What is SEBI?
SEBI stands for Securities and Exchange Board of India. It is the regulator for the securities market and an apex institution for investment in India. It was established in the year 1988 as a non – statutory body for security market regulation but become an autonomous body by The Government of India on 12th May 1992 and given statutory powers in 1992 with the SEBI Act 1992 being passed by the Indian Parliament. It has its headquarters in Mumbai and regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. Before its existence Controller of Capital Issues was the regulatory authority.
It consists of a Chairman nominated by the Union Government of India and eight other members out of which– two members are officers from the Union Finance Ministry, one member from Reserve Bank of India and five others are nominated by the union government of India.
Functions of SEBI
The idea behind its establishment is to provide such an environment for the financial market enthusiasts that facilitate efficient and smooth working of the securities market by ensuring that the three important participants of the financial market i. e issuers of securities, investor and financial intermediaries are taken care of. It is basically a quasi-judicial, quasi-legislative body. Its functions can be primarily divided into 3 categories
- Protective Functions – to protect the interest of investors and other financial participants which include: promote fair practices, create awareness among investors, prohibit fraudulent and unfair trade practices etc
- Regulatory Functions – to keep a check on the functioning of the business in the financial markets which include: levying of fees, register and regulate credit rating agency, regulation of takeover of companies etc
- Development Functions – include: carry out research work, encouraging self – regulating organizations, imparting training to intermediaries etc
Besides this, it also regulates and registers the working of stockbrokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, merchants bankers, underwriters, portfolio managers and other such intermediaries who may be associated with the securities market in any manner. For the promotion of investors education and awareness, SEBI had established The Investor Protection and Education Fund. SAT or Securities appellate Tribunal, is a statutory body established under the provisions of Section 15K of the Securities and Exchange Board of India Act, 1992. Its main purpose is to hear and dispose of appeals against orders passed by the Securities and Exchange Board of India or by an adjudicating officer under the act.
So overall SEBI is the key authority to regulate and empower the Indian capital market. It releases annual guidelines from time to time for all participants of the security market so that fair and smooth functioning of the security market can be ensured.