Dear Aspirants,

As we are going to work in a bank, it is very important to know about SEBI(Securities and Exchange Board of India) which is the regulator of securities market. And we as bankers should also deal with these things once we get into the bank. So it is important to know about SEBI and its functions.

SEBI was established in 1992 by passing of the Securitites and Exchange Board Act. This board was established to protect the interests of investors in securities and to promote the development and regulation of securities market. It extends to entire India. SEBI is headquartered in the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 – 2014.

Initially SEBI was a non statutory body without any statutory power. However, in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act, 1992. In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.

The SEBI is managed by its members, namely

• The chairman who is nominated by Union Government of India.
• Two members, i.e., Officers from Union Finance Ministry.
• One member from the Reserve Bank of India.
• The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members.

Objectives of SEBI:-

• To protect the investors, so that steady and regular flow of savings into the capital markets be maintained.
• To ensure the fair practices by the issuer of securities, so that they can raise resources easily and cheaply.
• To promote the efficiency services by brokers, sub-brokers, merchant bankers, and other intermediaries, so that they may become competitive and professional.

Functions and Responsibilities:-

SEBI has to be responsive to the needs of three groups, which constitute the market:

• the issuers of securities
• the investors
• the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability.

Powers:-

For the discharge of its functions efficiently, SEBI has been vested with the following powers:

• to approve by−laws of stock exchanges
• to require the stock exchange to amend their by−laws.
• inspect the books of accounts and call for periodical returns from recognized stock exchanges.
• inspect the books of accounts of financial intermediaries.
• compel certain companies to list their shares in one or more stock exchanges.
• levy fees and other charges on the intermediaries for performing its functions.
• grant licence to any person for the purpose of dealing in certain areas.
• delegate powers exercisable by it.
• prosecute and judge directly the violation of certain provisions of the Companies Act.

SEBI Committees:-

• Technical Advisory Committee
• Committee for review of structure of market infrastructure institutions
• Advisory Committee for the SEBI Investor Protection and Education Fund
• Takeover Regulations Advisory Committee
• Primary Market Advisory Committee (PMAC)
• Secondary Market Advisory Committee (SMAC)
• Mutual Fund Advisory Committee
• Corporate Bonds & Securitization Advisory Committee
• Derivatives market review committee
• Committee on Infrastructure Funds

Value added questions:-

1) Which of the following clauses of SEBI is associated with corporate government?
a) 41
b) 42
c) 49
d) 52
e) 55

2) In the term Repo the term of the loan is greater than
a) 30 days
b) 20 days
c) 60 days
d) 90 days
e) None of these

3) SCORES stands for:
a) SEBI Complaints Redress System
b) Special Complaints Redress System
c) Sources for Complaints Redress System
d) None of These

4) The rolling cycle of T + 2 means, Settlement is done in______after trade date:
a) 2 Days
b) 2 Months
c) 2 Weeks
d) None of These

5) Who is the current chairman of SEBI?
a) Upendra Kumar Sinha
b) Arundhati Bhattacharya
c) Uday Dharamlingam
d) None of These