Section 3 of SEBI Act protects the interests of the investors in securities and also promotes the development of, and regulates, the securities market and related matters.

The following are the financial products/instruments which the secondary market deals with
Equity Shares

FAQs on Secondary Market
What is EDIFAR?
In July 2002 SEBI launched Electronic Data Information Filing and Retrieval System (EDIFAR) in association with National Informatics Center (NIC) to facilitate filing of certain material information/ documents/statements by the listed companies on line in the EDIFAR web site - www.sebiedifar.nic.in.

What is a Central Listing Authority?
The Central Listing Authority (CLA) is set up to address the issue of multiple listing of the same security and to bring about uniformity in the due diligence exercise in scrutinizing all listing applications on any stock exchanges. The functions of CLA as enumerated in SEBI (Central Listing Authority) Regulations, 2003 include:

• processing the application made by any body corporate, mutual fund or collective investment scheme for the letter of recommendation to get listed at the stock exchange,
• making recommendations as to listing conditions, and
• any other functions that may be specified by the SEBI Board from time to time.

What is the exit opportunity available for investors in case a company gets delisted?
SEBI (Delisting of Securities) Guidelines, 2003 provide an exit mechanism, whereby the exit price for voluntary delisting of securities is determined by the promoter of the concerned company which desires to get delisted, in accordance to book building process. The offer price has a floor price ,which is average of 26 weeks average of traded price quoted on the stock exchange where the shares of the company are most frequently traded preceding 26 weeks from the date public announcement is made. There is no ceiling on the maximum price.

For infrequently traded securities, the offer price is as per Regulation20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations. Regarding this, infrequently traded securities is determined in the manner as provided in Regulation 20 (5) of SEBI (Substantial Acquisition and Takeover) Regulations.

What is demutualisation of stock exchanges?
Demutualisation refers to the transition process of an exchange from a "mutually-owned" association to a company "owned by shareholders". In other words, transforming the legal structure of an exchange from a mutual form to a business corporation form is referred to as demutualisation. The above, in effect means that after demutualisation, the ownership, the management and the trading rights at the exchange are segregated from one another.

How is a demutualised exchange different from a mutual exchange?
The three functions of ownership, management and trading are intervened into a single Group in a mutual exchange. The broker members of the exchange over here are both the owners and the traders on the exchange and they further manage the exchange as well. A demutualised exchange has all these three functions clearly segregated.

Currently are there any demutualised stock exchanges in India?
Yes currently there are two stock exchanges in India

• The National Stock Exchange (NSE)
• Over the Counter Exchange of India (OTCEI)

These are not only corporatised but also demutualised with segregation of ownership and trading rights of members.

What steps have been taken by SEBI to give a head start to the process of demutualisation in India?
SEBI had formed a Group on Corporatisation and Demutualisation of Stock Exchanges under the Chairmanship of Justice M H Kania, former Chief Justice of India, for advising SEBI on corporatisation and demutualisation of exchanges and to recommend the steps that need to be taken to implement the same. The Group submitted its Report to SEBI on August 28, 2002. SEBI has taken up with Central Government to amend the SC( R) A to effect Corporatisation and Demutualization .

What is the traditional structure of the stock exchanges in India?
According to legal structure, the stock exchanges in India could be segregated into

• 2 broad groups
• 20 stock exchanges which were set up as companies, either limited by guarantees or by shares
• 3 stock exchanges which are functioning as associations of persons (AOP) viz. BSE, ASE and Madhya Pradesh Stock Exchange

The 20 stock exchanges which are companies are the stock exchanges of:

• Bangalore
• Bhubaneswar
• Calcutta
• Cochin
• Coimbatore
• Delhi
• Gauhati
• Hyderabad
• Interconnected SE
• Jaipur
• Ludhiana
• Madras
• Magadh
• Managalore
• NSE
• Pune
• OTCEI
• Saurashtra-Kutch
• Uttar Pradesh
• Vadodara

Apart from NSE, all stock exchanges whether established as corporate bodies or Association of Persons (AOPs), are non-profit making organizations.

What is meant by corporatisation of stock exchanges?
Corporatisation of Stock Exchanges is the process of converting the organizational structure of the stock exchange from a non-corporate structure to a corporate structure. Traditionally, some of the stock exchanges in India were established as "Association of persons", like BSE, ASE and MPSE. Corporatisation of these exchanges is the process of converting them into incorporated Companies.

What recourses are available to me for redressing my grievances?

• Investor Grievance Redressal Cell (IGG)
• Arbitration
• Court of Law

What happens if I do not get my money or share on the due date?
You can file a complaint with the respective stock exchange. The exchange is required to resolve the complaints. To resolve the dispute, the complainant can also resort arbitration as provided on the reverse of contract note /purchase or sale note.

However, if the complaint is not addressed by the Stock Exchanges or is unduly delayed, then the complaints along with supporting documents may be forwarded to Secondary Market Department of SEBI. Your complaint would be followed up with the exchanges for expeditious redressal.

In case of complaint against a sub broker, the complaint may be forwarded to the concerned broker with whom the sub broker is affiliated for redressal.

What is the maximum brokerage that a broker/sub broker can charge?
1.5% of the value mentioned in the respective purchase or sale note.

How do I know whether my order is placed?
Unique Order Code Number is assigned by Stock Exchanges to each transaction, which is intimated by broker to his client and once the order is executed, this order code number is printed on the contract note. The broker member also maintains the record of time when the client has placed order and reflect the same in the contract note along with the time of execution of the order.