Regulation and De-Regulation of the Stock Market in India

30 Pages Posted: 26 Oct 2004

See all articles by Ashima Goyal

Ashima Goyal

Indira Gandhi Institute of Development Research (IGIDR)

Date Written: September 8, 2005


Liberalization requires de- and re-regulation, since with internationalization government controls become ineffective, and with the use of new technologies new governance structures are required. The functioning of the reformed Indian regulatory structure is examined in the context of the basic principles of regulation, the special regulatory requirements of capital markets, and the features of Indian markets. The regulator's aim was to achieve international best practices, and encourage market -integrity through clear and self-enforcing rules of the game while encouraging the game itself. It contributed to implementing world-class technology and processes in the markets. Following general principles allowed flexible response to arbitrage and change. Insider groups lost power as the liquidity advantage tipped in favour of automated systems, but there were imperfections in implementation due to design inadequacies. As these are addressed, and markets revive with growth, thinness of participation and in depth of securities may be overcome.

Keywords: Regulations, capital markets, technology, information, implementation

JEL Classification: G18

Suggested Citation

Goyal, Ashima, Regulation and De-Regulation of the Stock Market in India (September 8, 2005). Available at SSRN: or

Ashima Goyal (Contact Author)

Indira Gandhi Institute of Development Research (IGIDR) ( email )

Gen A.K. Vaidya Marg Santoshnagar
Goregaon (East)
Bombay 400065, Maharashtra
+91 22 28400920 (Phone)
+91 22 28402752 (Fax)


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