THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

INTRODUCTION

SEBI(Securities and Exchange Board of India) was constituted on April 12,1988 as a non-statutory body

It is an apex body to develop and regulate the stock market in India

SEBI is the regulator for the securities market in India, originally set up by the Government of India in 1988,it acquired statutory form in 1992 with SEBI Act 1992 being passed by the Indian Parliament.

OBJECTIVES

To protect the interest of investors so that there is a steady flow of savings in to the capital market.

To regulate the securities market Ensure fair practices by the issuers of securities so that

they can raise resources at minimum cost. To promote efficient services by brokers, merchant

bankers and other intermediaries so that they become competitive and professional.

ORGANISATION

SEBI has divided its activities in to four operational departments, each headed by an Executive Director.

1.Primary Market Department: It deals with all policy matters and regulatory issues relating to primary market.

2.Issue Management and Intermediaries Departments : This department is concerned with inspection of offer documents and other things like registration, regulation and monitoring of issue related to intermediaries.

3.Secondary Market Department: It looks after all the policy and regulatory issues for the secondary market; administration of the major stock exchanges and other matters related to it.

4.Institutional Investment Department: It concerned with framing policy for foreign institutional investors.

In addition to this, there are two other departments: They are; Legal Department and Investigation Department, also headed by officials of the rank of Executive Directors.

SEBI has two Advisory Committees, one each for primary and secondary markets. They provide advisory inputs in framing policies and regulations. These committees are non-statutory in nature and SEBI is not bound by the committees.

FUNCTIONS

Section 11 of the SEBI Act , there are mainly two types of functions. They are;

1.Regulatory Functions

2.Developmental Functions

Regulatory Functions

(a) Regulating the business in stock exchanges and any other securities markets.

(b) Registration and regulation of stock brokers , sub-brokers , registrar to all issue, merchant bankers, underwriters, portfolio managers and such other intermediaries who are associated with securities market.

(c) Registration and regulation of the working of Venture capital funds and Collective investment schemes including mutual funds.

(d) Prohibition of fraudulent and unfair trade practices relating to securities market.

(e). Prohibition of insider trading in securities. (f ). Regulating substantial acquisitions of shares

and take over of companies.

(a). Promoting investor’s education.

(Investor Protection and Education Fund)

(b). Training of intermediaries.

(c). Conducting research and publishing information useful to all market participants.

(d). Promotion of fair practices. Code of conduct for self-regulatory organizations.

(e). Promoting self-regulatory organizations.

Developmental Functions

POWERS

SEBI has been vested with the following powers:

1.Power to call periodical returns from recognized stock exchange.

2.Power to control and regulate stock exchange.3.Power to call any information or explanation

from recognized stock exchanges or their members.

4. Power to levy fees or other charges for carrying out the purpose of regulation.

5. Power to grant registration to market intermediaries.

6.Power to direct enquiries to be made in relation to affairs of stock exchanges or members.

7. Power to grant approval to bye-laws of recognized stock exchanges.

8. Power to make or amend bye-laws of recognized stock exchanges.

9. Power to compel listing of securities by public companies.

10. Power to declare applicability of Section 17 of the Securities Contract (Regulation) Act is any state or area to grant licenses to dealers in securities.

SEBI and Central Government

The Central Government has power to issue directions to SEBI Board, supersede the Board, if necessary and to call for returns and reports as and when necessary.

The Central Government has also power to give any guideline or to make regulations and rules for SEBI and its operations.

The activities of SEBI are financed by grants from Central Government, in addition to fees, charges etc. collected by SEBI.

The fund called SEBI General Fund is set up, to which, all fees, charges and grants are credited.

This fund is used to meet the expenses of the Board and to pay salary of staff and members of the body.

Legal Framework : Acts

Aug 22, 2014 : Securities Laws (Amendment) Act, 2014 Mar 28, 2014 : The Securities Laws (Amendment) Ordinance, 2014 Oct 03, 2013 : Notification under section 16 and 28 of Securities

Contracts (Regulation) Act, 1956 Sep 16, 2013 : The Securities Laws (Amendment) Second

Ordinance, 2013 Sep 13, 2013 : The Securities and Exchange Board of India

(Amendment) Act, 2013 Jul 18, 2013 : The Securities Laws (Amendment) Ordinance, 2013 Sep 20, 1995 : The Depositories Act, 1996 [As amended by the

Securities Laws(Amendment) Act, 2014] Jan 30, 1992 : Securities and Exchange Board of India Act, 1992 [As

amended by the Securities Laws(Amendment) Act, 2014] Feb 16, 1957 : The Securities Contracts (Regulation) Act, 1956 [As

amended by the Securities Laws(Amendment) Act, 2014] 

Policy Developments

With the objectives of maintaining fair and efficient markets, developing new products, improving the securities market arena, enhancing operational efficiencies, encouraging small investors, and attracting new players, various regulatory changes were made by the regulators in India—the Ministry of Finance (MoF), the SEBI, and the RBI—in the Indian securities market.

Primary Market

ASBA facility through syndicate / sub-syndicate members (SEBI Circular dated April 29, 2011)

ASBA facility mandatory for QIBs and NIIs (SEBI Circular dated April 29, 2011)

Adjustment of differential pricing amount at the time of application for allotment of specified securities (SEBI Circular dated May 16, 2011)

Amendment to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 for revision of bid cum-application form and abridged prospectus (SEBI Press Release dated July 28, 2011)

Eligibility criteria for companies coming out with IPOs through the profitability track record (SEBI Press Release dated July 28, 2011)e dated July 28, 2011)

Disclosure of quarterly financial results (SEBI Press Release dated July 28, 2011)

Mode of supplying annual reports to shareholders (SEBI Press Release dated July 28, 2011)

Disclosure of voting results by listed entities (SEBI Press Release dated July 28, 2011)

Disclosure of price information of past issues handled by merchant bankers (SEBI Notification dated September 23, 2011)

Comprehensive guidelines on offer for sale (OFS) of shares by promoters through the stock exchange mechanism (SEBI Circular dated July 18, 2012)

Collective Investment Vehicles

Option to hold mutual fund units in demat form (SEBI Circular dated May 19, 2011)

Investment by foreign investors in mutual fund schemes (SEBI Circular dated August 9, 2011)

Commission disclosures by mutual funds (SEBI Circular dated August 22, 2011)

Capital Markets

Review of Internet-based trading and securities trading using wireless technology (SEBI Circular dated June 30, 2011)

Clarification regarding admission of limited liability partnerships as members of stock exchanges (SEBI Circular dated July 11, 2011)

SMS and email alerts to investors from stock exchanges (SEBI Circular dated August 2, 2011)

Simplification and rationalisation of opening process for trading accounts (SEBI Circular dated August 22, 2011)

Amendment to SEBI (Buyback of Securities) Regulations, 1998 (SEBI Notification dated February 7, 2012)

Exit policy for de-recognised/non-operational stock exchanges (SEBI Circular dated May 30, 2012) Circular dated February 21 2012)

Debt Market

Setting up of Central Electronic Registry under the SARFAESI Act, 2002 (RBI Circular dated April 21, 2011)

Guidelines for issue and listing of structured products/market linked debentures (SEBI Circular dated September 28, 2011)

Ban on incentives in public issues of debt (SEBI Circular dated December 26, 2011)

Standardisation of application form and abridged prospectus for public issue of debt securities (SEBI Circular dated July 25, 2012)

System for making online applications for public issue of debt securities (SEBI Circular dated July 27, 2012)

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