SEBI & Financial Markets — NISM Certification

SEBI — Structure & Role

SEBI (Securities and Exchange Board of India) — established 1992 (SEBI Act 1992). Statutory regulatory body for Indian capital markets.

Three-fold objectives:

1.Protect interests of investors in securities

2.Promote development of securities market

3.Regulate securities market

Indian Capital Market Structure

PRIMARY MARKET — new securities issued
    ├── IPO (Initial Public Offering)
    ├── FPO (Follow-on Public Offer)
    ├── Rights Issue
    └── Private Placement / QIP

SECONDARY MARKET — trading of existing securities
    ├── BSE (Bombay Stock Exchange) — Sensex (30 stocks)
    ├── NSE (National Stock Exchange) — Nifty 50
    └── Derivatives: NSE F&O, MCX (commodities)

DEBT MARKET
    ├── Government Securities (G-Sec) — RBI auctions
    ├── Corporate Bonds
    └── T-Bills (91/182/364 days)

Investment Products

Equity

•Shares/Stocks: Ownership in a company. Return through dividends + capital appreciation

•IPO process: Company → DRHP to SEBI → SEBI approval → Anchor investors → Open subscription (3 days) → Allotment → Listing

•Demat account: Electronic holding of shares. Depositories: CDSL, NSDL. Opened via Depository Participant (DP).

Mutual Funds

•Pooled investment vehicle managed by Asset Management Company (AMC)

•SEBI categorisation (2017): 10 equity categories, 16 debt, 6 hybrid, 2 solution-oriented, 2 others

•Key MF types:

- Large cap: Top 100 companies by market cap

- Mid cap: 101–250

- Small cap: 251+

- Flexi cap: Invest across market caps (minimum 65% equity)

- Debt funds: Liquid (< 91 days), Short duration, Long duration, Gilt

- ELSS: Tax-saving equity fund — 3-year lock-in, 80C deduction up to ₹1.5 lakh

NAV (Net Asset Value): Total assets - liabilities / Number of units. Published daily for open-ended funds.

Expense ratio: Annual fee charged by AMC. SEBI limits: 2.25% for equity, 2% for debt. Lower expense = higher returns for investor.

Derivatives

•Futures: Obligation to buy/sell at predetermined price on future date

•Options: Right (not obligation) to buy (call) or sell (put) at strike pric

SEBI & Financial Markets — Fundamentals