Reforms in Indian Primary Market – A View

Abstract

The emerging significance of the securities markets is expanding rapidly in the form if quantum of funds raised and number of investors in the primary market, as also increase in the number of stock exchanges and listed stocks speedy rise in market capitalization and volume of trade, entity of sophisticated investors like the foreign institutional investors and mutual funds. The Structure of both the segments of the market i.e., primary and secondary has witnessed significant changes. The Primary market intermediaries’ organization, pre and post issue procedures activities are indeed undergoing reform process. The security market(stock market) having more activities like intermediaries, trading and settlement, futures and options market, cash market, regulatory part etc are under went reforms.

The basic task of securities market to help in process of capital formation in the economy, this can only is possible by services of systematic measures which would build their confidence in the systems and process and protect investor’s interest fully. The rising of capital issues were controlled by the office of the Controller of Capital Issues (CCI) under the Capital Issues Control Act (CIA) 1947. The CIA 1947, repealed office of the controller of capital issues abolished and initial share pricing decontrolled. In 1991-92 Finance minister announced the repeal of the act and transfer of power from CCI to SEBI from control to disclosure based regulation. Since then SEBI put some reforms in the primary market operations in India.  

The present paper discusses the reforms introduced in Indian primary market over a period of time which includes special focus on Book Building Mechanism, Green Shoe Option and Application Supported by Blocked Amount.