SECURITIES AND

EXCHANGE BOARD
OF INDIA
(SEBI)
 Why does Securities Market need Regulators?
 The absence of conditions of perfect competition in
the securities market makes the role of the Regulator
extremely important. The regulator ensures that the
market participants behave in a desired manner so
that securities market continues to be a major source
of finance for corporate and government and the
interest of investors are protected.

Who regulates the Securities Market?

 The responsibility for regulating the securities market
is shared by Department of Economic Affairs (DEA),
Department of Company Affairs (DCA), Reserve
Bank of India (RBI) and Securities and Exchange
Board of India (SEBI).
 SEBI - An Introduction :-
* The Securities and Exchange Board of India
(SEBI) was constituted on April 12,1988 as a
non-statutory body through an Administrative
Resolution of the Government.

* for dealing with all matters relating to the

development and regulation of the securities
market and investor protection and to advise
the Government on all these matters.
 WHY ‘ SEBI ACT, 1992 ’ ?
* In 1992, the Bombay Stock Exchange (BSE), the
leading stock exchange in India, witnessed the first
major scam masterminded by Harshad Mehta.

* Analysts felt that if more powers had been given to

SEBI, the scam would not have happened.

* As a result, the Government of India (GoI) brought in a

separate legislation by the name of 'SEBI Act 1992' and
conferred statutory powers to it.

Since then, SEBI had introduced several stock market

reforms. These reforms significantly transformed the
face of Indian stock markets.
 SEBI was given statutory status and powers
through an Ordinance passed on January
30,1992.
 SEBI was established as a statutory body on
February 21, 1992. The Ordinance Was
replaced by an Act of Parliament on April 4,
1992.
 The preamble of the SEBI Act, 1992 enshrines
the OBJECTIVES of SEBI –
 to protect the interest of investors in securities
market and to promote the development of and
to regulate the securities market.
 Administration of SEBI :-
* The head office of the board is situated in Mumbai & its
regional offices are at Delhi, Calcutta and Chennai.
 The board consists of :- a Chairman;

 Two members from the ministries of the central

government dealing with finance & law;
 One member from the Reserve Bank of India;

 Five other members of whom at least three shall be the

full time members appointed by Central government.
 Chairman & other members – persons of ability, integrity
& standing having special knowledge or experience of
law,finance,economics,accountancy,administration or
other discipline which in the opinion of central govt, shall
be useful to SEBI.
 Functions and powers of SEBI -
Functions of SEBI -
i. Regulate the business in stock exchange &
other securities markets.
ii. Registering and regulating the working of the
depositories ,participants ,foreign institutional
investors & other intermediaries,as board may
specify.
iii. Registering and regulating the working of
venture capital funds and collective investment
schemes, including mutual funds.
iv. Registering & regulating self regulatory
organisations(SRO).
v. Prohibiting fraudulent & unfair trade practices
related to securities market.
vi. Promoting investors education and training of
intermediaries of securities markets.
vii. Prohibiting insider trading in securities.
viii. Regulating substantial acquisition of shares &
take over of companies.
ix. Calling for information from, undertaking
inspection, conducting enquiries & audits of
stock exchanges, mutual funds, SRO’s.
x. Performing such functions under Securities
Contract (Regulation) Act,1956 as delegated
to SEBI by the Central govt.
 Powers of SEBI-
i. The discovery & production of books of
accounts & other documents at place & time
specified by SEBI.

ii. Summoning and enforcing the attendance of

persons & examining them on oath.

iii. Inspection of any books, registers or any other

document of any person like stock brokers,
share transfer agents, of the company & other
intermediaries in securities markets.
THANK YOU