For every stock market across the world, there is a watchdog which keeps a close eye on the market activities to ensure that the interests of every participant are not impacted by frivolous activities of any other participants. In India, SEBI has been created to ensure that the market activities are free and fair.
In this article, we will cover
- Introduction on SEBI & What is SEBI
- When was SEBI established
- Full form of SEBI and Meaning of SEBI
- SEBI Chairman and Organization Structure
- Role and Functions of SEBI
- Powers of SEBI
Introduction on SEBI & What is SEBI:
SEBI is a market regulator which tries to create a balance in the day to day stock market activities and for this, there are regulatory frameworks established by SEBI. There are 17 exchanges currently operational in India and all exchanges, including NSE and BSE are regulated by SEBI guidelines. Securities and exchange Board of India has headquarters in Mumbai, and has regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. SEBI has also opened local offices in Jaipur, Bangalore, Guwahati, Bhubaneswar, Patna, Kochi and Chandigarh.
SEBI has also commenced regulating the commodity derivatives market under the Securities Contract Regulation Act (SCRA) 1956 with effect from September 28 2015, and the Forward Contracts Regulation Act (FCRA) 1952 got replaced with effect from September 29 2015.
When was SEBI established:
SEBI was established in the year 1988 and subsequently was given the constitutional validity on 30th January 1992 by Government of India bypassing the SEBI Act, 1992 in the parliament of India.
Full form of SEBI and Meaning of SEBI:
Full form of SEBI is Securities and Exchange Board of India and the existence of SEBI means that any unwanted market activities won’t be allowed to occur so easily.
Who is the current chairman of SEBI and SEBI Organization Structure:
Ajay Tyagi was appointed as the chairman on 10th January 2017 and took over as the head on 1st March 2017 by replacing U.K. Sinha.
The SEBI has 7 board members with the following structure.
- The Chairman who is nominated by the Union Government of India.
- Two members from the Union Finance Ministry
- One member from the Reserve Bank of India
- The remaining 5 members are nominated by the Union Government of India, out of them
SEBI has to be responsive to 3 groups which constitute the market:
- The issuer of securities
- The investor
- The market intermediaries
Powers of SEBI:
- To regulate and approve by-laws of stock exchanges
- Inspect the books of accounts of recognized stock exchanges and call for periodical returns
- Inspect the books of financial Intermediaries.
- Compel certain companies to get listed on one or more stock exchanges
- To handle the registration of brokers
Role and Functions of SEBI:
- Primary Markets: SEBI has regulated the primary market through
- The regulation of issuers’ access to market
- Regulation of information production at the time of issue
- Regulation of processes and procedures relating to the issuance of securities
- Disclosure: Disclosure standards are not limited to accounting information but was extended to other issue related communications such as advertisements.
- Corporate Governance: SEBI has made a constant effort to improve the standards of Corporate Governance in India.
- Settlement Systems
- Dematerialization of securities
- Institutionalization of Trading and ownership of securities
- Market Integrity and Insider Trading
- To help in developing the capital market so that the business activities don’t get hampered
- To bring companies and organizations under its regulation so that the interests of investors are not harmed
- To curtail unethical trading which includes insider trading also
- To get done the registration of Mutual Funds and Systematic Investment Plans(SIPs) and all such funds comply with laid down rules and regulations of Mutual funds and SIPs
- To impart training to market participants on a regular basis
For detailed regulations and guidelines on markets, mutual funds and SIPs, investors can visit the official website of SEBI, www.sebi.gov.in.
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