SEBI was established by the Government of India with the objectives towards Protecting the interest of the investors in securities; to Promote the development of, and Regulate the securities market and matters connected therewith or incidental to. SEBI has drawn a comprehensive Strategic Action Plan in order to realize this vision. The Plan envisages achievement of strategic aims laid down for :

1. corporates,

2. markets and

3. regulatory regime

SEBI has drawn its Vision to become the "Most Dynamic and Respected Regulator-Globally". Towards this end it has drawn a comprehensive Strategic Action Plan in order to realize this vision. The Strategic Action Plan has identified four key spheres and has set strategic aims for each of the them as under:

A Number of steps have been taken to ensure that investors are enabled to make informed choices and decisions and achieve fair deals in their financial dealings. Some of them are:

1. Electronic Data Filing and Retrieval System (EDIFAR) was made operational in July 2002. This is an automated web based system for filing, retrieval and dissemination of information pertaining to corporates. For period ending December 2002, 1200 companies are required to electronically file the documents.

2. Benchmarking has been made compulsory for debt oriented and balanced funds for providing objective analysis of the performance of the mutual fund schemes.

3. A Code of conduct for Mutual fund intermediaries has been prescribed.

4. Guidelines for Risk Management System issued and implemented for the Mutual Funds in order to eliminate/minimize the risks in operations of Mutual Funds.

5. Guidelines have been issued for the valuation of unlisted equity shares by Mutual Funds with a view to bringing about uniformity in the calculation of NAV.

6. A provision of nomination for the unit holders has been introduced. This has been an investor friendly measure.

7. Mutual Funds have been advised to follow a uniform method to calculate the sale and repurchase price. This would avoid creation of confusion in the minds of the investors.

8. SEBI prohibited rebating and discounting by the Mutual Funds, thus, ensuring that all investors get fair treatment.

9. Guidelines were issued to Mutual Funds for exercising due diligence while making investments in unlisted equity shares. The mutual funds now cannot buy unlisted equity shares at a price higher than the price worked out in accordance with detailed pricing formula. Thus mutual funds cannot buy unlisted equity shares at arbitrary high prices.

10. A detailed study done on unit holding pattern in mutual funds industry for the first time and the same is available on the SEBI web site.

11. With a view to improving corporate governance standards, trustees who act as first line regulators are now required to meet on bi-monthly basis instead of earlier requirement of meeting on quarterly basis. They are required to review the performance and compliance of regulations on bi-monthly basis.

12. Depository charges for investors were rationalized after a SEBI initiative.

13. Depository Participants have been directed that no Account closure charges shall be imposed on the closure of any Beneficial Owner accounts by any depository participant.

14. Quarterly secretarial audit has been made mandatory for listed entities to reconcile the issue capital and electronic shares.

15. 65 orders were passed against Collective Investment Schemes (Plantation Schemes) entities under Section 11B of the SEBI Act, 1992 and 43 case of prosecutions launched against errant promoters of these entities.

16. Out of the 25,929 investor complaints received during the period April 1st, 2002-December 31st ,2002, 15066 complaints were redressed by the respective companies.

1. Prof Varma committee reviewed SEBI (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 to strengthen the same and to remove glitches, if any, in the operations of the same. The committee inter-alia recommended mandatory disclosure of the fair value of the ESOPs (i.e using Black Scholes or similar models), the impact on profits and on EPS of the company, had the company expensed the ESOPs on fair value basis and also relaxation from lock-in requirement subject to certain disclosures in the offer document in case company is going for IPO after the grant of options.

2. The Accounting Standards Committee has recommended additional disclosures for investment in associate and subsidiaries. It also recommended introduction of half yearly audited consolidate results and quarterly audit review.

3. Credit Rating Agencies have been asked to develop models for rating corporate governance on the principles of wealth creation, wealth management and wealth sharing. This would ensure that corporates adhere to the 'substance' element of corporate governance.

4. Code of conduct has been specified for listed entities and regulated firms under the Insider Trading Regulations.

5. SEBI brought a scheme to enable individuals and companies to disclose the irregularities in reporting of acquisition of shares under the SEBI (SAST) Regulations, 1997.

During 2002-03, SEBI initiated several structural changes in the securities market and worked assiduously to achieve them. Some of the major accomplishments of SEBI during the last financial year are as follows :

• Implementation of T+3 rolling settlement for all listed securities across the exchanges from April 2, 2002 to move T+2 on April 1, 2003.

• Introduction of scientific model for risk management, based on VaR.

• Introduction of Electronic Data Information Filing And Retrieval (EDIFAR) System to facilitate electronic filing of certain documents/statements by the listed companies and their immediate disclosure to the market participants.

• Launch of Securities Market Awareness Campaign.

• Introduction of rating corporate governance on the principles of wealth creation, wealth management and wealth sharing.

• Introduction of Straight Through Processing (STP) for the securities transaction.

• Implementation of a comprehensive risk management system for Mutual Funds.

• Introduction of the Dual fungibility of ADRs and GDRs.

• Establishment of the Central Listing Authority (CLA).

Issuance of necessary guidelines/circulars for Corporatization and Demutualization of stock exchanges.

• Introduction of the trading of Government Securities on the Stock Exchanges.

• Posting all the orders passed by the Securities Appellate Tribunal (SAT) and the Board on the SEBI website, to bring in regulatory transparency.

• Introducing the consultative process on policy formulation by putting all reports of committees and draft regulations on the SEBI website for seeking comments, suggestions and opinions from public.

• Issuance of guidelines on Delisting of Securities from the Stock Exchanges.

• Establishment of inter-depository transfer through on-line connectivity between CDSL and NSDL.

• Announcement of Accounting Standards and disclosure practices of the Indian companies by ICAI in consultation with SEBI in accordance with International Accounting Standards.

• Expansion of the derivatives products basket.

• Introduction of benchmarking of all the Mutual Funds Schemes to facilitate the understanding of the investors about the performance of the funds.

Introduction of nomination facility for the unit holders of mutual funds.

• Simplification of documentation procedure for FII registration and reduction of registration fee for FIIs.

1. The SEBI Act, 1992 was amended in October 2002 and SEBI's powers were enhanced to check cases of insider trading , fraudulent and unfair trading practices in securities markets and market manipulation in order to protect the investors. SEBI has been given powers to levy deterrent penalties against individuals, corporates and individuals in the matters related to market manipulation, insider trading and fraudulent practices.

2. As per the amendments, the SEBI Board has been enlarged with the provision of three full time Board members. The Securities Appellate Tribunal has been converted into a three member body with a sitting or retired judge of Supreme Court or a sitting or retired Chief Justice of High Court as the presiding officer.

3. In an effort to enhance regulatory transparency all the orders passed by the Securities Appellate Tribunal and Chairman , SEBI are being posted on the SEBI website with effect from June 20, 2002.

4. It was felt that participation of regulatees as also the nation at large in the process of designing the regulation will improve the efficacy of regulations . With this end in view, a consultative mechanism was established by placing reports of committees and draft regulations on the SEBI website and seeking comments, suggestions and opinions.