Abstract

Powers And Functions Of SEBI -SEBI is a statutory regulatory body that stands for Securities And Exchange Board Of India which is responsible to regulate the Indian capital markets.

It was set-up to prevent malpractices in the capital market and to promote the development of the capital market because people were losing confidence in the stock market, so the government felt a sudden need to set up an authority to regulate the working and to reduce malpractices.

SEBI ensures that the capital market operates in a systematic manner and provides its investors such a transparent environment for their investment.

It monitors and regulates the securities market and protects the interests of the investors by enforcing certain rules and regulations.[1]

History

Powers And Functions Of SEBI – SEBI was originally established on 12 April 1988 by the government of India.

In April 1988, The SEBI was constituted as the regulator of capital markets under the resolution of the Indian government.

Initially, SEBI was a non-statutory body, later it became an ‘autonomous’ body on 30 January, 1992, after the Indian parliament passed the SEBI Act, 1992.

In 1995, the Indian government through an amendment to the Securities And Exchange Board Of India Act, 1992, was given additional statutory powers.

Its headquarter is located in Mumbai, and regional offices in New Delhi, Kolkata, Chennai and Ahmedabad.

SEBI is managed by its members, consists of the following

A chairman, nominated by the union government of India;
Two members, Officers from union finance ministry;
One member from the Reserve Bank Of India;
Five members, nominated by the union government of India, three out of them shall be full-time members.[2]

Powers of SEBI

SEBI has powers relating to stock exchanges and intermediaries i.e. It can ask about information regarding business transactions for inspection or scrutiny and other purposes.
SEBI has the power to impose monetary penalties on capital market intermediaries. It can also impose a suspension of their registration for a small period.
It has the power to initiate actions into functions assigned.
Has the power to regulate insider trading.
Also has powers under the securities contracts act i.e. SEBI has empowered by the finance ministry to nominate three members on the governing body of every stock exchange.[3]
It has the power to regulate the business of the stock exchange.

Functions of SEBI

SEBI has three functions:

1. Protective Function: SEBI performs these functions to protect the interest of investors and other financial participants.

(i)Safeguard the interests of traders and investors.

(ii)Limit price rigging, as some of them is already fix (price rigging) by the corporate or group of corporate.

(iii)Prevent insider trading.

(iv)Promote fair practices, ensure that all the market transactions take place smoothly and securely.

(v)Prohibits unfair trade practices.

2. Development Function: It brings freshness and innovations to the Indian financial market.

(i) Offering training to financial intermediaries.

(ii) Introducing DEMAT form of securities.

(iii) Buying- selling mutual funds directly from AMC through a broker.

(iv) Encouraging self-regulating organisations.

(v) Promoting fair trade practices and reducing unfair trade practices.[4]

3.Regulatory Function: This function ensures the smooth and transparent functioning of the stock market.

It regulates the functioning of mutual funds and the takeover of companies.

All intermediaries, brokers, sub-brokers, merchant bankers, trustees etc register in SEBI.

Conducts inquiries and audit of exchanges.

Reference

[1] Divya Singh Rathore, Regulations, Categorisation, PAISABAZAAR.COM, (February 04, 2021, 12:02 PM), https://www.paisabazaar.com/mutual-funds/what-is-sebi/

[2] Bare Act, The Securities And Exchange Board Of India, 1992, Page No. 4

[3] Gaurav Akrani, powers of SEBI- Securities & Exchange Board Of India, Kalyan City Life, (February 04, 2021, 01:56) https://kalyan-city.blogspot.com/2010/11/powers-of-sebi-securities-and-exchange.html

[4] Elearnmarkets, SEBI: Role, Objective, Structure, And Functions Of SEBI, Elearnmarkets.com, (February 04, 2021, 02:34), https://www.elearnmarkets.com/blog/sebi-purpose-objective-functions-sebi/