The Securities Exchange Board of India (SEBI) works as the regulator of the securities market in India. It aims at creating and maintaining a healthy stock market in the country and has control over the transactions in the stock market. It governs the rules through which the stock markets in India are controlled.
The headquarters of SEBI is situated in Mumbai. Mr. U.K Sinha is the Chairman of SEBI. The chairman of SEBI is nominated by the Union Government of India. The organization has a total of 643 employees. It has four regional offices in Ahmedabad, Chennai, New Delhi and Kolkata. Along with the regional offices, it also has 14 local offices in Chandigarh, Lucknow, Dehradun, Bengaluru, Hyderabad, Kochi, Guwahati, Bhubaneswar, Patna, Ranchi, Jaipur, Indore, Panaji and Raipur.
The basic functions as described by the preamble of SEBI is “…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”
The Securities Exchange Board of India was established in the year 1988 but was given legal powers in the year 1992. The SEBI came into power with the SEBI Act 1992 by the government of India with a purpose of stopping malpractices and protecting the investor’s interest. It was given additional powers in 1995. One major goal behind the inception of SEBI was to create and keep the trust in the finance and investment markets in India.
Functions and powers of SEBI
The functions and roles of the SEBI are similar to the U.S. Securities and Exchange Commission (SEC). As the central regulator of securities and exchange of the country, it protects the interest of the following groups in the debt and equity market.
- The investors : Protective duties
- The issuers of securities : Regulatory duties
- The market intermediaries: Developmental duties
Some of the main functions of SEBI are:
- Regulating the business in stock exchanges and any other securities markets.
- Prohibiting fraudulent and unfair trade practices relating to securities markets
- Registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets.
- Registering and regulating the working of the depositories and other participants.
- Regulating the working of venture capital funds and collective investment schemes, including mutual funds.
- Prohibiting insider trading in securities
- Conducting investors’ education and training of intermediaries of securities markets
Technically SEBI has three powers: quasi-judicial, quasi-legislative and quasi-executive powers.
The following are the powers vested with SEBI for its proper functioning:
- The discovery and production of books of account and other documents.
- Summoning and enforcing the attendance of persons.
- Suspend the trading of any security in a recognized stock exchange.
- Issuing commissions for the examination of witnesses or documents.
- Suspend any office-bearer of any stock exchange or self- regulatory organization from holding such position.
- Impound and retain the proceeds or securities in respect of any transaction which is under investigation.
Departments of SEBI
The following are the main departments present in SEBI for its smooth functioning:
- MIRSD: MARKET INTERMEDIARIES REGULATION AND SUPERVISION DEPARTMENT
The Market Intermediaries Regulation and Supervision Department is responsible for the registration, supervision, compliance monitoring and inspections of all market intermediaries in respect of all segments of the markets.
- MRD: MARKET REGULATION DEPARTMENT
The Market Regulation Department is responsible for supervising the functioning and operations (except relating to derivatives) of securities exchanges, their subsidiaries, and market institutions such as Clearing and settlement organizations and Depositories.
- CDMRD: COMMODITY DERIVATIVES MARKET REGULATION DEPARTMENT
Responsible for supervising the functioning and operations of Commodity Derivative exchanges.
- CFD: CORPORATION FINANCE DEPARTMENT
- IMD: INVESTMENT MANAGEMENT DEPARTMENT
- ISD: INTEGRATED SURVEILLANCE DEPARTMENT
- IVD: INVESTIGATIONS DEPARTMENT
- EFD: ENFORCEMENT OF DEPARTMENT
- LAD: LEGAL AFFAIRS DEPARTMENT
- EAD: ENQUIRIES AND ADJUDICATION DEPARTMENT