Securities Laws and Capital Markets
Core concepts
Securities Laws covers the regulatory architecture: the securities market regulator, stock exchanges, intermediaries, and the primary and secondary markets. Know the disclosure regime for public issues, the distinction between primary market issuance and secondary market trading, and the roles of merchant bankers, registrars, underwriters and depository participants.
Key content includes insider trading prohibitions, takeover regulations and their thresholds, delisting, buy-back, preferential allotment, and the rules on listing obligations and disclosure requirements. You should understand the dematerialisation framework, the depository system, and investor protection mechanisms including grievance redressal and the investor education fund. Also cover collective investment vehicles and the difference between a mutual fund and a portfolio management service.
Traps
- Confusing the takeover trigger threshold with the open offer size.
- Treating insider trading as requiring proof of actual profit.
- Mixing disclosure obligations for a public issue with continuing listing obligations.
- Assuming a depository holds securities beneficially; it holds them in custody.
- Overlooking that buy-back has volume and timing limits.
Worked rule of thumb
For regulatory thresholds, memorise the number and the consequence together. When a question says an acquirer crosses a percentage, the answer must name the resulting obligation, the offer size and the timing, not just the percentage. Structure answers as: trigger, obligation, exception.
For insider trading, focus on possession of unpublished price-sensitive information and the prohibition on trading while in possession, subject to limited defences.