With the objectives of improving market efficiency, enhancing transparency, preventing unfair trade practices and bringing the Indian market up to international standards, a package of reforms consisting of measures to liberalise, regulate and develop the securities market was introduced. The practice of allocation of resources among different competing entities as well as its terms by a central authority was discontinued. The issuers complying with the eligibility criteria were allowed freedom to issue the securities at market determined rates. The secondary market overcame the geographical barriers by moving to screen based trading. All kinds of securities – debt and equity, government and corporate – are traded on exchange side by side. Trades enjoyed counter-party guarantee. The trading cycle shortened to a day and trades are settled within 3 working days, while all deferral products were banned. Physical security certificates almost disappeared. A variety of derivatives were permitted. Corporate governance has improved significantly. As a result of these reforms, the market design has changed drastically for better as may be seen from Table 3. This has boosted the confidence of international investors in Indian securities market. Indian market is getting integrated with the global market though in a limited way through euro issues. Since 1992, when they were permitted access, Indian companies have raised about Rs.37,000 crore through ADRs/GDRs. More than 500 FIIs are currently registered with SEBI. They have made net cumulative investments of about US $ 16 billion by the end of February 2003. One can gauge the extent of reforms in the securities market from the change in transactions costs. The market impact cost of transactions in equity on stock exchanges has reduced from 0.75% in mid-1993 to 0.10% in January 2003. The brokerage has reduced from 3% to 0.15%. Lower transaction cost means higher attraction for investors in securities and issuers of securities to participate in the market on a larger scale.

Market is efficient means the enterprises that do well in the real sectors are rewarded with funds for growth and expansion.All these inevitably lead to higher economic growth.

The securities market promotes economic growth. More efficient is the securities market, the greater is the promotion effect on economic growth. It is, therefore, necessary to ensure that our securities market is efficient, transparent and safe. In this direction, SEBI has been working since its inception and would continue to work to continuously improve market design to bring in further efficiency and transparency to market and make available newer and newer products to meet the varying needs of market participants, while protecting investors in securities. The aim is to make Indian securities market a model for other jurisdictions to follow and make SEBI the most dynamic and respected regulator globally.

Some of the initiatives on which SEBI is working are

1. Introducing exchange traded interest rate derivatives

2. Promoting an index to comprehensively reflect the level of corporate governance

3. Setting up a central listing authority to dynamise listing requirements

4. Facilitating demutualization of stock exchanges

5. Building a cadre of securities market professionals through training and certification

6. Constructing a central registry of securities market participants and professionals

7. Rationalising margin trading, securities lending and short selling

8. Promoting secondary market for corporate debt securities

9. Implementing market wide straight through processing from trade initiation to settlement

10. Operationalising T+1 rolling settlement

11. Reviewing all regulations of SEBI and code of conduct for intermediaries

12. Providing a legal framework for central counter party

13. Consolidation of exchanges and other market participants

14. Benchmarking Indian securities market with best in the World