The SEBI (Securities and Exchange Board of India) is the regulator for the securities market in India.

• Established in the year 1988.
• It was given statutory powers on 12 April 1992 through the SEBI Act, 1992.

Security Market is tradable (service or goods that can be sold) financial assets (Example : bank deposits, bonds, and stocks) of any kind.

Some Points to be Noted

• Present Chairman of SEBI – Upendra Kumar Sinha.
• Head-quarters: MUMBAI

Structure of SEBI

• A chairman
• 2 members:
  • First, official from the Ministry of Central Government dealing with Finance and
  • Second, from Administration of Company Act,1956;
• 1 from the official of Reserve Bank of India;
• 5 other members- 3 of which shall be whole- time members appointed by the central government.

Objectives of SEBI

• To regulate securities market for fair practices
• To promote systematic services by Brokers, Merchant Bankers and other intermediaries
• To protect the interest of investors, for steady flow of capital in the market.

Functions of SEBI

SEBI Functions are divided into :

1. Regulatory functions and
2. Developmental functions

1. Regulatory Function :
   • Regulation of stock market and self regulatory organizations
   • Registrations & regulation of Self Brokers, sub brokers, merchant bankers
   • Registration and Regulation of INVESTMENT SCHEMES, including Mutual Funds
   • Regulating acquisition of Shares and takeover of companies
   • Prohibition of illegal and unfair trade practices relating to securities market
   • Prohibition of insider trading
2. Developmental function :
   • Promotion of fair practices
   • Promotion of self regulatory organizations
   • Conducting Research and publishing important information to all market participants
   • Promoting Investor’s education and training of intermediaries

Powers of SEBI:

• 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 a financial intermediaries.
• compel certain companies to list their shares in one or more stock exchanges.
• registration brokers.

Central Government and SEBI

• The central government has power to issue directions to SEBI board, replace the board and if necessary can call for returns and reports.
• The Central Government has power to give any guideline and make regulations and rules for SEBI and its operation.
• The activities of SEBI are financed by grants from Central Government.
• The fund called SEBI General Fund has been setup, to which all fees and charges are credited. This fund is used to meet the expenses of Board and to pay salaries to staff and board members.

TEST YOUR SKILLS

Q1. WHO IS THE FOUNDER OF SEBI?