledge on the government and corporate securities market. This quiz covers key concepts, types of securities, and major participants in each market. Understand the roles of banks, insurance companies, and more in these financial systems.