PROJECT REPORT

In fulfillment of the requirements for graduation in

BACHELORS OF BUSINESS ADMINISTRATION (2021-22)
UNDER THE GUIDANCE OF Prof.Sarita Goyal Mam.

SUBMITTED TO: - SUBMITTED BY:-

Prof Sarita Goyal Ms. Parvathy Vinodkumar

ASM GROUP OF INSTITUES, PIMPRI.

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 CERTIFICATE
This is to certify that Miss Parvathy
Vinodkumar, studying in class BBA
Third year at ASM Group of Institutes
has
completed a project report “Legal Aspects of
Finance and Security Law” in Third year
fulfillment of graduate. She has successfully
completed the project under my constant
guidance and support.

Signature of Project Guide

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 ACKNOWLEDGEMENT

I feel very proud in presenting my Project Report on the topic “Legal Aspects

”
of Finance and Security . This Project has been successfully completed under
the guidance of the teacher Prof.Sarita Goyal.

I extend my heartily thanks Prof.Sarita Goyal without her guidance I could

not have proceeded way towards completion of my project.

Thank You.

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 INDEX
Sr. Particulars Page
No No
I Introduction 1.1 Introduction of
to Legal Indian Financial System
Aspects of
1.2 Introduction to
Finance
Legal Aspect- Finance
and Securities Market.
1.3 Basics of Insurance,
Derivatives, Commercial
Banking, Capital Markets,
Money Market, Forward Market
Commission of India (FMC),
Pension Fund Regulatory and
Development Authority
(PFRDA).
II Overview
III Introduction
IV Key Takeways
V Securtiy Laws
VI

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VII Conclusions
References

What exactly is an Indian Financial System?

Meaning of Indian financial system, the financial
system enables lenders and borrowers to exchange
funds. India has a financial system that is controlled by
independent regulators in the sectors of insurance,
banking, capital markets and various services sectors.
Thus, a financial system can be said to play a significant
role in the economic growth of a country by mobilizing
the surplus funds and utilizing them effectively for
productive purposes.

FEATURES OF INDIAN FINANCIAL SYSTEM:

• It plays a vital role in economic development of a country.
• It encourages both savings and investment.
• It links savers and investors.
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• It helps in capital formation.
• It helps in allocation of risk.
• It facilitates expansion of financial markets

COMPONENTS/ CONSTITUENTS OF INDIAN FINANCIAL

SYSTEM
The following are the four major components that
comprise the Indian Financial System:
1. Financial Institutions
2. Financial Markets
3. Financial Instruments/ Assets/ Securities
4. Financial Services.
TYPES OF FINANCIAL INSTITUTIONS: -

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Financial institutions can be classified into two categories:
A. Banking Institutions B. Non - Banking Financial
Institutions

A. BANKING INSTITUTIONS: -
(Reserve Bank of India) Indian banking industry is
subject to the control of the Central Bank. The RBI as
the apex institution organizes, runs, supervises,
regulates and develops the monetary system and the
financial system of the country. The main legislation
governing commercial banks in India is the Banking
Regulation Act, 1949.
The Indian banking institutions can be broadly classified
into two categories:
1. Organised Sector
2. Unorganised Sector

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B.NON – BANKING INSTITUTIONS: -
The non – banking institutions may be categorized broadly
into two groups:
(a)Organised Non – Banking Financial Institutions.
(b) Unorganised Non – Banking Financial Institutions.
(a) Organised Non – Banking Financial Institutions
The organized non - banking financial institutions
include:

What are financial market securities?

Securities are fungible and tradable financial instruments

used to raise capital in public and private markets. There
are primarily three types of securities: equity—which
provides ownership rights to holders; debt—essentially
loans repaid with periodic payments; and hybrids—
which combine aspects of debt and equity.

Financial markets are made by buying and selling

numerous types of financial instruments including
equities, bonds, currencies, and derivatives. ... The
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equities (stock) market is

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a financial market that enables investors to buy and
sell shares of publicly traded companies.

FINANCIAL MARKET: - It is through financial markets

and institutions that the financial system of an economic
works. Financial markets refer to the institutional
arrangements for dealing in financial assets and credit
instruments of different types such as currency, cheques,
bank deposits, bills, bonds etc. Functions of financial
markets are:
(i) To facilitate creation and allocation of credit and liquidity
(ii) To serve as intermediaries for mobilization of savings.
(iii) To assist the process of balanced economic growth.
(iv) To provide financial convenience.
(v) To cater to the various credit needs of the
business houses. These organized markets can be
further classified into two they are
(i) Capital Market

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(ii) Money Market

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CAPITAL MARKET: - The capital market is a market
for financial assets which have a long or indefinite
maturity. Generally, it deals with long term securities
which have a maturity uperiod of above one year.
Capital market may be further divided into three
namely:
(I) Industrial securities market
(II)Government securities market and
(III)Long term loans market
1. INDUSTRIAL SECURITIES MARKET: As the very
name implies, it is a market for industrial securities
namely:
(i) Equity shares or ordinary shares,
(ii) Preference shares and
(iii) Debentures or bonds.
Money market

Definition: Money market basically refers to a section of the

financial market where financial instruments with high liquidity
and short-term maturities are traded.....Money market consists
of various financial institutions and dealers, who seek to borrow or
loan securities.

The Forward Markets Commission (FMC) is

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the regulatory body for the commodity market and futures

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market in India. It is a division of the Securities and
Exchange Board of India, Ministry of Finance, Government
of India. As of July 2014, it regulated Rs 17 trillion[1]
worth of commodity trades in India. It is
headquartered
in Mumbai and this financial regulatory agency is overseen
by the Ministry of Finance. The Commission
allows commodity trading in 22 exchanges in
India, of which 6 are national.

PENSION FUND:-
A pension fund is an investment fund for retirement plans.
A pension fund provides a lump sum to purchase a pension in retirement.
New Hampshire is among those to require that new workers contribute more of their
salary to the pension fund.
A pension fund is an investment fund for retirement plans.

What Are Financial Markets?

Financial markets refer broadly to any
marketplace where the trading of securities
occurs, including the stock market, bond
market, forex market, and derivatives market,
among others. Financial markets are vital to the
smooth operation of capitalist economies.
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KEY TAKEAWAYS
 Financial markets refer broadly to any
marketplace where the trading of securities
occurs.

 There are many kinds of financial markets,

including (but not limited to) forex, money,
stock, and bond markets.

 These markets may include assets or

securities that are either listed on regulated
exchanges or else trade over-the-counter
(OTC).

 Financial markets trade in all types of

securities and are critical to the smooth
operation of a capitalist society.

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  When financial markets fail, economic
disruption including recession and
unemployment can result.

Understanding the Financial Markets

Financial markets play a vital role in facilitating the
smooth operation of capitalist economies by
allocating resources and creating liquidity for
businesses and entrepreneurs. The markets make it
easy for buyers and sellers to trade their financial
holdings. Financial markets create securities
products that provide a return for those who have
excess funds (Investors/lenders) and make these
funds available to those who need

 A financial market is a market in which people trade

financial securities and derivatives at low transaction
costs. Some of the securities include stocks and bonds,
raw materials and precious metals, which are known in the
financial markets as commodities.

Often referred to as the "truth in securities" law,

the Securities Act of 1933 has two basic objectives:
require that investors receive financial and other

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significant information concerning securities being
offered for public sale; and. prohibit deceit,
misrepresentations, and other fraud in the sale of
securities.

 require that investors receive financial

and other significant information
concerning securities being offered for
public sale; and
 prohibit deceit, misrepresentations, and other
fraud in the sale of securities.

Purpose of Registration

A primary means of accomplishing these goals is

the disclosure of important financial information
through the registration of securities. This
information enables investors, not the
government, to make informed judgments about
whether to purchase a company's securities. While
the SEC requires that the information provided be
accurate, it does not guarantee it. Investors who
purchase securities and suffer losses have
important recovery rights if they can prove that
there was incomplete or inaccurate disclosure of
important information.
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The Registration Process

In general, securities sold in the U.S. must be

registered. The registration forms companies file
provide essential facts while minimizing the burden
and expense of complying with the law. In general,
registration forms call for:

 a description of the company's properties and

business;
 a description of the security to be offered for
sale;
 information about the management of
the company; and
 financial statements certified by independent
accountants.

Registration statements and prospectuses become

public shortly after filing with the SEC. If filed by
U.S. domestic companies, the statements are
available on the EDGAR database accessible at
www.sec.gov. Registration statements are subject
to examination for compliance with disclosure
requirements.

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Not all offerings of securities must be registered
with the Commission. Some exemptions from the
registration requirement include:

 private offerings to a limited number

of persons or institutions;
 offerings of limited size;
 intrastate offerings; and
 securities of municipal, state, and federal
governments.

By exempting many small offerings from the

registration process, the SEC seeks to foster capital
formation by lowering the cost of offering securities
to the public.

 Securities Exchange Act of 1934

With this Act, Congress created the Securities

and Exchange Commission. The Act empowers
the SEC with broad authority over all aspects of
the securities industry. This includes the power
to register, regulate, and oversee brokerage
firms, transfer agents, and clearing agencies as
well as the nation's securities self regulatory
organizations (SROs). The various securities
exchanges, such as the New York Stock

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 Exchange, the NASDAQ Stock Market, and the
Chicago Board of Options are SROs. The Fi

 nancial Industry Regulatory Authority (FINRA)

is also an SRO.

 The Act also identifies and prohibits certain

types of conduct in the markets and provides
the Commission with disciplinary powers over
regulated entities and persons associated
with them.

 The Act also empowers the SEC to require

periodic reporting of information by
companies with publicly traded securities.

Securities/Capital Markets Law is the practice area of

lawyers who represent entities that issue securities to
raise capital, security holders seeking to sell their securities,
or banks and investment banks that underwrite and sell such
securities.
 Definition of Certain Important Terms:-
 Contract
 Derivative
 Government Security
 Member
 Prescribed

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  Securities and appellate tribunal
 Securities
 Stock Exchange
 Rules

STOCK MARKET

A stock market, equity market, or share market is the

aggregation of buyers and sellers of stocks (also
called shares), which represent ownership claims on
businesses; these may include securities listed on a
public stock exchange, as well as stock that is only
traded privately, such as shares of private
companies which are sold
to investors through equity crowdfunding
platforms. Investment in the stock market is most
often done via stockbrokerages and electronic
trading platforms.
Investment is usually made with an investment strategy in
mind.
Stocks can be categorized by the country where the
company is domiciled. For
example, Nestlé and Novartis are domiciled
in Switzerland and traded on the SIX Swiss Exchange, so
they may be considered as part of the Swiss stock market,
although the stocks may also be traded on exchanges in
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other countries, for example, as American depositary
receipts (ADRs) on U.S. stock markets.

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Size of the markets
The total market capitalization of all publicly traded
securities worldwide rose from US$2.5 trillion in
1980 to US$93.7 trillion at the end of 2020.[1]
As of 2016, there are 60 stock exchanges in the
world. Of these, there are 16 exchanges with
a market capitalization of $1 trillion or more, and
they account for 87% of global market capitalization.
Apart from the Australian Securities Exchange,
these 16 exchanges are all
in North America, Europe, or Asia.[2]
By country, the largest stock markets as of January
2021 are in the United States of America (about
55.9%), followed by Japan (about 7.4%) and China
(about 5.4%).

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Equity crowdfunding
Equity crowdfunding is the online offering of
private company securities to a group of people
for investment and therefore it is a part of the
capital markets.

Because equity crowdfunding involves investment

into a commercial enterprise, it is often subject to
securities and financial regulation. Equity
crowdfunding is also referred to

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as crowdinvesting, investment crowdfunding,
or crowd equity.
Equity crowdfunding is a mechanism that enables
broad groups of investors to fund startup
companies and small businesses in return for
equity.[1] Investors give money to a business and
receive ownership of a small piece of that
business. If the business succeeds, then its value
goes up, as well as the value of a share in that
business—the converse is also true. Coverage of
equity crowdfunding indicates that its potential is
greatest with startup businesses that are seeking
smaller investments to achieve establishment, while
follow-on funding (required for subsequent
growth) may come from other sources.

Basics in the Stock Market:-

Stock exchanges is a place or a platform where traders and

buyers come together to buy and sell stocks. There are
two primary stock exchanges in the country: Bombay Stock
Exchange (BSE) and National Stock Exchange (NSE). This is
extremely important information to know about stock market
basics in India.

Features of Stock Market

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  (1) Organised Market:
 (2) Dealings in Securities Issued by Various Concerns:
 (3) Dealing only through Authorised Members:
 (4) Necessary to Obey the Rules and Bye-laws:

How do you analyze the stock market?

A common method to analyzing a stock is studying its price-

to-earnings ratio. You calculate the P/E ratio by dividing the
stock's market value per share by its earnings per share. To
determine the value of a stock, investors compare a stock's P/E
ratio to those of its competitors and industry standards.

What are the 3 indicators for market analysis?

Popular market indicators include Market Breadth,

Market
What Sentiment,analysis
is fundamental Advance-Decline,
of stock? and Moving
Averages.
Fundamental analysis (FA) is a method of measuring a security's intrins

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and financial factors. ... The end goal is to arrive at a
number that an investor can compare with a security's current price in order

What are key market factors?

Here are four market factors you should be monitoring.

 Your Geographic Market. Keep track of what's
going on in the geographic regions you sell to. ...
 Your Demographic Market. What's going on with
the demographic niche you sell to? ...
 Your Competitors. ...
 Your Industry.

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Conclusions:-
The aim of this work was to develop a comprehensive,
systematic ordering and classification of issues in the area of
alternative investments connected with Wealth Management.
Particular emphasis has been placed on the development of the
segment of services in the countries of Central and Eastern
Europe, especially in Poland.
A developed capital market contributes to the growth of wealth,
for example, through more profitable investments. Moreover, it
enables a more efficient flow of funds between operating
entities. The market exists because of the savings that can be
invested on it.
The emergence of numerous financial innovations will change
the structure of the financial market. In today’s financial market,
there is no longer any difficulty of access to different segments
of the financial market in each country. Globalization,
liberalization, computerization as well as improved management
techniques have reduced the level of financial expenses. They
have thus enabled a wider group of customers to be given
individual care.
In recent years, interest in alternative investments in the
securities market has increased. Enrichment of different groups
in society has an impact on the growth in demand for

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innovations that would offer more opportunities to invest funds
for entities willing to take risks. It should be assumed that with
the increasing affluence of society and globalization of
international financial markets,
alternative forms of investment will become more widely
available in Poland.
Alternative investments establish new challenges for market
participants. On the one hand, they allow the diversification of
the investment portfolio and increase return on investment,
while on the other hand their development brings new risks.
The level of the complexity of the modern financial market is
still growing. Therefore, Wealth Management services should
serve two basic functions. The first one is to protect customers’
financial assets, and the second one is to allow the real value of
financial assets to be maintained or increased through the
implementation of financial operations. In Wealth Management
services the basis for co-operation is meeting customers’
requirements. However, these are not the standard needs of the
average customer, but the actual needs of the individual client.
Wealthy clients’ requirements necessitate the precise
determination of their inclination to risk, taking into account the
value of their financial assets.
At the same time the number of clients in the WM sector is
increasing around the world. In recent years, the countries of
Central and Eastern Europe have become an attractive market
segment. The wealth of Polish society is growing relatively
quickly. This means that in Poland customers form an attractive
segment for the development of WM. It is significant that in

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Poland the financial institutions are not waiting for the
emergence of classic millionaires (HNWIs). Nowadays, almost
every important bank offers a package of services for wealthy
individual customers. In addition, many new banks that
undertake activities on the Polish market are only interested in
this group of customers. Therefore, it is important to become
acquainted with the knowledge and preferences of potential
customers in the field of modern instruments and financial
services.
The estimated statistical data, mainly from the U.S. and the most
developed countries of the European Union, confirm the high
attractiveness of alternative investments, resulting from the
prosperity of the citizens of these countries. In Poland, financial
institutions offer new services, including alternative
investments. It confirms the hypothesis of the penetration of
these instruments and institutions into Poland.
The results of the survey indicate a lack of basic knowledge of
Polish citizens about alternative investments. At the same time
information about the personality of potential investors, their
product knowledge and motivation for alternative transactions,
is an important source of information. It can be used by those
responsible for creating the supply of instruments, as well as by
legislators and regulators, creating the legal framework for the
functioning of the market.
Analysis of changes in the securities market, on the basis of the
relevant empirical material, has enabled many findings to be
revealed that could have an application. However, planning for
alternative investments should be preceded by a comprehensive
analysis that takes into account the financial capacity of the
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inves- tor, investment risk and the rate of return that it is
possible to generate.
Alternative investments should be evaluated by investors, taking
into account the following criteria:
– expected income,
– standard deviation of the measured risk,
– distribution of income,
– transaction fees,
– investment liquidity,
– location of the investment,
– tax efficiency,
– possibility of eliminating or reducing specific risk,
– ability to control the direction of invested funds.
The product range in the field of Wealth Management in Poland
does not differ substantially from the global standards. The
product range includes a wide choice of financial instruments.
More and more banks – thanks to the open architecture of the
product – may invite a client to take advantage of access to a
range of products offered by foreign financial institutions. The
main difference between the recipient of Wealth Management
services in Poland and in the world lies in the lack of
comprehensive solutions for tax consultancy, inheritance
planning or art banking. In addition, further systematic increase

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in the wealth of citizens will force them to seek knowledge
regarding rational investment of cash. At the same time it will be
necessary to conduct empirical verification of emerging and
adopted solutions.

The market exists because of the savings that can be invested on it. The
emergence of numerous financial innovations will change the structure of the
financial market. In today's financial market, there is no longer any difficulty of
access to different segments of the financial market in each country.

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Thank You!!!

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