COURSE:SUBJECT:TOPIC:-

MFM Batch 2011-14 International Finance SEC, ADR Guidelines, Re)uire*ents+ rac!in" o# S$%, &ASDA' and (istin"

GROUP MEMBERS:-

Sr. No. 1 2 3 4 " 6 7

Name Priya Hemani Laxmi Dodeja Sagar Parekh Den il Pin!o S#$riyo Seng#$!a &anali Pan are P#ni! &e'ada

Roll No. 74 69 93 97 1%3 91 (7

U.S. Securities and Exchange Commission SEC

Seal of the U.S. Securities and Exchange Commission

Flag of the U.S. Securities and Exchange Commission Agency overview Formed Jurisdiction $ead%uarters Em(loyees Agency executive June 6, !"# United States federal government &ashington, '.C. ",)#* +,- -./
0

1ary Jo &hite

INTRODUCTION

he U.S. Securities and Exchange Commission ,SEC- is an a"enc. o# the /nited States #ederal "o0ern*ent+ It holds 1ri*ar. res1onsi2ilit. #or en#orcin" the #ederal securities la3s and re"ulatin" the securities industr., the nation4s stoc! and o1tions e5chan"es, and other electronic securities *ar!ets in the /nited States+ In addition to the Securities E5chan"e Act o# 1674 that created it, the SEC en#orces the Securities Act o# 1677, the rust Indenture Act o# 1676, the In0est*ent Co*1an. Act o# 1640, the In0est*ent Ad0isers Act o# 1640, the Sar2anes895le. Act o# 2002, and other statutes+ he SEC 3as created 2. Section 4 o# the Securities E5chan"e Act o# 1674 ,no3 codi#ied as 1: /+S+C+ ; <=d and co**onl. re#erred to as the 1674 Act-+ Re"ulator. a"enc., durin" the Great De1ression that #ollo3ed the Crash o# 1626+ 95le. Act o# 2002, and the Credit Ratin" A"enc. Re#or* Act o# 200>+ he en#orce*ent authorit. "i0en 2. Con"ress allo3s the SEC to 2rin" ci0il en#orce*ent actions a"ainst indi0iduals or co*1anies alle"ed to ha0e co**itted accountin" #raud, 1ro0ided #alse in#or*ation, or en"a"ed in insider tradin" or other 0iolations o# the securities la3+ he SEC also 3or!s 3ith cri*inal la3 en#orce*ent a"encies to 1rosecute indi0iduals and co*1anies ali!e #or o##enses 3hich include a cri*inal 0iolation+ o achie0e its *andate, the SEC en#orces the statutor. re)uire*ent that 1u2lic co*1anies su2*it )uarterl. and annual re1orts, as 3ell as other 1eriodic re1orts+ In addition to annual #inancial re1orts, co*1an. e5ecuti0es *ust 1ro0ide a narrati0e account, called the ?*ana"e*ent discussion and anal.sis? ,MD$A-, that outlines the 1re0ious .ear o# o1erations and e51lains ho3 the co*1an. #ared in that ti*e 1eriod+ MD$A 3ill usuall. also touch on the u1co*in" .ear, outlinin" #uture "oals and a11roaches to ne3 1ro@ects+ In an atte*1t to le0el the 1la.in" #ield #or all in0estors, the SEC *aintains an online data2ase called EDGAR ,the Electronic Data Gatherin", Anal.sis, and Retrie0al s.ste*- online #ro* 3hich in0estors can access this and other in#or*ation #iled 3ith the a"enc.+ he *ain

reason #or the creation o# the SEC 3as to re"ulate the stoc! *ar!et o# 1640, the Sar2anes8

'uarterl. and 2i-annual re1orts #ro* 1u2lic co*1anies are crucial #or in0estors to *a!e sound decisions 3hen in0estin" in the ca1ital *ar!ets+ /nli!e 2an!in", in0est*ent in the ca1ital *ar!ets is not "uaranteed 2. the #ederal "o0ern*ent+ he 1otential #or 2i" "ains needs to 2e 3ei"hed a"ainst e)uall. li!el. losses+ Mandator. disclosure o# #inancial and other in#or*ation a2out the issuer and the securit. itsel# "i0es 1ri0ate indi0iduals as 3ell as lar"e institutions the sa*e 2asic #acts a2out the 1u2lic co*1anies the. in0est in, there2. increasin" 1u2lic scrutin. 3hile reducin" insider tradin" and #raud+ he SEC *a!es re1orts a0aila2le to the 1u2lic 0ia the EDGAR s.ste*+ SEC also o##ers 1u2lications on in0est*ent-related to1ics #or 1u2lic education+ he sa*e online s.ste* also ta!es ti1s and co*1laints #ro* in0estors to hel1 the SEC trac! do3n 0iolators o# the securities la3s+ he SEC adheres to a strict 1olic. that it ne0er co**ents on the e5istence or status o# an on"oin" in0esti"ation+

HISTOR

%rior to the enact*ent o# the #ederal securities la3s and the creation o# the SEC, there e5isted so-called 2lue s!. la3s+ he. 3ere enacted and en#orced at the state le0el, and re"ulated the o##erin" and sale o# securities to 1rotect the 1u2lic #ro* #raud+ hou"h the s1eci#ic 1ro0isions o# these la3s 0aried a*on" states, the. all re)uired the re"istration o# all securities o##erin"s and sales, as 3ell as o# e0er. /+S+ stoc!2ro!er and 2ro!era"e #ir*+ Ao3e0er, these 2lue s!. la3s 3ere "enerall. #ound to 2e ine##ecti0e+ For e5a*1le, the In0est*ent Ban!ers Association told its *e*2ers as earl. as 161: that the. could ?i"nore? 2lue s!. la3s 2. *a!in" securities o##erin"s across state lines throu"h the *ail+ A#ter holdin" hearin"s on a2uses on interstate #rauds ,co**onl. !no3n as the %ecora Co**ission-, Con"ress 1assed the Securities Act o# 1677 ,1: /+S+C+ ; <<a-, 3hich re"ulates interstate sales o# securities ,ori"inal issues- at the #ederal le0el+ he su2se)uent Securities E5chan"e Act o# 1674 ,1: /+S+C+ ; <=d- re"ulates sales o# securities in the secondar. *ar!et+ Section 4 o# the 1674 Act created the /+S+ Securities and E5chan"e Co**ission to en#orce the #ederal securities la3s+ Both la3s are considered 1art o# Fran!lin D+ Roose0elt4s ?&e3 Deal? ra#t o# le"islation+ he Securities Act o# 1677 is also !no3n as the ? ruth in Securities Act? and the ?Federal Securities ActB, or @ust the ?1677 Act+? Its "oal is to increase 1u2lic trust in the ca1ital *ar!ets 2. re)uirin" uni#or* disclosure o# in#or*ation a2out 1u2lic securities o##erin"s+ he 1ri*ar. dra#ters o# 1677 Act 3ere Auston ho*1son, a #or*er Federal rade Co**ission ,F Cchair*an, and Calter Miller and 9llie Butler, t3o attorne.s in the Co**erce De1art*ent4s Forei"n Ser0ice Di0ision, 3ith in1ut #ro* Su1re*e Court Dustice (ouis Brandeis+ For the #irst .ear o# the la34s enact*ent, the en#orce*ent o# the statute rested 3ith the Federal rade Co**ission, 2ut this 1o3er 3as trans#erred to the SEC #ollo3in" its creation in 1674+ ,Interestin"l., the #irst, re@ected dra#t o# the Securities Act 3ritten 2. Sa*uel /nter*.er 0ested these 1o3ers in the /+S+ %ost 9##ice, 2ecause /nter*.er 2elie0ed that onl. 2. 0estin" en#orce*ent 1o3ers 3ith the 1ostal ser0ice could the constitutionalit. o# the act 2e assured+he la3 re)uires that issuin" co*1anies re"ister distri2utions o# securities 3ith the SEC 1rior to interstate sales o# these securities, so that in0estors *a. ha0e access to 2asic #inancial in#or*ation a2out issuin" co*1anies and ris!s in0ol0ed in in0estin" in the securities in

)uestion+ Since 1664, *ost re"istration state*ents ,and associated *aterials- #iled 3ith the SEC can 2e accessed 0ia the SECEs online s.ste*, EDGAR+ he Securities E5chan"e Act o# 1674 is also !no3n as ?the E5chan"e Act? or ?the 1674 Act?+ his act re"ulates secondar. tradin" 2et3een indi0iduals and co*1anies 3hich are o#ten unrelated to the ori"inal issuers o# securities+ Entities under the SECEs authorit. include securities e5chan"es 3ith 1h.sical tradin" #loors such as the &e3 For! Stoc! E5chan"e ,&FSE-, sel#-re"ulator. or"aniGations ,SR9s- such as the &ational Association o# Securities Dealers ,&ASD-, the Munici1al Securities Rule*a!in" Board ,MSRB-, online tradin" 1lat#or*s such as he &ASDA' Stoc! Mar!et ,&ASDA'- and A S, and an. other 1ersons ,e.g., securities 2ro!ers- en"a"ed in transactions #or the accounts o# others+

CRE!TIO" O# THE SEC

he SEC4s #oundation 3as laid in an era that 3as ri1e #or re#or*+ Be#ore the Great Crash o# 1626, there 3as little su11ort #or #ederal re"ulation o# the securities *ar!ets+ his 3as 1articularl. true durin" the 1ost-Corld Car I sur"e o# securities acti0it.+ %ro1osals that the #ederal "o0ern*ent re)uire #inancial disclosure and 1re0ent the #raudulent sale o# stoc! 3ere ne0er seriousl. 1ursued+ e*1ted 2. 1ro*ises o# ?ra"s to riches? trans#or*ations and eas. credit, *ost in0estors "a0e little thou"ht to the s.ste*ic ris! that arose #ro* 3ides1read a2use o# *ar"in #inancin" and unrelia2le in#or*ation a2out the securities in 3hich the. 3ere in0estin"+ Durin" the 1620s, a11ro5i*atel. 20 *illion lar"e and s*all shareholders too! ad0anta"e o# 1ost-3ar 1ros1erit. and set out to *a!e their #ortunes in the stoc! *ar!et+ It is esti*ated that o# the H:0 2illion in ne3 securities o##ered durin" this 1eriod, hal# 2eca*e 3orthless+

President Franklin D. Roosevelt

Joseph Kennedy Chen the stoc! *ar!et crashed in 9cto2er 1626, 1u2lic con#idence in the *ar!ets 1lu**eted+ In0estors lar"e and s*all, as 3ell as the 2an!s 3ho had loaned to the*, lost "reat su*s o# *one. in the ensuin" Great De1ression+ here 3as a consensus that #or the econo*. to

reco0er, the 1u2lic4s #aith in the ca1ital *ar!ets needed to 2e restored+ Con"ress held hearin"s to identi#. the 1ro2le*s and search #or solutions+ Based on the #indin"s in these hearin"s, Con"ress I durin" the 1ea! .ear o# the De1ression I 1assed the Securities Act o# 1677+ his la3, to"ether 3ith the Securities E5chan"e Act o# 1674, 3hich created the SEC, 3as desi"ned to restore in0estor con#idence in our ca1ital *ar!ets 2. 1ro0idin" in0estors and the *ar!ets 3ith *ore relia2le in#or*ation and clear rules o# honest dealin"+ he *ain 1ur1oses o# these la3s can 2e reduced to t3o co**on-sense notionsJ

Co*1anies 1u2licl. o##erin" securities #or in0est*ent dollars *ust tell the 1u2lic the truth a2out their 2usinesses, the securities the. are sellin", and the ris!s in0ol0ed in in0estin"+

%eo1le 3ho sell and trade securities 8 2ro!ers, dealers, and e5chan"es 8 *ust treat in0estors #airl. and honestl., 1uttin" in0estors4 interests #irst+

Monitorin" the securities industr. re)uires a hi"hl. coordinated e##ort+ Con"ress esta2lished the Securities and E5chan"e Co**ission in 1674 to en#orce the ne3l.-1assed securities la3s, to 1ro*ote sta2ilit. in the *ar!ets and, *ost i*1ortantl., to 1rotect in0estors+ %resident Fran!lin Delano Roose0elt a11ointed Dose1h %+ Kenned., %resident Dohn F+ Kenned.4s #ather, to ser0e as the #irst Chair*an o# the SEC+

OR$!"I%!TIO" O# THE SEC

he SEC consists o# #i0e 1residentiall.-a11ointed Co**issioners, 3ith sta""ered #i0e-.ear ter*s ,see SEC 9r"aniGation ChartL te5t 0ersion also a0aila2le-+ 9ne o# the* is desi"nated 2. the %resident as Chair*an o# the Co**ission I the a"enc.4s chie# e5ecuti0e+ B. la3, no *ore than three o# the Co**issioners *a. 2elon" to the sa*e 1olitical 1art., ensurin" non1artisanshi1+ he a"enc.4s #unctional res1onsi2ilities are or"aniGed into #i0e Di0isions and 27 9##ices, each o# 3hich is head)uartered in Cashin"ton, DC+ he Co**ission4s a11ro5i*atel. 7,:00 sta## are located in Cashin"ton and in 11 Re"ional 9##ices throu"hout the countr.+ It is the res1onsi2ilit. o# the Co**ission toJ

inter1ret and en#orce #ederal securities la3sL issue ne3 rules and a*end e5istin" rulesL o0ersee the ins1ection o# securities #ir*s, 2ro!ers, in0est*ent ad0isers, and ratin"s a"enciesL o0ersee 1ri0ate re"ulator. or"aniGations in the securities, accountin", and auditin" #ieldsL and coordinate /+S+ securities re"ulation 3ith #ederal, state, and #orei"n authorities+

he Co**ission con0enes re"ularl. at *eetin"s that are o1en to the 1u2lic and the ne3s *edia unless the discussion 1ertains to con#idential su2@ects, such as 3hether to 2e"in an en#orce*ent in0esti"ation+

The &a's That $o(ern the Securities Industr) Securities !ct o* +,--

9#ten re#erred to as the ?truth in securities? la3, the Securities Act o# 1677 has t3o 2asic o2@ecti0esJ re)uire that in0estors recei0e #inancial and other si"ni#icant in#or*ation concernin" securities 2ein" o##ered #or 1u2lic saleL and 1rohi2it deceit, *isre1resentations, and other #raud in the sale o# securities+

Pur.ose o* Registration
A 1ri*ar. *eans o# acco*1lishin" these "oals is the disclosure o# i*1ortant #inancial in#or*ation throu"h the re"istration o# securities+ his in#or*ation ena2les in0estors, not the "o0ern*ent, to *a!e in#or*ed @ud"*ents a2out 3hether to 1urchase a co*1an.4s securities+ Chile the SEC re)uires that the in#or*ation 1ro0ided 2e accurate, it does not "uarantee it+ In0estors 3ho 1urchase securities and su##er losses ha0e i*1ortant reco0er. ri"hts i# the. can 1ro0e that there 3as inco*1lete or inaccurate disclosure o# i*1ortant in#or*ation+

The Registration Process

In "eneral, securities sold in the /+S+ *ust 2e re"istered+ he re"istration #or*s co*1anies #ile 1ro0ide essential #acts 3hile *ini*iGin" the 2urden and e51ense o# co*1l.in" 3ith the la3+ In "eneral, re"istration #or*s call #orJ a descri1tion o# the co*1an.4s 1ro1erties and 2usinessL a descri1tion o# the securit. to 2e o##ered #or saleL in#or*ation a2out the *ana"e*ent o# the co*1an.L and #inancial state*ents certi#ied 2. inde1endent accountants+ All co*1anies, 2oth do*estic and #orei"n, *ust #ile their re"istration state*ents electronicall.+ hese state*ents and the acco*1an.in" 1ros1ectuses 2eco*e 1u2lic shortl. a#ter #ilin", and in0estors can access the* usin" EDGAR+ Re"istration state*ents are su2@ect to e5a*ination #or co*1liance 3ith disclosure re)uire*ents+&ot all o##erin"s o# securities *ust 2e re"istered 3ith the Co**ission+ So*e e5e*1tions #ro* the re"istration re)uire*ent includeJ

 1ri0ate o##erin"s to a li*ited nu*2er o# 1ersons or institutionsL o##erin"s o# li*ited siGeL intrastate o##erin"sL and securities o# *unici1al, state, and #ederal "o0ern*ents+ B. e5e*1tin" *an. s*all o##erin"s #ro* the re"istration 1rocess, the SEC see!s to #oster ca1ital #or*ation 2. lo3erin" the cost o# o##erin" these t.1es o# securities to the 1u2lic+

Securities Exchange !ct o* +,-/

Cith this Act, Con"ress created the Securities and E5chan"e Co**ission+ he Act e*1o3ers the SEC 3ith 2road authorit. o0er all as1ects o# the securities industr.+ his includes the 1o3er to re"ister, re"ulate, and o0ersee 2ro!era"e #ir*s, trans#er a"ents, and clearin" a"encies as 3ell as the nation4s securities sel# re"ulator. or"aniGations ,SR9s-+ he 0arious stoc! e5chan"es, such as the &e3 For! Stoc! E5chan"e, and A*erican Stoc! E5chan"e are SR9s+ he Financial Industr. Re"ulator. Authorit., 3hich o1erates the &ASDA' s.ste*, is also an SR9+ he Act also identi#ies and 1rohi2its certain t.1es o# conduct in the *ar!ets and 1ro0ides the Co**ission 3ith disci1linar. 1o3ers o0er re"ulated entities and 1ersons associated 3ith the*+ he Act also e*1o3ers the SEC to re)uire 1eriodic re1ortin" o# in#or*ation 2. co*1anies 3ith 1u2licl. traded securities+

Cor.orate Re.orting
Co*1anies 3ith *ore than H10 *illion in assets 3hose e)uit. securities are held 2. *ore than a s1eci#ied nu*2er o# holders *ust #ile annual and other 1eriodic re1orts+ hese re1orts are a0aila2le to the 1u2lic throu"h the SEC4s EDGAR data2ase+

Prox) So0icitations
he Securities E5chan"e Act also "o0erns the disclosure in *aterials used to solicit shareholders4 0otes in annual or s1ecial *eetin"s held #or the election o# directors and the a11ro0al o# other cor1orate action+ his in#or*ation, contained in 1ro5. *aterials, *ust 2e #iled

3ith the Co**ission in ad0ance o# an. solicitation to ensure co*1liance 3ith the disclosure rules+ Solicitations, 3hether 2. *ana"e*ent or shareholder "rou1s, *ust disclose all i*1ortant #acts concernin" the issues on 3hich holders are as!ed to 0ote+

Tender O**ers
he Securities E5chan"e Act re)uires disclosure o# i*1ortant in#or*ation 2. an.one see!in" to ac)uire *ore than : 1ercent o# a co*1an.4s securities 2. direct 1urchase or tender o##er+ Such an o##er o#ten is e5tended in an e##ort to "ain control o# the co*1an.+ As 3ith the 1ro5. rules, this allo3s shareholders to *a!e in#or*ed decisions on these critical cor1orate e0ents+

Insider Trading
he securities la3s 2roadl. 1rohi2it #raudulent acti0ities o# an. !ind in connection 3ith the o##er, 1urchase, or sale o# securities+ hese 1ro0isions are the 2asis #or *an. t.1es o# disci1linar. actions, includin" actions a"ainst #raudulent insider tradin"+ Insider tradin" is ille"al 3hen a 1erson trades a securit. 3hile in 1ossession o# *aterial non 1u2lic in#or*ation in 0iolation o# a dut. to 3ithhold the in#or*ation or re#rain #ro* tradin"+ Re"istration o# E5chan"es, Associations, and 9thers he Act re)uires a 0ariet. o# *ar!et 1artici1ants to re"ister 3ith the Co**ission, includin" e5chan"es, 2ro!ers and dealers, trans#er a"ents, and clearin" a"encies+ Re"istration #or these or"aniGations in0ol0es #ilin" disclosure docu*ents that are u1dated on a re"ular 2asis+ he e5chan"es and the Financial Industr. Re"ulator. Authorit. ,FI&RA- are identi#ied as sel#re"ulator. or"aniGations ,SR9-+ SR9s *ust create rules that allo3 #or disci1linin" *e*2ers #or i*1ro1er conduct and #or esta2lishin" *easures to ensure *ar!et inte"rit. and in0estor 1rotection+ SR9 1ro1osed rules are 1u2lished #or co**ent 2e#ore #inal SEC re0ie3 and a11ro0al+

!1R 2!merican de.ositar) recei.ts3

A*erican de1ositar. recei1ts, or ADRs, are a 2it o# #inancial *a"ic that deli0er the 3orld to the doors o# /S in0estors+ First introduced 2. the in0est*ent house o# D% Mor"an in 162<, ADRs are si*1le in conce1t+ In the *ost 2asic ter*s, A /nited States 2an! or in0est*ent institution 1laces a certain a*ount o# stoc! o# a #orei"n co*1an. into its 0aults - the ?de1ositar.? 1art o# the na*e - then allo3s in0estors to 2u. shares in that collection o# stoc!s, 1riced in /S dollars+ hose shares, or recei1ts, can then 2e traded on re"ular stoc! *ar!ets al*ost as thou"h the. 3ere shares held directl. in the #orei"n co*1an. itsel#, onl. the arran"e*ent is 2etter #or /S in0estors+ Since ADRs are traded in /S dollars and are securities that ori"inate 3ithin the /nited States, the. carr. none o# the cross-2order #ees or other hassles that *i"ht ensue i# an in0estor #ro* %eoria 3ere to tr. to 2u. stoc! directl. in a South Korean steel *ill+ he 3orst *ost in0estors ha0e to 3orr. a2out are s*all #ees, o#ten a #e3 1ennies 1er ADR 1er .ear, char"ed 2. the de1ositor. institution to co0er their costs o# o##erin" the ser0ice+ hus, in a sense, /S in0estors "ain access to the 3orld throu"h ADRs 3ithout ha0in" to lea0e the co*#ort o# their o3n li0in" roo*s+

!1Rs (s. Stoc4s

(i!e nor*al stoc!s, ADRs tend to trade at le0els that trac! the #inancial health o# their underl.in" co*1anies+ Still, there are i*1ortant di##erences 2et3een an ADR and a directl. held stoc!+ For e5a*1le, there are di##erent #la0ors o# ADRs, each o# 3hich carries a di##erent le0el o# re1ortin" res1onsi2ilit. - in other 3ords trans1arenc. in re1ortin" their #inancial health - to /S re"ulators and in0estors+ Uns.onsored shares: hese o##er the lo3est le0el o# entr. into the A*erican *ar!et+ /ns1onsored shares trade onl. on o0er-the-counter *ar!ets - not on the *a@or /S stoc! e5chan"es - and 2ear no res1onsi2ilit. to re1ort to /S re"ulator. a"encies+ issued toda.+ &e(e0 I: hese shares can also onl. 2e traded on o0er-the-counter *ar!ets, 2ut the. are "enerall. issued throu"h onl. one /S a"ent - their de1ositar. ?s1onsor+? Re"ulator. re1ortin" re)uire*ents are still *ini*al+ 'uarterl. or annual re1orts are not re)uired+ E0en i# such re1orts are issued, the. are not re)uired to adhere to /S standards o# "enerall. acce1ted accountin" 1rinci1les, or GAA%, and the co*1anies can 1ost their results in a #orei"n currenc.+ &e(e0 II: Co*1anies that 3ant to sell ADRs to /S in0estors at this le0el ha0e to re"ister 3ith the Securities and E5chan"e Co**ission and #ile an annual re1ort that co*1lies 3ith GAA% standards+ his is the lo3est le0el o# shares that can 2e listed on a /S stoc! e5chan"e+ &e(e0 III: his is the "old standard o# ADR ratin"s+ It allo3s #orei"n co*1anies to issue shares directl. into the /S, rather than si*1l. allo3in" the indirect 1urchase o# alread. created shares+ In e5chan"e, the co*1an. is re)uired to #ile annual re1orts that co*1l. 3ith GAA% standards, t.1icall. so*ethin" !no3n as a #or* 20-F ,co*1ared to the re"ular 10-K #ilin" 2. co*1anies he. are rarel.

in the /nited States-+ And it is re)uired to share an. ne3s that it distri2utes 3ithin its ho*e countr. to /S in0estors as 3ell+

!1Rs5 S.ecia0 Ris4s

9# course, e0en thou"h the. trade in /S dollars and can, at least on the sur#ace, closel. *i*ic the loo! and #eel o# A*erican stoc!s, ADRs co*e 3ith their o3n set o# s1ecial considerations to !ee1 in *ind+ Currenc) ris4: I# the 0alue o# the /S dollar rises a"ainst the 0alue o# the co*1an.4s ho*e currenc., a "ood deal o# the co*1an.4s intrinsic 1ro#its *i"ht 2e 3i1ed out in translation+ Con0ersel., i# the /S dollar 3ea!ens a"ainst the co*1an.4s ho*e currenc., an. 1ro#its it *a!es 3ill 2e enhanced #or a /S o3ner+ For *ore in#or*ation on ho3 this could da*a"e or in#late .our results, read he Dan"er o# In0estin" in International Bonds+ Po0itica0 ris4: ADR status does not insulate a co*1an.4s stoc! #ro* the inherent ris! o# its ho*e countr.4s 1olitical sta2ilit.+ Re0olution, nationaliGation, currenc. colla1se or other 1otential disasters *a. 2e "reater ris! #actors in other 1arts o# the 3orld than in the /S, and those ris!s 3ill 2e clearl. translated throu"h an. ADR that ori"inates in an a##ected nation+ In*0ation ris4: Countries around the "lo2e *a. 2e *ore, or less, 1rone to in#lation than the /S econo*. is at an. "i0en ti*e+ hose 3ith hi"her in#lation rates *a. #ind it *ore di##icult to 1ost 1ro#its to an /S o3ner, re"ardless o# the co*1an.4s underl.in" health+ In other 3ords, ADRs are @ust 3hat the. see*J a re1resentation o# a #orei"n stoc!, rather than an actual holdin" in the co*1an.+ Because o# all o# the considerations listed a2o0e, an ADR o# a #orei"n co*1an. in the /S+ *a. trade a little ahead or a little 2ehind the 1rice the co*1an. co**ands in its o3n currenc. in its o3n ho*e 2ase+ But it4s sa#e to sa. that 2u.in" an ADR is the closest an A*erican in0estor can co*e to 1artici1atin" directl. in the rest o# the 3orld4s econo*.+

$uide0ines *or !1R6$1R issues 7) the Indian Com.anies -1isin(estment o* shares 7) the Indian com.anies in the O(erseas mar4et through issue o* !1Rs6$1Rs
,iDi0est*ent 2. shareholders o# their holdin"s o# Indian co*1anies, in the o0erseas *ar!ets 3ould 2e allo3ed throu"h the *echanis* o# S1onsored ADRMGDR issue in res1ect o#J,a- Di0est*ent 2. shareholders o# their holdin"s o# Indian co*1anies listed in IndiaL ,2- Di0est*ent 2. shareholders o# their holdin"s o# Indian co*1anies not listed in India 2ut 3hich are listed o0erseas+ ,iihe 1rocess o# di0est*ent 3ould 2e initiated 2. such Indian co*1anies 3hose shares are 2ein" o##ered #or di0est*ent in the o0erseas *ar!et 2. s1onsorin" ADRMGDR issues a"ainst the 2loc! o# e5istin" shares o##ered 2. the shareholders under the 1ro0isions o# these "uidelines+ ,iii- Such a #acilit. 3ould 2e a0aila2le 1ari-1assu to all cate"ories o# shareholders, o# the co*1an. 3hose shares are 2ein" sold in the ADRMGDR *ar!ets o0erseas+ his 3ould ensure that no class o# shareholders "ets a s1ecial dis1ensation+ ,i0he s1onsorin" co*1an., 3hose shareholders 1ro1ose to di0est e5istin" shares in the o0erseas *ar!et throu"h issue o# ADRsMGDRs 3ill "i0e an o1tion to all its shareholders indicatin" the nu*2er o# shares to 2e di0ested and the *echanis* ho3 the 1rice 3ill 2e deter*ined under the ADRMGDR nor*s+ I# the shares o##ered #or di0est*ent are *ore

than the 1re-s1eci#ied nu*2er to 2e di0ested shares 3ould 2e acce1ted #or di0est*ent in 1ro1ortion to e5istin" holdin"s+ ,0he 1ro1osal #or di0est*ent o# the e5istin" shares in the ADRMGDR *ar!et 3ould ha0e to 2e a11ro0ed 2. a s1ecial resolution o# the co*1an. 3hose shares are 2ein" di0ested+ ,0ihe 1roceeds o# the ADRMGDR issue raised a2road shall 2e re1atriated into India 3ithin a 1eriod o# one *onth o# the closure o# the issue+ ,0ii- Such ADRMGDR issues a"ainst e5istin" shares arisin" out o# the di0est*ent 3ould also co*e 3ithin the 1ur0ie3 o# the e5istin" SEBI shareholders+ ,0iii- Di0est*ent o# e5istin" shares o# Indian co*1anies in the o0erseas *ar!ets #or issue o# ADRsMGDRs 3ould 2e rec!oned as FDI+ Such 1ro1osals 3ould re)uire FI%B a11ro0al as also other a11ro0als, i# an., under the FDI 1olic.+ ,i5- Such di0est*ent inductin" #orei"n e)uit. 3ould also need to con#or* to the FDI sectoral 1olic. and the 1rescri2ed sectoral ca1 as a11lica2le+ Accordin"l. the #acilit. 3ould not 2e a0aila2le 3here the co*1an. 3hose shares are to 2e di0ested is en"a"ed in an acti0it. 3here FDI is not 1er*itted+ ,5Each case 3ould re)uire the a11ro0al o# FI%B #or #orei"n e)uit. induction throu"h o##er o# e5istin" shares under the ADRMGDR route+ ,5i- 9ther *andator. a11ro0als such as those under the Co*1anies Act, etc+ as a11lica2le 3ould ha0e to 2e o2tained 2. the co*1an. 1rior to the ADRMGDR issue+ ,5iihe issue related e51enses ,co0erin" 2oth #i5ed e51enses li!e under3ritin" co**issions, lead *ana"ers char"es, le"al e51enses and rei*2ursa2le e51enses- #or 1u2lic issue shall a!eo0er Code i# the ADRsMGDRs are cancelled and the underl.in" shares are to 2e re"istered 3ith the co*1an. as

2e su2@ect to a ceilin" o# 4N in the case o# GDRs and <N in the case o# ADRs and 2N in case o# 1ri0ate 1lace*ents o# ADRsMGDRs+ Issue e51enses 2e.ond the ceilin" 3ould need the a11ro0al o# RBI+ he issue e51enses shall 2e 1assed onto the shareholders 1artici1atin" in the s1onsored issue on a 1rorate 2asis+ ,5iii- he shares ear*ar!ed #or the s1onsored ADRMGDR issue *a. 2e !e1t in an escro3 account created #or this 1ur1ose and in an. case, the retention o# shares in such escro3 account shall not e5ceed 7 *onths+ ,5i0- I# the issues o# ADRMGDR are *ade in *ore than one tranche, each tranche 3ould ha0e to 2e treated as a se1arate transaction+ ,50- A#ter co*1letin" the transactions, the co*1anies 3ould need to #urnish #ull 1articulars thereo# includin" a*ount raised throu"h ADRsMGDRs, nu*2er o# ADRsMGDRs issued and the underl.in" shares o##ered, 1ercenta"e o# #orei"n e)uit. le0el in the Indian co*1an. on account o# issue o# ADRsMGDRs, details o# issue 1ara*eters, details o# re1atriation, and other details to the E5chan"e Control De1art*ent o# the Reser0e Ban! o# India, Central 9##ice, Mu*2ai 3ithin 70 da.s o# co*1letion o# such transactions+ ,50ihe ta5 1ro0ision under Section 11: AC o# the Inco*e a5 Act 16>1, 3hich is a11lica2le to non-resident in0estors #or ADRMGDR o##erin" a"ainst issue o# #resh underl.in" shares 3ould e5tend to non-resident in0estors in0estin" in #orei"n e5chan"e in ADRsMGDRs issued a"ainst disin0ested e5istin" shares, in ter*s o# the rele0ant 1ro0isions o# the Inco*e a5 Act, 16>1+ ,50ii- Resident shareholders di0estin" their holdin"s 3ill 2e su2@ect to Ca1ital Gain ta5 1ro0isions a11lica2le under the Inco*e a5 Act 16>1 i+e+ Section 11: AC a11lica2le #or non-residents 3ould not e5tend to the*+

Standard 8 Poor9s: ! :a;or $0o7a0 Rating !genc)

Standard $ %oorEs is a #inancial 1u2lishin", *edia, and in#or*ation co*1an. 3ith dee1 roots in those 2usiness se"*ents+ It a11lies *an. o# the sa*e 1rinci1les that #inancial ne3s1a1ers and *a"aGines do in order to 1reser0e their @ournalistic inde1endence and inte"rit.+ he credit anal.sis 1er#or*ed 2. Standard $ %oorEs anal.sts is in so*e 3a.s si*ilar to the credit anal.sis that anal.sts at 2an!s or other #inancial institutions 1er#or*+ Ao3e0er, ratin" anal.sts so*eti*es ha0e access to con#idential in#or*ation that is 1ro0ided 2. issuers, or in0est*ent 2an!ersMarran"ers, o# structured #inance transactions as 1art o# the ratin" 1rocess+ Standard $ %oorEs also "ains a 0alua2le 1ers1ecti0e #ro* 3or!in" on a 3ide ran"e o# credit ratin"s throu"hout the 3orld+ Standard $ %oorEs 1er#or*s inde1endent e0aluation and re1ortin" o# credit ris!, and is not other3ise in0ol0ed in ca1ital *ar!et transactions+ As a result, Standard $ %oorEs credit ratin"s, 3hich are assi"ned 2ased on trans1arent criteria, ha0e lon" 2een utiliGed 2. ca1ital *ar!et 1artici1ants+

The Origin O* Standard 8 Poor5s Credit Ratings

Standard $ %oorEs Ratin"s Ser0ices traces its histor. 2ac! to 1=>0, the .ear that Aenr. Oarnu* %oor 1u2lished the Aistor. o# Railroads and Canals o# the /nited States+ %oor 3as concerned a2out the lac! o# )ualit. in#or*ation a0aila2le to in0estors and e*2ar!ed on a ca*1ai"n to 1u2liciGe details o# cor1orate o1erations+ Standard $ %oorEs has 2een 1u2lishin" credit ratin"s

since 161>, 1ro0idin" in0estors and *ar!et 1artici1ants 3orld3ide 3ith inde1endent anal.sis o# credit ris!+

Rating :ethodo0ogies 6 !..roaches

Ratin" a"encies use di##erent a11roaches in #or*in" and 1u2lishin" their o1inions a2out credit ris!+ So*e a"encies use anal.sts, so*e use *athe*atical *odels, and so*e use a co*2ination o# the t3o+ As ratin" a"enc. *odels di##er 3ith re"ards to their criteria, 1rocesses, and ratin"s de#initions, users o# ratin"s should consider such di##erences i# the. are usin" credit ratin"s as 2ench*ar!s+

!na0)st-1ri(en Credit Ratings

Credit ratin" a"encies, such as Standard $ %oorEs, that use the anal.st-dri0en a11roach e*1lo. anal.sts to e0aluate and e51ress an o1inion on the relati0e credit3orthiness o# issuers and the relati0e credit )ualit. o# de2t issues+ In ratin" an issuer, such as a cor1oration or *unici1alit., anal.sts conduct a re0ie3 o# the #inancial 1er#or*ance, 1olicies, and ris! *ana"e*ent strate"ies o# that issuer as 3ell as o# the 2usiness and econo*ic en0iron*ent in 3hich the issuer o1erates+ In addition to e0aluatin" #inancial data, credit anal.sts t.1icall. 3ei"h )ualitati0e in#or*ation, such as lon"-ter* strate"ies, as the. assess the issuerEs a2ilit. and 3illin"ness to *eet its #inancial o2li"ations in a ti*el. *anner+ Ratin" a"encies that use the anal.st-dri0en a11roach o#ten e*1lo. anal.sts 3ith e51erience in e0aluatin" the relati0e credit ris! o# an entit. or securit.+ In addition to their e51erience 3ith and understandin" o# the credit *ar!ets, anal.sts are trained to thin! criticall. and to e0aluate co*1le5 2usiness, #inancial, and accountin" issues+ Man. anal.sts also 2rin" to 2ear s1ecialiGations in s1eci#ic industr. se"*ents and transaction structures in e0aluatin" credit ris!s attri2utes+

:ode0-1ri(en Credit Ratings

A s*all nu*2er o# ratin" a"encies use the *odel-dri0en a11roach, #ocusin" *ore e5clusi0el. on )uantitati0e data that the. incor1orate into a *athe*atical *odel to 1roduce their ratin"s, 3hich are "enerall. 1oint-in-ti*e assess*ents+ For e5a*1le, an a"enc. usin" this a11roach to

assess the credit3orthiness o# a 2an! or #inancial institution e0aluates that entit.Es asset )ualit., #undin", and 1ro#ita2ilit. 2ased on #i"ures that a11ear in that entit.Es #inancial state*ents and re"ulator. #ilin"s+ he *athe*atical #or*ulas used to *easure credit3orthiness are o#ten 1ro1rietar. and hi"hl. co*1le5+

Standard 8 Poor5s !na0)st-1ri(en Rating Process

$0o7a0 (s. "ationa0 Ratings !gencies

So*e ratin" a"encies #ocus onl. on issuers and issues 3ithin a s1eci#ic countr. or re"ion, 3hile others 1ro0ide a "lo2al 1ers1ecti0e+ Glo2al credit ratin" a"encies, such as Standard $ %oorEs, 1u2lish ratin"s and research a2out the credit3orthiness o# issuers and the credit )ualit. o# de2t issues around the 3orld+ B. a11l.in" standardiGed ratin" criteria on a "lo2al 2asis, Standard $ %oorEs ratin"s 1ro0ide a 2ench*ar! #or assessin" the relati0e credit )ualit. o# issuers and instru*ents+ hese "lo2al scale ratin"s *a. 2e use#ul to institutional in0estors 3ho see! "eo"ra1hic di0ersi#ication in their de2t

in0est*ents 3hile at the sa*e ti*e adherin" to internal in0est*ent "uidelines that re)uire a "lo2al 2ench*ar!+ &ational ratin" a"encies can 1ro0ide a #ra*e o# re#erence di##erent #ro* that o# "lo2al a"encies 2. concentratin" on a 1articular countr. and a s*aller uni0erse o# securities+ For e5a*1le, 3hile "lo2al a"encies *a. consider national econo*ic and 1olitical ris! in their ratin"s, national a"encies *a. e*1lo. a countr.-s1eci#ic ratin" scale+ he national scale *a. 2e hel1#ul in co*1arin" the relati0e ris! o# securities issued in a sin"le countr.+ Glo2al ratin" a"encies *a. also o##er countr.-s1eci#ic scales in addition to their "lo2al scale ratin"s, as Standard $ %oorEs does+

Histor) o* Standard 8 Poor5s Credit Rating Ser(ices

he #ollo3in" ti*eline 1ro0ides *ilestones in Standard $ %oorEs ratin"s histor. and "lo2al e51ansionJ +<= < 161 > 164 1 16< 1 16< 7 16< 4 16< : 16= 4 16= 4 16= Henr) >arnum Poor .u70ishes a ?@@-.age 7oo4 containing o.erationa0 and *inancia0 detai0s on more than +?@ rai0road and cana0 com.anies First credit ratin"s on cor1orate 2onds and so0erei"n de2t First ratin"s on *unici1al 2onds First #inancial stren"th ratin"s on insurance co*1anies First ratin"s on lon"-ter* de2t o# 2an! holdin" co*1anies First ratin"s ,non so0erei"n- issuers located outside the /nited States First ratin"s on *ort"a"e-2ac!ed securities Be"an o1enin" Euro1ean o##ices First ratin"s on #i5ed inco*e 2ond and *one. *ar!et #unds First ratin"s on co**ercial *ort"a"e-2ac!ed securities ,CMBS-, and asset 2ac!ed

: 16= > 16= 6 166 0 166 7 166 4 166 : 166 > 166 < 166 < 166 = 200 7 200 4 200 : 200 =

securities ,ABS- ,*ade u1 o# e)ui1*ent leases, student loans, and other consu*er o2li"ations91ened o##ice in Da1an First ratin"s on collateraliGed de2t o2li"ations ,CD9s91ened o##ice in Australia, throu"h ac)uisition o# Australian Ratin"s 91ened o##ices in Canada and Me5ico, throu"h ac)uisition o# CAOA( 91ened o##ice in Aon" Kon" First ratin"s on 2an! loans First ratin"s on catastro1he 2onds 91ened o##ices in Ar"entina ,throu"h ac)uisition-, BraGil, and ai3an First ratin"s on s.nthetic CD9s 91ened o##ice in Russia Introduced reco0er. ratin"s 91ened o##ice in China In0est*ent in India ,*a@orit. in0est*ent in CRISI( Ratin"s91ened o##ices in Du2ai, South A#rica, and Israel ,throu"h the ac)uisition o# Maalot-

TR!CAI"$ O# S8P
Sur(ei00ance: Trac4ing Credit Bua0it)
A#ter issuin" a credit ratin", Standard $ %oorEs t.1icall. trac!s de0elo1*ents that *i"ht a##ect the credit ris! o# an issuer or issue+ he "oal o# this sur0eillance is to *aintain a current ratin" 2. identi#.in" *atters that *a. result in either an u1"rade or a do3n"rade o# the ratin"+

Such *atters could include chan"in" industr. trends, issuer 1er#or*ance, credit enhance*ents, or other credit ris! #actors+ Anal.sts re0ie3 ratin"s 3ith a #ocus on 1otential chan"es to the !e. anal.tical #actors that su11orted the earlier ratin"s o1inion+ Chen a11ro1riate, anal.sts 1resent reco**endations #or ratin"s chan"es to a Ratin" Co**ittee #or a 1ossi2le action+ Standard $ %oorEs sur0eillance acti0ities *a. lead toJ Changing a rating out0oo4+ his occurs 3hen the Ratin" Co**ittee deter*ines that there is a one-in-three 1otential #or a ratin"s chan"e 2ased on trends or antici1ated ris!s that *a. a##ect credit3orthiness #or the co*in" > to 24 *onths+ P0acing ratings on CreditCatch+ his occurs 3hen there is a one-in-t3o li!elihood o# a ratin" chan"e in the near ter* as a result o# an e0ent, a si"ni#icant and une51ected de0iation #ro* antici1ated 1er#or*ance, or a chan"e in criteria has 2een ado1ted that necessitates a re0ie3 o# an entire sector or *ulti1le issues+ Raisin" or lo3erin" a ratin"+ Standard $ %oorEs discloses chan"es to 1u2lic ratin"s, "enerall. 3ith a short e51lanation, and *a!es the* a0aila2le at 333+standardand1oors+co*+ Actions *a. include credit ratin" u1"rades, do3n"rades, 3ithdra3als, and sus1ensions, as 3ell as chan"es in credit ratin" outloo!s and CreditCatch 1lace*ents and re*o0als+

T).e and #reDuenc) o* Sur(ei00ance Standard $ %oorEs considers a nu*2er o# di##erent #actors in deter*inin" the t.1e o# sur0eillance to 1er#or* on a 1articular ratin"+ For e5a*1le, the #re)uenc. and e5tent o# sur0eillance *a. de1end on s1eci#ic ris! considerations that are rele0ant to an indi0idual, a "rou1, or a class o# rated entities+ In addition, the re"ularit. o# sur0eillance *a. 2e related to

the ti*in" and a0aila2ilit. o# #inancial and re"ulator. re1ortin", transaction-s1eci#ic 1er#or*ance in#or*ation, and other ne3 in#or*ation #ro* 0arious sources+ For cor1orate and "o0ern*ent ratin"s, it is routine to schedule 1eriodic *eetin"s 3ith *ana"e*ent+ hese #ace-to-#ace *eetin"s 3ith issuers assist anal.sts in sta.in" a11rised o# an. chan"es in the issuerEs 1lans and allo3 the* to discuss ne3 de0elo1*ents, 1er#or*ance relati0e to 1rior e51ectations, and 1otential 1ro2le* areas+ For structured #inance ratin"s, dedicated sur0eillance anal.sts *onitor 1er#or*ance data and other 1ertinent in#or*ation+

CreditCatch: The &i4e0ihood o* a Rating Change

As 1art o# its sur0eillance 1rocess, Standard $ %oorEs *a. co**unicate the 1otential #or a credit ratin"s chan"e 2. 1lacin" the ratin" on CreditCatch+ Ratin"s #or an issuer or issue a11ear on CreditCatch 3hen, 2ased on Standard $ %oorEs anal.sis, an e0ent or de0iation #ro* an e51ected trend has occurred, or *a. occur, that is li!el. to cause a ratin"s chan"e in the near ter*, usuall. 3ithin 60 da.s+ S1eci#icall., a CreditCatch listin" si"ni#ies that Standard $ %oorEs 2elie0es that a s1eci#ic ratin" has at least a one-in-t3o li!elihood o# 2ein" u1"raded or do3n"raded in the near ter*+ A 0ariet. o# e0ents and #actors, includin" *er"ers, reca1italiGations, re"ulator. actions, unantici1ated o1eratin" de0elo1*ents, or criteria chan"es *a. tri""er a CreditCatch listin"+ Chile the listin" *eans that the 1otential #or a ratin" chan"e is su2stantial in the near ter*, it does not *ean that a ratin"s chan"e is ine0ita2le+ Rather, it indicates that *ore in#or*ation or anal.sis is re)uired 2e#ore ta!in" action+ Chene0er 1ossi2le, the rationale e51lainin" the CreditCatch 1lace*ent indicates a ran"e o# 1ossi2le ratin"s outco*es that can 2e antici1ated, 1articularl. the e5tent o# the chan"e, u1 or do3n+ Standard $ %oorEs *a. also ad@ust a credit ratin" 3ithout 1lacin" the issuer or issue on CreditCatch 2e#orehand+ Standard $ %oorEs does not dela. a ratin"s chan"e *erel. 2ecause it has not si"naled a 1otential chan"e on CreditCatch+ I# all the necessar. in#or*ation is a0aila2le, Standard $ %oorEs chan"es the ratin" to re#lect the altered circu*stances+

Ex.ressions O* Change: Out0oo4 !nd CreditCatch

9utloo!s and CreditCatch use a s1ecial 0oca2ular. to con0e. the li!elihood o# a ratin"s chan"eJ ?Positi(e? indicates a ratin" *a. 2e raised+ ?"egati(e? indicates a ratin" *a. 2e lo3ered+ ?1e(e0o.ing? a11lies to unusual situations 3here the e##ect o# #uture e0ents is so uncertain that Standard $ %oor4s is not .et clear 3hether it *i"ht raise or lo3er a s1eci#ic ratin"+ ?Sta70e? is used onl. in outloo!s and si"nals that a ratin"s chan"e is unli!el., 2ut does not e51ress an o1inion that the #inancial 1er#or*ance o# the issuer or issue 3ill necessaril. re*ain sta2le+

Out0oo4: &onger-Term >ie' o* a Potentia0 Rating Change

Standard $ %oorEs also assesses the 1otential #or a ratin"s chan"e 2. assi"nin" an outloo! to *ost lon"-ter* credit ratin"s 9utloo!s ha0e a lon"er ti*e #ra*e than CreditCatch listin"s and address trends or ris!s 3ith the 1otential, not the certaint., o# a##ectin" credit )ualit.+ he ti*e #ra*e #or an outloo! "enerall. is u1 to t3o .ears #or hi"h-"rade ratin"s and "enerall. u1 to one .ear #or s1eculati0e-"rade ratin"s+ An outloo! is not an indication that a ratin" 3ill 2e listed on CreditCatch+ 9utloo!s use a si*ilar 0oca2ular. to CreditCatch to si"nal 3hether a ratin" is 1ositi0e, ne"ati0e, de0elo1in", or sta2le+

"!S1!B Stoc4 :ar4et

.1e (ocation Founded 93ner Currenc. &o+ o# listin"s :ar4etCa. Oolu*e Ce2site

Stoc! e5chan"e &e3 For! Cit., &e3 For!, /nited States Fe2ruar. 4, 16<1 &ASDA' 9MP Grou1 /nited States dollar 2,<06 ,Se1t 2017H4+4: trillion ,Dan 2012H06=2 2illion ,Fe2 2011&ASDA'+co*

I"TRO1UCTIO"
"!S1!B 2e"an #ort. .ears a"o at the "ationa0 !ssociation o* Securities 1ea0ersE or "!S1+ he &ASD 3anted to create a 3a. #or in0estors to 2u. and sell stoc!s on a co*1uteriGed, trans1arent, and #ast s.ste*+ his 3ould eli*inate the 2urden and ine##icienc. o# in-1erson he &ASD stoc! transactions, 3hich had 2een the 1re0alent *odel #or nearl. a centur.+

2elie0ed that in0estors could *a!e *ore *one. 2. closin" the 1rice "a1s 2et3een 2u.ers and sellers, and technolo". had e0ol0ed enou"h at that 1oint to *a!e it ha11en+ On #e7ruar) <E +,F+E the "ationa0 !ssociation o* Securities 1ea0ers !utomated Buotation 2"!S1!B3 3ent li0e 3ith *edian )uotes #or 2,:00 o0er-the-counter securities+ In earl. .ears, it "a0e "ro3th co*1anies the o11ortunit. to raise ca1ital that 3asnEt 1re0iousl. a0aila2le to the*+ hose co*1anies ,Intel, Microso#t, A11le, Cisco, 9racle, Dell, to na*e a #e3- used the ca1ital raised on he &ASDA' Stoc! Mar!et to *a!e the cuttin" ed"e 1roducts that are no3 inte"ral to the dail. li0es+ hese co*1anies ha0e also created *illions o# @o2s around the 3orld alon" the 3a.+ oda., the &ASDA' 9MP Grou1 o3ns and o1erates 24 *ar!ets, 7 clearin" houses, and : central securities de1ositories, s1annin" si5 continents--*a!in" the 3orldEs lar"est e5chan"e co*1an.+ Ei"hteen o# the 24 *ar!ets trade e)uities+ he other si5 trade o1tions, deri0ati0es, #i5ed inco*e, and co**odities+ It is the lar"est sin"le li)uidit. 1ool #or /S e)uities and the 1o3er 2ehind 1 in 10 o# the 3orldEs securities transactions+ Se0ent. e5chan"es in :0 countries trust in tradin" technolo". to 1o3er their *ar!ets, dri0in" "ro3th in e*er"in" and de0elo1ed econo*ies+ &ASDA' 9MP is also dedicated to desi"nin" 1o3er#ul, rele0ant inde5 and 2ench*ar! #a*ilies that are in s.nc 3ith the continuall. chan"in" *ar!et en0iron*ent+ /tiliGin" the e51anded co0era"e #ro* the "lo2al #oot1rint, &ASDA' 9MP has nearl. 2,000 di0erse inde5es that 1ro0ide co0era"e across asset classes, countries and sectors+ &ot onl. do their inde5es 1ro0ide co*1rehensi0e insi"ht into the "lo2al *ar!ets, 2ut their un1aralleled 1rocess, added 0alue and co*1etiti0e 1ricin" set the* a1art #ro* other inde5ers+ Chether .ou are an institution, #und *ana"er or 1ri0ate in0estor, &ASDA' 9MP inde5es are 2ench*ar!s that can hel1 2oth in#luence and trac! in0est*ent strate"ies+ In 200>, &ASDA' co*1leted its se1aration #ro* the &ASD and 2e"an to o1erate as a national securities e5chan"e+ he ne5t .ear ,200<-, &ASDA' co*2ined 3ith the 1o3er#ul Scandina0ian e5chan"e "rou1 9MP and o##iciall. 2eca*e he &ASDA' 9MP Grou1, #urther de*onstratin" its co**it*ent to technolo". and inno0ation across "lo2al *ar!ets+ It is the second-lar"est stoc! *ar!et co*1arin" to o##icial stoc! e5chan"es 2. *ar!et ca1italiGation in the 3orld, a#ter the &e3 For! Stoc! E5chan"e+

&ASDA' is s1lit into three tiersL the Glo2al Select Mar!et, Glo2al Mar!et and Ca1ital Mar!et+ Co*1anies listed on &ASDA' re1resent di0erse industries #ro* retail to health care and #ro* #inance to technolo".+ But the. all share the sa*e 0alue 8 to o1erate e##ecti0el. and to *o0e the 3orld #or3ard+ &asda) Ca1ital Mar!et is a e)uit. *ar!et #or co*1anies that ha0e relati0el. s*all le0els o# *ar!et ca1italiGation+ (istin" re)uire*ents #or such ?s*all ca1? co*1anies are less strin"ent than #or other &asda) *ar!ets that list lar"er co*1anies 3ith si"ni#icantl. hi"her *ar!et ca1italiGation+ &ASDA' Glo2al Mar!et is *ade u1 o# stoc!s that re1resent the &asda) Glo2al Mar!et+ he &ASDA' Glo2al Mar!et consists o# 1,4:0 stoc!s that *eet &asda)4s strict #inancial and li)uidit. re)uire*ents, and cor1orate "o0ernance standards+ e5clusi0e than the Glo2al Select Mar!et+ &ASDA' Glo2al Select Mar!et is a *ar!et ca1italiGation-3ei"hted inde5 *ade u1 o# /+S+2ased and international stoc!s that re1resent the &ASDA' Glo2al Select Mar!et Co*1osite+ he &ASDA' Glo2al Select Mar!et consists o# 1,200 stoc!s that *eet &ASDA'Es strict #inancial and li)uidit. re)uire*ents and cor1orate "o0ernance standards+ he Glo2al Mar!et Select is *ore e5clusi0e than the Glo2al Mar!et+ E0er. 9cto2er, the &ASDA' (istin" 'uali#ications De1art*ent re0ie3s the Glo2al Mar!et Co*1osite to deter*ine i# an. o# its stoc!s ha0e 2eco*e eli"i2le #or listin" on the Glo2al Select Mar!et+ he Glo2al Mar!et is less

Histor)
&ASDA' 3as #ounded in 16<12. the &ational Association o# Securities Dealers ,&ASD-, 3ho di0ested the*sel0es o# it in a series o# sales in 2000 and 2001+ It is o3ned and o1erated 2. the &ASDA' 9MP Grou1, the stoc! o# 3hich 3as listed on its o3n stoc! e5chan"e 2e"innin"

Dul. 2, 2002, under the tic!er s.*2ol &DA'+ It is re"ulated 2. the Financial Industr. Re"ulator. Authorit. ,FI&RA-, the successor to the &ASD+ Chen the &ASDA' stoc! e5chan"e 2e"an tradin" on Fe2ruar. =, 16<1, it 3as the 3orld4s #irst electronic stoc! *ar!et+ At #irst, it 3as *erel. a co*1uter 2ulletin 2oard s.ste* and did not actuall. connect 2u.ers and sellers+ he &ASDA' hel1ed lo3er the s1read ,the di##erence 2et3een the 2id 1rice and the as! 1rice o# the stoc!- 2ut so*e3hat 1arado5icall. 3as un1o1ular a*on" 2ro!era"es 2ecause the. *ade *uch o# their *one. on the s1read+ &ASDA' 3as the successor to the o0er-the-counter ,9 C- s.ste* o# tradin"+ As late as 16=<, the &ASDA' e5chan"e 3as still co**onl. re#erred to as the 9 C in *edia and also in the *onthl. Stoc! Guides issued 2. Standard $ %oor4s Cor1oration+ 90er the .ears, &ASDA' 2eca*e *ore o# a stoc! *ar!et 2. addin" trade and 0olu*e re1ortin" and auto*ated tradin" s.ste*s+ &ASDA' 3as also the #irst stoc! *ar!et in the /nited States to start tradin" online, hi"hli"htin" &ASDA'-traded co*1anies ,usuall. in technolo".- and closin" 3ith the declaration that &ASDA' is ?the stoc! *ar!et #or the ne5t hundred .ears+? Its *ain inde5 is the &ASDA' Co*1osite, 3hich has 2een 1u2lished since its ince1tion+ Ao3e0er, its e5chan"e-traded #und trac!s the lar"e-ca1 &ASDA'-100 inde5, 3hich 3as introduced in 16=: alon"side the &ASDA' 100 Financial Inde5+ /ntil 16=<, *ost tradin" occurred 0ia the tele1hone, 2ut durin" the 9cto2er 16=< stoc! *ar!et crash, *ar!et *a!ers o#ten didn4t ans3er their 1hones+ o counteract this, the S*all 9rder E5ecution S.ste* ,S9ES- 3as esta2lished, 3hich 1ro0ides an electronic *ethod #or dealers to enter their trades+ &ASDA' re)uires *ar!et *a!ers to honor trades o0er S9ES+ In 1662, it @oined 3ith the (ondon Stoc! E5chan"e to #or* the #irst intercontinental lin!a"e o# securities *ar!ets+ &ASD s1un o## &ASDA' in 2000 to #or* a 1u2licl. traded co*1an., the &ASDA' Stoc! Mar!et, Inc+ In 200> &ASDA' chan"ed #ro* stoc! *ar!et to licensed national e5chan"e+

9n &o0e*2er =, 200<, &ASDA' 2ou"ht the %hiladel1hia Stoc! E5chan"e ,%A(P- #or /SH>:2 *illion+ %A(P is the oldest stoc! e5chan"e in A*ericaIha0in" 2een in o1eration since 1<60+ o )uali#. #or listin" on the e5chan"e, a co*1an. *ust 2e re"istered 3ith the /nited States Securities and E5chan"e Co**ission ,SEC-, ha0e at least three *ar!et *a!ers ,#inancial #ir*s that act as 2ro!ers or dealers #or s1eci#ic securities- and *eet *ini*u* re)uire*ents #or assets, ca1ital, 1u2lic shares, and shareholders+ In Fe2ruar. 2011, in the 3a!e o# an announced *er"er o# &FSE Eurone5t 3ith Deutsche BQrse, s1eculation de0elo1ed that &asda) and Intercontinental E5chan"e ,ICE- could *ount a counter-2id o# their o3n #or &FSE+ &asda) could 2e loo!in" to ac)uire the A*erican e5chan"e4s cash e)uities 2usiness, ICE the deri0ati0es 2usiness+ As o# the ti*e o# the s1eculation, ?&FSE Eurone5tEs *ar!et 0alue 3as H6+<: 2illion+ &asda) 3as 0alued at H:+<= 2illion, 3hile ICE 3as 0alued at H6+4: 2illion+? (ate in the *onth, &asda) 3as re1orted to 2e considerin" as!in" either ICE or the Chica"o Merc to @oin in 3hat 3ould 1ro2a2l. ha0e to 2e, i# it 1roceeded, an H11812 2illion counter2id+ he Euro1ean Association o# Securities Dealers Auto*atic 'uotation S.ste* ,EASDA'- 3as #ounded ori"inall. as a Euro1ean e)ui0alent to &ASDA'+ It 3as 1urchased 2. &ASDA' in 2001 and 2eca*e &ASDA' Euro1e, 2ut o1erations 3ere shut do3n as a result o# the 2urst o# the dot-co* 2u22le+ In 200<, &ASDA' Euro1e 3as re0i0ed as E)uiduct and is currentl. o1eratin" under BQrse Berlin+ In 2017, &ASDA' 3as a11roached 2. 1ri0ate e)uit. #ir* Carl.le Grou1 a2out ta!in" the e5chan"e o1erator 1ri0ate, 2ut the tal!s #ell a1art o0er a disa"ree*ent on 1rice+

Chat are the 0isting reDuirements *or "asdaDG

Ma@or stoc! e5chan"es, li!e the &ASDA', are e5clusi0e clu2s - their re1utations rest on the co*1anies the. trade+ As such, the &ASDA' 3on4t allo3 @ust an. co*1an. to 2e traded on its

e5chan"e+ 9nl. co*1anies 3ith a solid histor. and to1-notch *ana"e*ent 2ehind the* are considered+ he &ASDA' has three sets o# listin" re)uire*ents+ Each co*1an. *ust *eet at least one o# the three re)uire*ent sets, as 3ell as the *ain rules #or all co*1anies+ &isting ReDuirements *or !00 Com.anies Each co*1an. *ust ha0e a *ini*u* o# 1,2:0,000 1u2licl.-traded shares u1on listin", e5cludin" those held 2. o##icers, directors or an. 2ene#icial o3ners o# *ore than 10N o# the co*1an.+ In addition, the re"ular 2id 1rice at ti*e o# listin" *ust 2e H4, and there *ust 2e at least three *ar!et *a!ers #or the stoc!+ Ao3e0er, a co*1an. *a. )uali#. under a closin" 1rice alternati0e o# H7 or H2 i# the co*1an. *eets 0ar.in" re)uire*ents+ Each listin" #ir* is also re)uired to #ollo3 &asda) cor1orate "o0ernance rules such as distri2ution o# annual M interi* re1orts, inde1endent director, Audit Co**ittee, Co*1ensation o# e5ecuti0e o##icer, &o*ination o# directors, Code o# conduct, annual *eetin", 'uoru*, Ootin" ri"hts etc+ Co*1anies *ust also 2,200 total shareholders or ::0 total shareholders 3ith 1+1 *illion a0era"e tradin" 0olu*es o0er the 1ast 12 *onths+ In addition to these re)uire*ents, co*1anies *ust *eet all o# the criteria under at least one o# the #ollo3in" standards+ &isting Standard "o.+ he co*1an. *ust ha0e a""re"ate 1re-ta5 earnin"s in the 1rior three .ears o# at least H11 *illion, in the 1rior t3o .ears at least H2+2 *illion, and no one .ear in the 1rior three .ears can ha0e a net loss+ &isting Standard "o. ? he Co*1an. *ust ha0e a *ini*u* a""re"ate cash #lo3 o# at least H2<+: *illion #or the 1ast three #iscal .ears, 3ith no ne"ati0e cash #lo3 in an. o# those three .ears+ In addition, its a0era"e *ar!et ca1italiGation o0er the 1rior 12 *onths *ust 2e at least H::0 *illion, and re0enues in the 1re0ious #iscal .ear *ust 2e H110 *illion, *ini*u*+ &isting Standard "o. -

Co*1anies can 2e re*o0ed #ro* the cash #lo3 re)uire*ent o# Standard &o+ 2 i# the a0era"e *ar!et ca1italiGation o0er the 1ast 12 *onths is at least H=:0 *illion, and re0enues o0er the 1rior #iscal .ear are at least H60 *illion+ A co*1an. has three 3a.s to "et listed on the &ASDA', de1endin" on the underl.in" #unda*entals o# the co*1an.+ I# a co*1an. does not *eet certain criteria, such as the o1eratin" inco*e *ini*u*, it has to *a!e it u1 3ith lar"er *ini*u* a*ounts in another area li!e re0enue+ his hel1s to i*1ro0e the )ualit. o# co*1anies listed on the e5chan"e+ It doesn4t end there+ A#ter a co*1an. "ets listed on the *ar!et, it *ust *aintain certain standards to continue tradin"+ Failure to *eet the s1eci#ications set out 2. the stoc! e5chan"e 3ill result in its delistin"+ Fallin" 2elo3 the *ini*u* re)uired share 1rice, or *ar!et ca1italiGation, is one o# the *a@or #actors tri""erin" a delistin"+ A"ain, the e5act details o# delistin" de1end on the e5chan"e+ &isting Time0ine Chile it "enerall. ta!es #our to si5 3ee!s to 1rocess a listin" a11lication, this ti*e #ra*e is 0aria2le and *a. 2e shortened considera2l., i# the a11lication raises no issues and the co*1an. res1onds )uic!l. to Sta## co**ents+ Cee! 1+ Co*1an. su2*its a11lication #or listin" and &ASDA' (istin" 'uali#ications 2e"ins its re0ie3+ Cee!s 2-7+ Sta## co*1letes its 1reli*inar. re0ie3 and 1re1ares co**ent letter+ Cee!s 7-4+ Co*1an. addresses an. issues raised 2. Sta##+ Cee!s :->+ Sta## co*1letes their re0ie3 and co*1an. is a11ro0ed #or listin"+ Sta##

Short 1ocument Chec40ist Since &ADA' is a2le to "ather *uch o# the in#or*ation needed to 0eri#. co*1liance #ro* 1u2licl. a0aila2le sources, the #or*s and su11ortin" docu*entation listin" co*1an. need to a11l. to &ASDA' should ta!e onl. a short ti*e to 1re1are+

S.*2ol Reser0ation For*+

his #or* is re)uired to reser0e or chan"e .our tradin" s.*2ol+

S.*2ol reser0ation re)uests *a. 2e su2*itted u1 to t3o .ears in ad0ance and can 2e co*1leted online throu"h the (istin" Center+ (istin" A11lication+ his #or* can 2e co*1leted online throu"h the (istin" Center+ (istin" A"ree*ent+ his #or* can 2e co*1leted online throu"h the (istin" Center+ Cor1orate Go0ernance Certi#ication+ Center+ Chec! %a.*ent For*+ Co*1anies *ust su2*it the a11lication #ee alon" 3ith their a11lication+ he #ull entr. #ee is due 1rior to the #irst da. o# tradin"+ All 1a.*ents to &ASDA' *a. 2e *ade 2. 3ire or chec!+ his #or* is onl. re)uired 3hen *a!in" 1a.*ents 2. chec!+ (o"o Su2*ission For*+ his #or* can 2e co*1leted online throu"h the (istin" Center Entr) #ees Entr. #ees are 2ased u1on the a""re"ate nu*2er o# shares outstandin" at the ti*e o# initial listin"+ he a11lication #ee, 3hich is included in the a*ounts 2elo3, is non-re#unda2le and *ust acco*1an. the a11lication su2*ission+ he re*ainder o# the entr. #ee is due 1rior to the #irst da. o# tradin"+ "!S1!B $0o7a0 Se0ect :ar4et and "!S1!B $0o7a0 :ar4et otal Shares 9utstandin" /1 to 70 *illion 70R to :0 *illion :0R to 100 *illion 90er 100 *illion "!S1!B Ca.ita0 :ar4et otal Shares 9utstandin" /1 to 1: *illion 90er 1: *illion Entr. Fee H:0,000, includin" H:,000 a11lication #ee H<:,000, includin" H:,000 a11lication #ee Entr. Fee H12:,000, includin" H2:,000 a11lication #ee H1:0,000, includin" H2:,000 a11lication #ee H200,000, includin" H2:,000 a11lication #ee H22:,000, includin" H2:,000 a11lication #ee his #or* can 2e co*1leted online throu"h the (istin"

BIB&IO$R!PH
htt1JMM333+0enturela3cor1+co*Mlistin"Sre)uire*entsSnasda)+ht*l htt1JMM333+in0esto1edia+co*Mas!Mans3ersM121+as1

htt1JMMen+3i!i1edia+or"M3i!iM&ASDA' htt1JMM333+nasda)+co*Ma2outMti*eline+1d# htt1JMM333+in0esto1edia+co*MarticlesMstoc!sM0=Ma*erican-de1ositar.-recei1t-adr+as1 htt1JMM333+slideshare+netMBiGDournalis*Msecurities-and-e5chan"e-co**ission-#ilin"sT #ro*SsearchU2 htt1JMM333+slideshare+netM&AFCareerAcadsM#inancial-*ar!ets-the-us-securit.-and-e5chan"eco**ission-and-the-acade*.-o#-#inanceT#ro*SsearchU7 htt1JMM333+sec+"o0Ma2outM3hat3edo+sht*lVintro htt1JMMen+3i!i1edia+or"M3i!iM/+S+SSecuritiesSandSE5chan"eSCo**ission