What is SEBI | Work | installation | right | Objective

There are currently 16 stock exchanges in the world with a market capitalization of over US$1 trillion. While the New York Stock Exchange (NYSE) ranks first in the world on the basis of parameter market capitalization. The Indian capital market is also one of the largest capital markets in the world. Sensex (Stock Exchange Sensitive Index), also known as BSE-30, is the oldest and main stock exchange in India.

Which plays an important role in the global market. Everything needs a special body for its governance, in the same way SEBI i.e. Securities and Exchange Board of India has been constituted by the Government of India to control and monitor this capital market. what is SEBI ? Along with knowing about it, we will share information about the work, establishment, authority and purpose of SEBI here.

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SEBI Full Form

The full form of SEBI is “Securities and Exchange Board of India (Securities and Exchange Board of India)”. Whereas in Hindi it is known as Securities and Exchange Board of India (SEBI). SEBI is a statutory regulatory authority, which oversees the Indian capital markets. It controls and regulates the stock market by implementing specific laws and regulations and it protects the interests of the investors.

What is SEBI

SEBI is a statutory body and a market regulator, which regulates the securities market in India. The basic function of SEBI is to protect the interests of investors in securities and to promote and regulate the securities market. SEBI is governed by its board members. The board consists of a chairman and several other full-time and part-time members. The chairman is nominated by the central government. Among others, two members from the Ministry of Finance, one member from the Reserve Bank of India and five other members are also nominated by the Centre. The headquarter of SEBI is located in Mumbai and regional offices are located in Ahmedabad, Kolkata, Chennai and Delhi.

SEBI Establishment

The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities and commodity markets under the ownership of the Ministry of Finance, Government of India. It was established on 12 April 1988 and was given statutory powers on 30 January 1992 through the SEBI Act 1992.

SEBI Establishment Reasons

During the decline of 1970s and the rise of 1980s, people of India were preferring to work in the capital market as the market was trending. Problems like informal private placement without any authority, price rigging, informal merchant bankers started violating the rules and regulations of the stock exchange which delayed the delivery of shares.

The government felt an urgent need to set up a regulatory body to regulate its functioning and to find solutions to all the problems faced by the market, as people were losing faith in the market. To maintain this faith of the people, the Security and Exchange Board of India was established by the Government of India.

Functions of SEBI

SEBI basically promotes the development of the securities market and regulates trading, along with protecting the interests of investors in the securities market. The functions of the Security and Exchange Board of India are mainly classified into three parts, which are as follows-

Protective Functions

• The act of preventing insider trading – When people working in the market such as directors, promoters or employees working in the company start buying or selling securities because they have access to the confidential price, resulting in affecting the price of the security, it is known as insider trading. is known in SEBI restricts companies to buy their shares from the secondary market and SEBI also regulates regular check-ups to prevent insider trading and avoid misconduct.
• Checking Price Rigging – Misconducts, which generate undue fluctuations in the price of securities with the help of increasing or decreasing the market value of shares, resulting in huge losses to investors or traders, are known as price gouging. In order to prevent price rigging, SEBI actively monitors the factors that may lead to price rigging.
• Promotes fair trade practices SEBI established rules and regulations and a certain code of conduct in the securities market to prohibit fraudulent and unfair trade practices.
• Providing awareness / financial education for investors – SEBI conducts seminars, both online and offline, to educate investors about insights into financial markets and wealth management.

Regulatory Functions

Regulatory actions are generally used to check the functioning of financial business in the market. They establish rules to regulate financial intermediaries and corporates for the efficiency of the market. These tasks are as follows-

• SEBI to frame guidelines and code of conduct for the efficient functioning of financial intermediaries and corporates.
• Establishing rules for taking over a company.
• Conducting regular inquiries and audits of stock exchanges.
• Controlling the process of mutual funds.
• The registration of brokers, sub-brokers and merchant bankers is regulated by SEBI.
• The levying of fees is regulated by SEBI.
• Ban on private placement.

Development work

• Training of middlemen.
• Promoting fair trade and reducing malpractices.
• Conducting research work.
• Promotion of self-run enterprises.
• Buy and sell mutual funds from AMC through a broker.

SEBI Rights and Powers

SEBI has been given certain powers to function efficiently and monitor the stock market.

Quasi-Judicial

In order to ensure fairness, transparency and accountability in the securities market, SEBI has the power to adjudicate any fraud and other unethical practices in the context of the securities market. This includes drafting legislation relating to capital markets. This feature of SEBI helps in safeguarding transparency, accountability, credibility and fairness in the capital market.

Semi-Executive

SEBI has the powers to enforce regulations and decisions and to take legal action against violators. If someone violates the rules, then this body is authorized to inspect the books of accounts and other documents.

Semi-legislative

SEBI is empowered to frame rules and regulations to protect the interests of investors. It also includes insider trading regulations, listing obligations and disclosure requirements. SEBI covers the implementation of the law. They have the right to file a complaint against any person who violates their rules and regulations. They also have the right to inspect all records ie records to investigate wrongdoing.

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Purpose and Role of SEBI

SEBI helps in creating an enabling environment to facilitate effective mobilization among market participants and investors. It helps in locating resources with the help of securities market. SEBI establishes rules and regulations, policy framework and infrastructure to meet the needs of the market.

The financial market mainly consists of three groups-

Issuers of securities

Issuer is the group, which works in the corporate department to raise funds easily from various sources in the market. Hence SEBI helps the issuers by providing a healthy and open environment for them to function efficiently.

Investor

Investors are the soul of the market as they keep the market alive by providing accurate supply, right information and security to the people on a daily basis. SEBI helps the investors by creating a malpractice free environment to attract and protect the money of people investing in the market.

Financial Intermediaries

Intermediaries are people who act as intermediaries between issuers and investors. SEBI helps in creating a competitive professional market, which better serves issuers and investors. They also provide efficient infrastructure and secure financial transactions.

SEBI Organizational Structure

The members of the Security and Exchange Board of India are as follows-

• The chairman who is appointed by the central government of India.
• Two members who are chosen from among the officers of the Union Ministry of Finance.
• One member who is appointed from the Reserve Bank of India.
• The other five members are appointed by the Central Government of India, three of the five should be full-time members.

SEBI Act

The Parliament established the Securities and Exchange Board of India Act, 1992 or the SEBI Act, 1992 to regulate and develop the securities market in India. It was further amended to meet the changes in the evolving requirements of the securities market.

SEBI Act Features and Regulations

SEBI is an organization which is responsible for maintaining an environment free of misconduct to maintain the confidence of the general public investing their hard earned money in the market. SEBI regulates the bye-laws of every stock exchange in the country. SEBI monitors all the books of accounts relating to stock exchanges and financial intermediaries to check their irregularities. The SEBI Act defines and empowers them. The SEBI Act is divided into 7 chapters, which provide for rules and regulations related to the capital market.

• The first chapter is an introductory or introductory chapter to the Act, which provides the title, detail and definition of terms used in the Act.
• The second chapter is the establishment of the Securities and Exchange Board of India. This chapter deals with the management, employees, meetings and office of the board.
• The third chapter is the transfer of assets, liabilities etc. of the existing Security and Exchange Board to the Board. Which means, that it declares the provisions to be used for transfer of assets in case of formation of a new Board.
• The fourth chapter is the powers and functions of the Board. This chapter helps in mentioning the powers and functions of the Board, which are given by the Act. The Board is bound to carry out the directions given by the Act and is not allowed to abuse its powers.
• The fifth chapter is the certificate of registration. It deals with the documents involved in the registration of stock brokers, sub-brokers and share transfer agents etc.
• The sixth chapter is Finance, Accounts and Audit. This chapter regulates all the grants, funds and accounts given by the central government to ensure the productivity of the board as well as the capital market.
• The seventh chapter is Miscellaneous, which discusses other topics relevant to the board and the market. Helping the board avoid mistakes.

The laws and regulations of the Security and Exchange Board of India are very important and must be followed seriously by those who are entitled or registered with the stock exchange and capital market of India. The SEBI Act, 1992 is the supreme authority of the securities market in India and has the authority to make laws and regulations. And these rules and regulations apply to all listed companies, their Board of Directors, key managerial personnel of such companies, investors and all other companies that are associated with the security market sector.

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