SEBI SECURITIES EXCHANGE BOARD OF INDIA
¸ In 1988, SEBI was established by the government of India through an executive resolution.
¸ In May 1992, SEBI was granted legal status. SEBI is a body corporate having a separate legal existence and perpetual succession.
1. To regulate the activities of stock exchange.
2. To protect the rights of investors and ensuring safety to their investment.
3. To prevent fraudulent and malpractices by having balance between self regulation of business and its statutory regulations.
4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc.
Management of the Board
¸ Two members from central government dealing with finance and Law
¸ One member from Reserve bank of India
¸ Two other members from central government
Functions of SEBI:
a. Protective functions
(i) It Checks Price Rigging
(ii) It Prohibits Insider trading
(iii) SEBI prohibits fraudulent and Unfair Trade Practices
(iv) SEBI undertakes steps to educate investors
(v) SEBI promotes fair practices and code of conduct
b. Developmental functions
(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI has permitted internet trading through registered stock brokers.
(iii) SEBI has made underwriting optional to reduce the cost of issue.
(iv)Even initial public offer of primary market is permitted through stock exchange
c. Regulatory functions
i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as merchant bankers, brokers, underwriters, etc.
(ii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer agents, trustees, merchant bankers and all those who are associated with stock exchange in any manner.
(iii) SEBI registers and regulates the working of mutual funds etc.
(iv)SEBI regulates takeover of the companies.
(v) SEBI conducts inquiries and audit of stock exchanges.
Powers of SEBI
¸ Power to seek information
¸ Powers of Inspection
¸ Powers of civil court Exercisable by SEBI
¸ Powers of SEBI where an enquiry or investigation is ordered
¸ Power to issue directions
¸ Power of search and seizure
¸ Power to order cease and desist
¸ Power to SEBI under SCRA Service members Civil Relief Act
ß Role of SEBI in regulating the capital market
¸ Market index act as a barometer for market behavior
¸ Market index is used to benchmark portfolio performance
¸ Market index is used in derivative instruments like index futures and index options
¸ Market index can be used for passive fund management as in case of index funds.
¸ To make rules for controlling stock exchanges
¸ To provide License to dealers and brokers
¸ To stop fraud in capital market
¸ To control the merger, acquisition and takeover of the companies
¸ To audit the performance of stock market
¸ To make new rules on carry forward transactions
¸ To create relationship with ICAI(Institute of Chartered Accountants of. India )
¸ Introduction of derivative contracts on volatility index
¸ To require report of portfolio Management activities
¸ To educate the investors
¸ To integrate the securities Market
¸ To diversify the trading products
ß Role of SEBI in secondary market
¸ Providing a centralized redressal mechanism
¸ Establishing the separate investment awareness division
¸ Displaying the names of defaulting companies on the SEBI website
¸ Providing helpline facility for investor assistance