What is the Securities and Exchange Board of India (SEBI)?
The Securities and Exchange Board of India is also known as (SEBI). SEBI is the most important regulatory body under the government of India that regulates the securities market. It was established in the year 1988 and received statutory powers on 12 April 1999 in accordance with the provisions of the securities exchange board of India Act, 1992.
Securities and Exchange Board of India (SEBI) is a body corporate having perpetual succession and a common seal with a power to acquire, hold, and dispose of property and sue and be sued in its own name.
OBJECTIVE:
SEBI was established with the main objective to protect the interest of investors in securities and to promote the development of and to regulates the securities market.
To keep a check on malpractices by having a balance between self-regulation of business and its statutory regulations.
To protect the rights of investors and ensuring safety to their investment.
To regulate a code of conduct for intermediaries such as brokers, underwriters, etc.
To regulate and develop the activities of the stock exchange.
REASONS FOR THE ESTABLISHMENT OF Securities and Exchange Board of India (SEBI)
During the 1980s, there was tremendous growth in the stock market due to the increasing participation of the public. This led to many malpractices started in the stock market such as the rigging of prices, the unofficial premium on new issues, delay in delivery of shares and violation of rules and regulations of stock exchanges by the brokers, merchant bankers, investment consultants, and companies, etc. Due to these malpractices, the customers started losing confidence and faith in the stock market. However, the Government of India decided to set up an agency or regulatory body known as the Securities and Exchange Board of India (SEBI).
ORGANISATION STRUCTURE OF Securities and Exchange Board of India (SEBI)
SEBI’s hierarchal organization structure consists of five departments that have a department head. It has two advisory committees that are answerable for primary and secondary markets. It consists of nine members; a chairman nominated by the Government of India, two members who are officers: one from the Union Finance Ministry and other from the Reserve bank of India and five other members who are also nominated by the Government of India.
SHRI AJAY TYAGI Chairman, (SEBI) |
Whole time Members, SEBI |
Shri G. Mahalingam
Ms. Madhabi Puri Buch
Shri S.K Mohanty
Shri Ananta Barua
FUNCTIONS OF Securities and Exchange Board of India (SEBI)
The preamble of the Securities and Exchange Board of India describes the basic functions of SEBI that is the protection of investors interests in securities and to be performed and regulate the securities market in India. Functions of SEBI include:-
To regulate the business in the stock exchange and other securities exchange markets.
To Prohibit fraudulent and unfair trade activities within the securities market.
To prohibit insider trading inside the securities market.
To register and regulate the work of stockbrokers and other intermediaries that may have an association with securities markets.
To examine books of accounts of financial mediators and recognized stock exchanges.
Dematerialization of securities.
To impart training to market participants on a regular basis.
To eliminate corruption in the security markets in India.
To increase research and provide investigation in order to achieve the above objectives.
POWERS OF Securities and Exchange Board of India (SEBI)
The Securities and Exchange Board of India (SEBI) has been vested in three main powers:
Quasi-Judicial
Quasi-Legislative
Quasi-executive
Following powers mentioned here:
To approve by-laws of stock exchanges.
To compel certain companies to get listed on one or more stock exchanges.
To handle the registration of brokers.
To inspect the books of accounts of the recognized stock exchange and call for periodical returns.
To inspect the books of financial intermediaries.
Securities and Exchange Board of India (SEBI) in accordance with its legislative capacity has the right to draft resolution, to conduct investigations and to enforce action. Its executive function and role allow it to pass rules and orders. Anyone aggrieved by the orders or actions of SEBI can file an appeal before the SAT and Supreme Court.
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