The Securities and Exchange Board of India (SEBI) is an autonomous regulatory body that operates under the administrative supervision of the Union Finance Ministry and is accountable to the Parliament. Established to protect investor interests and promote and regulate the securities market, SEBI plays a crucial role in ensuring the integrity and efficiency of the Indian financial market.
Formation and History
SEBI was initially formed in 1988 as a non-statutory body for regulating the securities market. It gained statutory status on 30th January 1992 with the enactment of the SEBI Act, 1992. On 12th April 1992, SEBI became an autonomous entity, tasked with the regulation of capital markets in India. Headquartered in Mumbai, Maharashtra, SEBI also has regional offices in New Delhi, Kolkata, Chennai, and Ahmedabad. In the financial year 2013-2014, SEBI expanded its reach by establishing local offices in cities including Jaipur, Bangalore, Guwahati, Bhubaneshwar, Patna, Kochi, and Chandigarh.
Structural Organisation
SEBI is structured to function autonomously while being supervised administratively by the Union Finance Ministry. Its management comprises:
- A chairman nominated by the Union Government of India.
- Two members from the Union Finance Ministry.
- One member from the Reserve Bank of India.
- Five members nominated by the Union Government of India, three of whom must be full-time members.
Functions and Powers
SEBI’s activities are comprehensive, encompassing both primary and secondary securities markets. It is empowered to frame rules, regulations, guidelines, and directions for various market participants, including intermediaries and financial institutions. SEBI’s regulatory purview includes:
- Depositories, participants, and custodians
- Debenture trustees and trust deeds
- Insider trading, Foreign Institutional Investors (FIIs), merchant bankers, and mutual funds
- Portfolio managers, investment advisors, registrars to capital issues, and share transfer agents
- Stockbrokers, sub-brokers, underwriters, bankers to the issues, and venture capital funds
- Substantial acquisition of shares and takeovers
SEBI also issues guidelines to ensure operational transparency and protect investor interests. These include directives on information disclosure, pricing of issues, bonus and preferential issues, and other financial instruments.
According to its preamble, one of SEBI’s primary functions is to protect the interests of investors in securities while promoting the development and regulation of the securities market. SEBI addresses the needs of three main groups within the securities market:
- Issuers of securities
- Investors
- Market intermediaries
Recent Developments
In March 2023, SEBI introduced new norms to enhance corporate governance and improve transparency among listed entities. These reforms included:
- Timely disclosure of material events
- Stricter timelines for compliance
- Removal of permanent board seats
- Improved corporate governance practices
These measures are designed to strengthen market integrity and boost investor confidence.
Summing Up
SEBI’s role as a regulator is pivotal in maintaining the stability and transparency of India’s securities market. Its efforts to safeguard investor interests and promote market development are ongoing, reflecting its commitment to fostering a robust financial ecosystem.