About SEBI

https://akm-img-a-in.tosshub.com/businesstoday/images/story/202212/sebi2812-sixteen_nine.jpg

Establishment of SEBI

Securities & Exchange Board of India constituted as non-statutory body* on April 12, 1988, through a resolution of the Government of India.

SEBI was established as a statutory body* in the year 1992, and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) came into force on January 30, 1992.

*Statutory body- organizations or institutions set-up by an act of parliament, existence and power regulated by law.

*Non-statutory body- organizations or institutions that are not regulated by law

Preamble

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as

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.

Functions

1. Watching Over the Market: SEBI’s main job is to keep an eye on different parts of the stock market, like stock exchanges, brokers, and other middlemen. It makes sure these firms follow the rules and play fair to protect the interests of people who invest their money.
2. Your Money’s Guardian: SEBI wants to protect your money when you invest in stocks. It does this by making sure companies give you all the important information about their business so you can make smart choices.
3. Helping the Market Grow: SEBI is like a gardener for the stock market. It takes care of it and helps it grow. It does this by making changes and introducing new things to encourage more people to join the market and invest in companies.
4. Making Sure Companies Play Fair: SEBI checks the rules for things like when companies want to sell shares to the public for the first time (IPOs) or later (FPOs). It also watches how shares are bought and sold. It makes sure everyone follows the rules to be open and honest.
5. Keeping Middlemen in Check: There are middlemen in the market, like stockbrokers and mutual funds. SEBI keeps an eye on them too. It sets rules to make sure they do their job properly and don’t cheat you.
6. Stopping Cheaters: SEBI has tools to spot anyone who tries to cheat or do something shady in the market. If it catches someone breaking the rules, it takes action to stop them.
7. Teaching You About the Market: SEBI also wants to teach you about the stock market. It wants you to understand how it works so you can make smart choices with your money.
8. Learning and Making Better Rules: SEBI studies and thinks about what rules will work best for the market. It changes the rules when needed to keep up with how the market is changing.
9. Working with Others: SEBI talks to stock market authorities in other countries to make sure people in India can invest safely in companies from other places and people from other countries can do the same in India.
10. Making the Market Safe: SEBI helps make the market safer by making sure stock exchanges and other parts of the market are working well and following the rules.

Objectives of SEBI

1. Monitor activities of the stock exchange*.
2. Safeguard Investors Rights.
3. Define rules for brokers, underwriters*, and other intermediaries.
4. Stops frauds and bad practices.

*Stock exchange is like a special market where people buy and sell pieces of companies. In India, there are 23 stock exchanges in total. Two of them are national stock exchanges, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The final 21 are regional stock exchanges (RSEs).

*Underwriters are like financial experts or organizations that assist companies in getting money when they decide to sell stocks or bonds to the public for the first time. They are essential in the process of making a company’s initial public offering (IPO) successful.

SEBI Carries the following task to meet its objective:

Protective Functions

1. Checks Price Manipulation.
2. Bans Insider Trading.
3. Prohibits unfair and fraudulent trade practices.
4. Promotes fair code of conduct in the security market.
5. Efforts to educate the Investors regarding ways to evaluate the investment options better.

Regulatory Functions

1. Designed code of conduct, Rules and Regulations to regulate the brokers, underwriters and other intermediaries.
2. Governs company takeover.
3. Regulates and register the working of share transfer agents, stockbrokers, merchant's bankers, trustees, and other who are linked with stock exchange.
4. Regulates and register mutual fund as well.
5. Conducts audits and inquiries of stock exchange.

Developmental Functions

1. Facilites the training of the intermediaries.
2. Aims at promoting activities of the stock exchange by having an adoptable and flexible approach.

Organisation Structure

SEBI | Organisation Structure

About SEBI website SEBI | About SEBI