6.
SEBI (Securities and Exchange Board of India)
The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities
and commodity market in India. Established in 1988 and given statutory powers in 1992,
SEBI plays a crucial role in regulating and developing the Indian capital markets.
Establishment and Legal Framework
• Year of Establishment: 1988 (Initially set up as a non-statutory body)
• Statutory Powers: Granted in 1992 through the SEBI Act, 1992
• Headquarters: Mumbai, Maharashtra
Objectives of SEBI
1. Protect Investor Interests: Safeguarding the interests of investors in securities
markets.
2. Promote Market Development: Encouraging the development of the securities
market.
3. Regulate the Market: Regulating the securities market and related activities.
Key Functions of SEBI
1. Registration and Regulation:
– Registers and regulates various market intermediaries such as stock brokers,
sub-brokers, share transfer agents, bankers to an issue, trustees of trust
deeds, registrars to an issue, merchant bankers, underwriters, portfolio
managers, investment advisers, and other intermediaries associated with the
securities market.
2. Regulatory Framework:
– Formulates regulations and guidelines for capital issuance and disclosure
requirements.
– Develops regulations for substantial acquisition of shares and takeovers of
companies.
3. Market Surveillance:
– Conducts inspections, audits, and investigations of stock exchanges and
market intermediaries.
– Monitors trading activities to detect and prevent unfair trade practices.
4. Investor Education:
– Promotes investor education and awareness programs.
– Trains intermediaries in the securities market.
5. Enforcement:
– Imposes penalties for violations of rules and regulations.
– Can initiate criminal proceedings against offenders.
6. Policy Making:
– Advises the government on matters related to the development and
regulation of the securities market.
7. Listing Regulations:
– Sets guidelines for listing agreements of stock exchanges.
8. Insider Trading Prevention:
– Prohibits insider trading in securities.
9. Mutual Funds Regulation:
– Regulates and develops the mutual fund industry.
SEBI’s Powers
1. Quasi-Judicial: Can conduct hearings and pass rulings.
2. Quasi-Legislative: Can draft regulations and guidelines.
3. Investigation: Has the power to investigate and audit market participants.
4. Enforcement: Can impose penalties and initiate criminal proceedings.
Recent Initiatives by SEBI
1. Ease of Doing Business: Simplifying norms for listing start-ups and small and
medium enterprises.
2. Technology Adoption: Encouraging the use of blockchain in the securities market.
3. Green Bonds: Introducing framework for issuance and listing of green bonds.
4. Investor Protection: Strengthening the grievance redressal mechanism.
5. Corporate Governance: Enhancing disclosure norms and corporate governance
standards.
Challenges Faced by SEBI
1. Keeping pace with rapidly evolving financial technologies.
2. Addressing new forms of market manipulation in the digital age.
3. Balancing between over-regulation and under-regulation.
4. Enhancing financial literacy among retail investors.
SEBI’s role is pivotal in maintaining the integrity of the Indian securities market and
fostering its growth. Through its various functions and initiatives, SEBI strives to create a
transparent, efficient, and trustworthy market environment for all participants.
