CAPITAL MARKET AND SECURITIES

TRIMESTER IX

THE ROLE OF SEBI IN REGULATING PRIMARY

MARKET IN SECURITIES

INTRODUCTION

The Securities and Exchange Board of India was established as an interim administrative
body on 12 April 1988 by the Government of India. Its main objective was to promote
orderly and healthy growth of securities and to provide protection to the investors. The
Ministry of Finance of the Government of India has overall administrative control over its
functions. On 30th January 1992, it was given a statutory status through an ordinance, which
later on was replaced by Act of Parliament known as Securities and Exchange Board of India
Act, 1992.

The main objective is to create such an environment which facilitates efficient mobilization
and allocation of resources through the securities market. This environment consists of rules
and regulations, policy framework, practices and infrastructures to meet the needs of three
groups which mainly constitute the market i.e. issuers of securities (companies), the investors
and the market intermediaries.
 STATEMENT OF PROBLEM

In the present era, the dealings in the stock market has increased rapidly. A lot of malpractices
also started in stock markets such as price rigging, unofficial premium on new issue, and
delay in delivery of shares, violation of rules and regulations of stock exchange and listing
requirements as a result. Due to these malpractices the customers started losing confidence
and faith in the stock exchange. This assignment will enable the reader to understand the
crucial role played by SEBI in the regulation of the securities in the primary markets.

HYPOTHESIS

It was believed that the SEBI would promote orderly and healthy development in the stock
market but initially it was not able to exercise complete control over the stock market
transactions. As a result it was left as a watch dog to observe the activities but was found
ineffective in regulating and controlling them. But, the grant of legal status to SEBI
empowered it to regulate the stock market transaction.

RESEARCH AIMS AND OBJECTIVES

This project is an effort to understand the role of SEBI in regulation of the following:
 Disclosures of offer documents and Code of Advertisement
 Preserving the Shareholders’ interests through regulation over intermediaries
 Regulation of Insider Trading.

RESEARCH QUESTIONS

 What are the reasons for establishment of SEBI?

  How SEBI regulate the emerging Indian securities market and improve its safety and
efficiency?

 What are the numerous measures taken by SEBI to restructure the capital market with
context to intermediaries?
 What is the role of SEBI in regulating Insider Trading with reference to the legal
provisions?

RESEARCH METHODOLOGY

The methodology used in this research project is doctrinal.

REVIEW OF LITERATURE

CASES REFERRED
 Kimsuk Krishna Sinha v. SEBI 2010 (100)SCL 197

 United States v. O'Hagan, 521 U.S. 642, 655 (1997)

STATUTES REFERRED

• Securities and Exchange Board of India Act,1992

• Securities and Exchange Board of India (Prohibition Of Insider Trading) regulations,
1992
• Securities and Exchange Board Of India (Investor Protection and education fund)
Regulations, 2009

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