0
0
Prerna Upadhyay , B.A.L.L.B , School of law, Gautam Buddha University,Noida
Introduction
In the time 1992, the Securities and Exchange Board of India (SEBI) was established as a statutory body. It conducts examinations and imposes forfeitures on violators. SEBI was introduced to develop translucency in the Indian stock request and to concentrate on covering the stock request. It protects the interest of investors, issuers of securities, and request actors. SEBI has the authority to check the account books of stock exchanges, and inspection the books of request interposers similar as companies, banks, and registered brokers. The main ideal of SEBI is to make it safe for investors by enforcing rules and regulations in the stock request.
Why was SEBI Established?
SEBI was established to avoid fraud and maintain translucency in the request. During the 70s and 80s, the Indian stock request faced numerous frauds similar as:
Unofficial private placements
Bigwig trading
Non-adherence to vittles of the Companies Act
Request manipulation
Violation of rules
Manipulation of prices
Detention in delivery of shares
This is when SEBI steps in to make it safer for investors by tensing the rules and regulations. They bring in rules to make it transparent and operate totally in the stock request.
Structure of SEBI
The structure of SEBI comprises nine members:
A Chairman, named by the Union Government of India
Two representatives from the Union Finance Ministry
One representative from the Reserve Bank of India
Five members named by the Union Government of India
SEBI has different departments and all the departments are controlled by the head of the department. There are around twenty departments under SEBI.
Some of these departments are:
Profitable and policy analysis
Pot finance
Mortal coffers
Debt and cold-blooded securities
Investment operation
Enforcement
Legal affairs
Commodity derivations request regulations
SEBI as a Regulator
As a controller of the capital request, SEBI aims to produce an atmosphere that encourages the integrated and accessible operation of the securities request.
Key Stakeholders:
Securities issuers: Raise cash from numerous sources to support operations.
Investors: SEBI maintains an atmosphere free of misconduct and restores public confidence.
Plutocrat brokers and interposers: Ensure flawless and secure fiscal deals between issuers and investors.
Functions of SEBI
1. Defensive Functions
Price manipulation examination by SEBI
Stopping bigwig trading
Encouraging the use of ethical behaviours
Informing investors
Proscribing trade practices that are deceptive or illegal
2. Regulatory Functions
Making norms and a law of conduct for correct operations in the stock request
Regulating appropriations
Inquiries about checkups
Registration of interposers like brokers, sub-brokers, trafficker bankers
Penalising companies for violations
Registering credit standing agencies
3. Experimental Functions
Training the interposers
Encouraging fair business and reducing malpractices
Conducting exploration into the benefits of encouraging tone-regulating groups
Sale of MFs directly through a broker
Carrying out exploration
Mutual Fund Regulations by SEBI
To cover the interests of investors, SEBI issued regulations and established norms for collective finances.
Five major orders of collective finances:
Equity schemes
Debt relief schemes
Mongrel schemes
Other schemes
Role of SEBI
1) Regulatory Part
Ensures fair and transparent dealings in securities, regulates players like stockbrokers and merchant bankers.
2) Administrative Part
Supervises and monitors operations of players in the securities request to ensure compliance.
3) Experimental Part
Promotes development of the securities request by introducing new products, encouraging foreign investment, and promoting investor education.
4) Investor Protection Part
Prevents bigwig trading and fraudulent practices, ensures accurate information is given to investors, and provides grievance redressal.
5) Enforcement Part
SEBI has power to impose penalties, initiate legal proceedings, suspend/cancel registration, and investigate misconduct.
6) Request Development Part
Introduces new products like equity derivations, allows short-selling, enables algorithmic trading, and encourages SME listings.
7) Promoting Translucency and Exposure
Mandates listed companies to provide timely information including financial statements and board meeting outcomes.
8) Promoting Commercial Governance
Lays down rules for independent directors, audit panels, and governance structures to ensure transparency.
9) Regulating Collective Finances
Monitors performance of collective finances and ensures compliance with SEBI guidelines.
10) Regulating Credit Rating Agencies
Lays guidelines for registration, functioning, and monitoring of credit standing agencies.
11) Regulating Insider Trading
Monitors for insider trading cases, imposes penalties, suspends trading, and initiates criminal proceedings if needed.
12) Promoting Investor Education and Awareness
Launches campaigns to educate investors and provides grievance redressal mechanisms.
13) Regulating Stock Exchanges
Ensures efficient functioning and transparency of stock exchanges.
14) Regulating Foreign Investments
Frames guidelines for foreign investments and monitors compliance.
Recent Reforms and Initiatives
Introduction of T+1 settlement cycle
Stricter disclosure requirements
Strengthened ESG reporting norms
Enhanced monitoring of crypto-related investments
Stricter rules on algorithmic trading
Revised norms on buybacks and shareholding disclosures
Improved whistleblower mechanisms
SEBI’s Role in Financial Market Development
Enhancing Transparency
Introduction of New Instruments (ETFs, derivatives)
Corporate Governance Standards
Education and Awareness Programs
Curbing Malpractices
Conclusion
SEBI plays a critical part in the functioning of the securities request in India. It regulates colorful players in the request, ensures fair and transparent dealings in securities, and protects the interests of investors. SEBI also plays a experimental part in promoting and developing the securities request and has the power to apply its regulations and guidelines.
Its sweats have helped in making the securities request in India more effective, transparent, and investor-friendly. SEBI stands for the Securities and Exchange Board of India. It monitors stock exchanges and brokers, helps prevent fraud and bigwig trading, ensures companies give accurate information, and fosters trust and safety in the market.
SEBI serves as the guardian of the Indian securities market, ensuring fairness, transparency, and investor confidence. Its continuous reforms and proactive measures contribute to the robust growth of India’s capital markets, attracting both domestic and global investors.
References
Securities and Exchange Board of India, www.sebi.gov.in
Companies Act, 2013, Ministry of Corporate Affairs – www.mca.gov.in
Indian Kanoon, SEBI Regulations – https://indiankanoon.org
NSE India, SEBI Guidelines – www.nseindia.com
BSE India, SEBI Circulars – www.bseindia.com
