The Securities and Exchange Board of India(SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992.
SEBI has its headquarters at 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.
Ajay Tyagi was appointed chairman on 10 January 2017 replacing U K Sinha and took charge of chairman office on March 1, 2017.
SEBI is managed by the following members of the board:
- 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.
List of former Chairmen:
|Ajay Tyagi||10 February 2017||present|
|U K Sinha||18 February 2011||10 February 2017|
|C. B. Bhave||18 February 2008||18 February 2011|
|M. Damodaran||18 February 2005||18 February 2008|
|G. N. Bajpai||20 February 2002||18 February 2005|
|D. R. Mehta||21 February 1995||20 February 2002|
|S. S. Nadkarni||17 January 1994||31 January 1995|
|G. V. Ramakrishna||24 August 1990||17 January 1994|
|Dr. S. A. Dave||12 April 1988||23 August 1990|
Objectives of SEBI:
The objectives of SEBI are to protect the interest of investors and to promote the development of stock exchange and to regulate the activities of stock market
- Ensuring fair practices in securities market.
- Defining rules and regulations for the securities market in India
- Ensuring safety of investor’s investment.
- Settlement of investor’s grievances in securities market.
- Rregulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc.
Functions of SEBI:
SEBI has three important functions. These are:
- Protective functions
- Developmental functions
- Regulatory functions.
1. Protective functions:
(a) SEBI checks Price Rigging: Price Rigging refers to manipulation of the prices of securities for inflation or depressing the market price of securities.
(b) It Prohibits Insider trading: Insider refers to any person connected to the company such as directors, promoters etc. Since, they are the part of the company so they have sensitive information which affects the prices of the securities. And all these information is not available to people at large but these Insider get this information by working inside the company. The overall point is these Insiders can use these information for their personal benefits or can make profit from it, and it is called as Insider Trading.
(c) SEBI prohibits fraudulent and Unfair Trade Practices: It does not allow the companies to make misleading statements which are likely to induce the sale or purchase of securities by any other person.
2. Developmental Functions:
(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI tries to promote activities of stock exchange by adopting flexible and adoptable approach in following way:
(a) SEBI has permitted internet trading through registered stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of issue.
(c) Even initial public offer of primary market is permitted through stock exchange.
3. Regulatory functions:
These functions are to regulate the business in stock exchange.
(i) SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries such as merchant bankers, brokers, underwriters, etc.
(ii) These intermediaries have been brought under the regulatory purview and private placement has been made more restrictive.
(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer agents, trustees, merchant bankers and all those who are associated with stock exchange in any manner.
(iv) SEBI registers and regulates the working of mutual funds etc.
(v) SEBI regulates takeover of the companies.
(vi) SEBI conducts inquiries and audit of stock exchanges.