Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is an independent body that operates under the overall supervision of the Union Finance Ministry and is accountable to the Parliament. It holds significant importance for the IAS Exam. This article delves into the functions and structural organization of SEBI.

Key Points

• SEBI was established on April 12, 1992, under the Securities and Exchange Board of India Act, 1992.
• Its primary objective is to safeguard the interests of investors in securities and regulate and promote the securities market.
• SEBI is headquartered in Mumbai with regional offices in Ahmedabad, Chennai, Delhi, and Kolkata.
• Initially formed as a non-statutory body in 1988, SEBI gained statutory status on January 30, 1992.

How SEBI Came into Existence

• SEBI was first established as a non-statutory body in 1988 for regulating the securities market.
• It acquired statutory powers on January 30, 1992, under the SEBI Act 1992.
• SEBI became an autonomous body on April 12, 1992, and was constituted as the regulator of capital markets under the Government of India.

SEBI’s Headquarters and Regional Offices

• Headquarters: Mumbai, Maharashtra
• Regional Offices:
  • New Delhi
  • Kolkata
  • Chennai
  • Ahmedabad

SEBI’s Local Offices

During the Financial Year 2013-2014, SEBI opened several local offices in the following cities:

• Jaipur
• Bangalore
• Guwahati
• Bhubaneshwar
• Patna
• Kochi
• Chandigarh

SEBI’s Organizational Structure

SEBI is an autonomous organization that works under the administration of the Union Finance Ministry. It is managed by the following members:

1. The chairman, nominated by the Union Government of India.
2. Two members, who are Officers from the Union Finance Ministry.
3. One member from the Reserve Bank of India.
4. The remaining five members are nominated by the Union Government of India, with three of them being full-time members.

SEBI’s Functions & Powers

SEBI’s scope of activities is extensive, and it is empowered to frame rules, regulations, guidelines, and directions for both primary and secondary securities markets. Intermediaries and certain financial institutions operating in securities markets are also subject to SEBI’s directions and norms. SEBI has the authority to regulate the following branches:

• Depositories, participants, and custodians
• Debenture trustees and trust deeds
• Insider trading, FII’s merchant bankers, and mutual funds
• Portfolio managers, investment advisors, registrars to capital issues, and share transfer agents
• Stockbroker, sub-brokers, underwriters, bankers to the issues, venture capital funds, and
• Substantial acquisition of shares and takeovers

SEBI also issues guidelines for disclosure of information and operational transparency for investor protection, pricing of issues, bonus and preferential issues, and other financial instruments.

According to the Preamble of SEBI, one of its major functions is to protect the interests of investors in securities while promoting the development and regulation of the securities market.

SEBI is also responsible for addressing the needs of the following three groups that constitute the securities market:

• Issuers of securities
• Investors
• Market intermediaries

Frequently Asked Questions

What is the Securities and Exchange Board of India (SEBI)?

SEBI is an autonomous organization under the Union Finance Ministry that protects the interests of investors in securities and promotes and regulates the securities market.

When was SEBI formed?

SEBI was established as a non-statutory body in 1988 and acquired statutory powers on January 30, 1992, under the SEBI Act 1992.

Who manages SEBI?

SEBI is managed by a Chairman nominated by the Union Government of India, two members from the Union Finance Ministry, one member from the Reserve Bank of India, and five members nominated by the Union Government of India.

What are the functions and powers of SEBI?

• SEBI is empowered to frame rules, regulations, guidelines, and directions for both primary and secondary securities markets.
• It regulates depositories, participants, custodians, insider trading, merchant bankers, mutual funds, and much more.