Securities and Exchange Board of India (SEBI) was first established in 1988 but as a non-statutory body for regulating the securities market. However, later it became an autonomous body and accorded as statutory powers with the passing of the SEBI Act 1992 by the Indian Parliament. It has its head office at Bandra Kurla Complex, Mumbai.
The SEBI monitors and regulates the Indian capital and securities market while ensuring to protect the interests of the investors, formulating regulations and guidelines.
Structure of SEBI:
There are about 20 departments under SEBI, each is managed by a department head. Some of these departments are corporation finance, economic and policy analysis, debt and hybrid securities, enforcement, human resources, investment management, commodity derivatives market regulation, legal affairs, and more.
The structure of SEBI consists of the following members:
- The chairman- nominated by the Union Government of India.
- Two officers from the Union Finance Ministry.
- One member- appointed from the Reserve Bank of India.
- Five other members- nominated by the Union Government of India.
Functions of the SEBI:
The preamble of Securities and Exchange Board of India provides the basic functions of the SEBI.
- The primary functions of the SEBI is to protect the interests of investors in the securities market.
- It provides a platform for stockbrokers, sub-brokers, portfolio managers, investment advisers, share transfer agents, bankers, merchant bankers, trustees of trust deeds, registrars, underwriters, and other associated people to register and regulate work.
- SEBI regulates the operations of depositories, participants, custodians of securities, foreign portfolio investors, and credit rating agencies.
- It prohibits insider trading, i.e. fraudulent and unfair trade practices related to the securities market.
- It monitors on the substantial acquisitions of shares and take-over of companies.
- SEBI ensures that the investors are educated on the intermediaries of securities markets.
- It checks the for different innovation to protect the securities market is efficient.
Powers of SEBI:
SEBI has been vested with the power to approve and amend the by-laws of securities exchanged. It can inspect the books of accounts and call for periodical returns from recognized Securities exchanges. It compels certain companies to list their shares in one or more Securities exchanges. It also register the brokers and sub-brokers.
Authorities of SEBI:
SEBI is the Quasi-Judicial Authority as it has the authority to deliver judgements related to fraud and other unethical practices in terms of the securities market. This helps to ensure fairness, transparency, and accountability in the securities market.
It is also a Quasi-Executive Authority because it empowered to implement the regulations and judgements made and to take legal action against the violators. It is also authorized to inspect the Books of accounts and other documents if it comes across any violation of the regulations.
SEBI is also a Quasi-Legislative Authority since it reserves the right to frame rules and regulations to protect the interests of the investors. Some of its regulations consist of insider trading regulations, listing obligations, and disclosure requirements. These have been formulated to keep malpractices at bay. Despite the powers, the results of SEBI’s functions still have to go through the Securities Appellate Tribunal and the Supreme Court of India.
Achievements of SEBI:
SEBI is success as a regulator by pushing systematic reforms aggressively and successively. SEBI has been credited for quick movement towards making the markets electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in April 2002 and further to T+2 in April 2003. The rolling cycle of T+2 means, Settlement is done in 2 days after Trade date. SEBI has also increased the extent and quantity of disclosures to be made by Indian corporate promoters. It has liberalized the takeover code to facilitate investments by removing regulatory structures.
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