SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)





the security and exchange board of India was established by the Government of India on 12 April 1988 as an in interim administrative body to promote orderly and healthy growth of security market and for investor protection. It was to function under the overall administrative control of the minister of finance of the Government of India. The SEBI was given a statutory status on 13 January 1992 through an ordinance. The ordinance was later replaced by an act of parliament known as the securities and exchange board of India act 1992.

 Reasons for the Establishment of SEBI

the capital market has witnessed a tremendous growth during 1980s, characteristic particularly by the increasing participation of the public. This ever expanding investor population and market capitalization let do a variety of malpractice on the part of companies. Broker, Merchant bankers, investment consultant and other involved in the securities market. The glaring example

of this malpractice include exitance off shelf styled merchant banker unofficial private placement, ringing half price, unofficial premium all new issues, non adherence all provision of the Companies Act, violation of rule and regulation of Stock Exchange and listing requirement, delay in delivery osier act these malpractice and unfair trading practices have eroded investor confidence and multiplied Ritter investor grievance. The government and the Stock Exchange were rather help mess in redressing the investors problem because of lack of proper panel provision in the existing legislation. In view of the above, the Government of India decided to set up a separate regulation burden known as security and exchange board of India. 

Purpose and Role of SEBI

the basic purpose of SEBI is to create an environment of facilities efficient mobilization an allocation resources through the securities market. It also aimed to simulate competition and encourage innovation. This environment included rule and regulation, institution and their interrelationship, instrument, practice, infrastructure and policy framework.                             This environment aimed at meeting
the needs of the three group which basically constitute the market, Wiz, the issuer of securities (companies), the investor and the market intermediaries.

  • Do they swear, it aim to provide a marketplace in which they can confidently look forward to raging finals they need in an easy, fair and efficient manners.
  • To the investor, it should provide protection of their right hand interest through adequate, accurate and go to antique information and disclosure of information on a continuous basic.
  • To the intermediaries, it should offer a competitive professionalize end expanding market educate and efficient infrastructure so that they are able to render better service to the investor and issuers.

Objective of SEBI

the overall objective of SEBI is to protect the interest of investor and to promote the development of, and regulation the securities market. This may be elaborated as follows:

  1. To regulation Stock Exchange and the security industry to promote their orderly functioning.
  2. To protect the right and interest of investor, particularly individual investor and to guide and educate them.
  3. To prevent trading malpractice and achieve a balance between safe regulation by the security industry and it statutory regulation.
  4. To regulation and develop a code of conduct and fair practice of intermediaries like brokers, merchant bankers act., with a view to making them competitive and professional 



Functions of SEBI

keeping in mind the emerging nature of the security market in India, SEBI was encrusted with the doing task of both regulation and development of the securities market. It also was certain protective function.

Regulatory Functions 

  1. registration of broker and sub broker and other player in the market.
  2. Registration of collective investment scam and mutual fund.
  3. Regulation of stockbroker, portfolio exchange, underwriter and merchant brokers and the business in Stock Exchange and any other securities market.
  4. Regulation of takeover bids by companies.
  5. Calling for information by undertaking inspection, conducting injuries and audit of Stock Exchange and intermediaries.
  6. Levying fee or other charge for carrying out the purpose of the act.
  7. But for me and exercising such power under securities contracts act 1956, as may be delegate by the Government of India.

Development Functions 

  1. training of intermediaries of the securities market.
  2. Conducting research and publishing information useful to all market participants.
  3. Undertaking measure to develop the capital market by adapting a fixable approach.

Protective Functions 

  1. prohibitions fraudulent and unfair practice like marketing misleading statement, many population, prize ringing etc.
  2. Controlling insider trading and imposing penalties for such practices.
  3. Undertaking step for investor protection.
  4. Promotion for fair practice and code of conduct in securities market.

The Organization Structure of SEBI

As SEBI is a statutory body there has been a considerable expansion in the range and the scope of its activities. Each of the activities of the SEBI no demands more careful, closure, coordinate and intensive attention to enable it to attain its objective. Accordingly, SEBI has been restructured end rationalization in tune with its expanded school. It had decided it activities into 5 operational departments. Each department headed by an executive director. Apart from its head office at Mumbai, SEBI head open regional office in Kolkata, Chennai and Delhi to attend to investor complaints and liaise Vida I swear, intermediaries and the Stock Exchange in the concerned region. The SEBI also from 2 advisory committees foolish talk they are the primary market advisory committees and the secondary market advisory committee. This committee consist of the market player, the investor association recognized by the SEBI and the the meeting person in the capital market. They provide importance inputs to the SEBI politics. The objective of the two committee are also follows:

  1. to advise SEBI all matter relating to the regulation of intermediaries for insuring investor protection in the primary market.
  2. To advise SEBI only swear related to the development of primary market in India to advise SEBI on disclosure requirement for companies.
  3. Do advise for exchange in legal from work to introduce simplification and transparency in the primary market.
  4. To advise the board in matter relating to the development and regulation of the secondary market in the country.

The committee are however non statutory in nature and the SEBI ignore bound by the advice for the committee. This committee are a part of SEBI's constant endeavor to obtain a feedback from the market pillar on various issues relating to the regulation and development of the market.