Securities market was exposed to a number of malpractices and violation of rules, when an increased demand for capital market took place. Lack of a body monitoring such related legislation led to the establishment of SEBI.
SEBI act 1992 was enacted, which delegated powers to a board SEBI, SEBI Full Form is Securities and Exchange Board of India.
What is SEBI?
SEBI is a regulatory body of Indian Stock Market, that drafts a precise set of rules and regulations, and should be followed when a securities trade is undertaken.
Definite rules and regulations were created, which would bind the intermediaries, creating a frame of boundaries they need to adhere to, mostly in favor of individual investors.
The brief SEBI meaning stands to be, Securities and exchange board of India safeguards the interest of the investors, invading the superiority and dominance of intermediaries, to create an environment free of malpractices.
Apart from safeguarding the interest of investors, SEBI as well promotes development and uplifting of the securities market.
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Establishment of SEBI was dated back to the year 1988, when it was a non statutory body, and it wasn’t until 1992 when the entire framework was redefined and an autonomous statutory body was created.
Being the controller and regulator of the securities market, Indian Capital market participant’s fulfilment of needs attained a definite shape.
SEBI is headquartered at business district at the Bandra Kurla Complex in Mumbai. The body has also established regional branches in the Northern, Eastern, Southern and Western regions, and precisely in the cities New Delhi, Kolkata, Chennai, and Ahmedabad.
Sub branches have establishment in Bangalore, Jaipur, Guwahati, Bhubaneshwar, Patna, Kochi, and Chandigarh.
What are the Functions of SEBI?
SEBI act 1992, briefly drafts the SEBI Functions, which are equally mended to suit and in favour of all the parties involved in a securities trade. The functions are briefly listed below.
- SEBI provides a well framed infrastructure, a place the issuers of securities may find appropriate to make their set of offering to the public, in a rather routine and uniform fashion.
- The traders, who opt to invest in the securities offers, shall be safeguarded, protecting their interest in investment and keeping them protected from the possible malpractices which target the investors and their money.
- The entire framework of Indian Securities market is promoted and regulated by SEBI, encourage ever fair aspect which may lead to the development of the market.
- It also has a set of prohibition list, where the insider trades is restricted, cutting off the chance of fraudulent and unfair trade practices arising.
- Investor awareness and education is highly promoted by the board, where education mediums are provided to the investors, and insights on the intermediaries of trade are laid upon.
- Among the various happenings, such as acquisition of shares and take-over of companies, are all monitored by the SEBI.
- Among all the other functions of SEBI, it also undertake the research activities, where the present and future possible market situations are closely monitored and take into account, to ensure the securities market is efficient, and functioning well enough.
What are the Powers of SEBI?
Powers vested upon SEBI are in consideration of a vast number of aspects. SEBI Powers are reportedly grouped into three categories and the same are as below:
This segment streamlines the protection of investors, and their interest, by formulation rules and regulations in favour of the investors.
There are a number of rules, issued by the board, such as Listing obligation and Disclosure Requirements, insider trading, listing obligations etc. They collectively cater to invading even the slight possibility of malpractices.
This power incorporated upon the idea of a transparent and fair trade. It lies upon the belief that any unfair trade practices should be accounted for. It is SEBI that conducts the hearing and proceeding, if any malpractices are found to exist.
This segment gives SEBI the right to investigate. If any issues or practices are found existent judgments would be passed by SEBI to deal with the same.
It has its share of rights to undertake inspection of books, document or records, if any breach arises. With the power to investigate, it also has its share of power to cease and desist proceedings.
What are the SEBI Regulations?
Of all the diverse regulations, we have listed 4 of SEBI Regulations below:
- 2009 regulation – This is the Issue of Capital and Disclosure Requirements, where the board directs the issuers of the securities to disclose everything in brief in order to have the transparency in capital matters as well.
- 2011 regulation – This consists of the Substantial Acquisition of Shares and Takeover, where the takeover activities are directed to be undertake in a fair way, pointing out the unfair ways, which need to be avoided.
- 2015 regulation – This regulation is of Prohibition of Insider Trading, where insiders of the listed company are not to trade the securities.
What is the Structure of SEBI?
SEBI Structure is of a corporate framework, which has its own sections of department. Each of such departments is supervised by a head. The departments being precisely listed are more than 20 in number.
From all the vast number of departments some are corporation finance, economic and policy analysis, debt and hybrid securities, enforcement, human resources, investment management, commodity derivatives market regulation, legal affairs, and more.
Head of the department being equally responsible have a different set of member, precisely the board of directors. The definite structure is as follows, and how each of the members is elected.
- Union Government of India is responsible to elect the Chairman of SEBI
- Reserve Bank of India then elects one member to the board of directors.
- Structure also has a place for 2 officers, who shall be the electing responsibility of Union Government of India.
- The remaining 5 members will as well be contributed to the board by the Union Government of India.
SEBI – Conclusion
Investing in the securities market has taken a turn since the incorporation of SEBI. This regulatory body has been the greatest contributor of the entire likely framework. This would outline the ways in which no investor would be exposed to encountering any unfair trade practices.
This body has a set of power it undertakes, if any breach or violation of rules is witnessed. Thereby strengthening the infrastructure of Indian securities market, alongside its management.
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