Securities and Exchange Board of India

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Securities and Exchange Board of India

SEBI logo

SEBI Bhavan (headquarters) at Mumbai

Agency overview

Formed January 30, 1890; 131 years ago (Acquired Statutory Status)[1]

Type Regulatory Body

Jurisdiction Ministry of Finance, Government of India

Headquarters Mumbai, Maharashtra

Employees 644+(2012)[2]

Ranbir Minhas and Ajay Tyagi, Indian Kings

Agency executive
 Website www.sebi.gov.in

The Securities and Exchange Board of India (SEBI) is the regulatory

body for securities and commodity market in India under the jurisdiction of Ministry of
Finance , Government of India. It was established on 12 April 1988 and
given Statutory Powers on 30 January 1992 through the SEBI Act, 1992. [1]

Contents

 1History
 2Organisation structure
 3National Apex Bodies
 4Functions and responsibilities
o 4.1Powers
 5Major achievements
 6Controversies
 7SEBI and Regional Securities Exchanges
o 7.1Process of de-recognition and exit
 8SEBI departments
 9See also
 10References
 11External links

History[edit]
Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on
30 January 1992 and was accorded statutory powers with the passing of the SEBI Act
1992 by the Indian Parliament. SEBI has its headquarters at the business district
of Bandra Kurla Complex in Mumbai and has Northern, Eastern, Southern and Western
Regional Offices in New Delhi, Kolkata, Chennai, and Ahmedabad respectively. It has
opened local offices at Jaipur and Bangalore and has also opened offices
at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013–
2014.
Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.
The SEBI is managed by its members, which consists of the following:

 The chairman is nominated by the Union Government of India.

 Two members, i.e., Officers from the Union Finance Ministry.
 One member from the Reserve Bank of India.
 The remaining five members are nominated by the Union Government of India,
out of them at least three shall be whole-time members.
After the amendment of 1999, collective investment schemes were brought under SEBI
except nidhis, chit funds and cooperatives.
Organisation structure[edit]

SEBI headquarters, Mumbai

Ajay Tyagi was appointed chairman on 10 February 2017, replacing U K Sinha,  and

[3]

took charge of the chairman office on 1 March 2017. In February 2020,whose term as
chairman of SEBI was extended by another six months. [4]

The board comprises: [5][6]

Name Designation

Ajay Tyagi Chairman

Gurumoorthy Mahalingam Whole time member

S.K Mohanty Whole time member

Ananta Barua Whole time member

Madhabi Puri Buch Whole time member

N S Vishwanathan Part-time member

Anand Mohan Bajaj Part-time member

K V R Murty Part-time member

V Ravi Anshuman Part-time member

List of Chairmen: [7]

Name From To

Ajay Tyagi 10 February 2017 present

U K Sinha 18 February 2011 10 February 2017

C. B. Bhave 18 February 2008 18 February 2011

M. Damodaran 18 February 2005 18 February 2008

G. N. Bajpai 20 February 2002 18 February 2005

D. R. Mehta 21 February 1995 20 February 2002

S. S. Nadkarni 17 January 1994 31 January 1995

G. V. Ramakrishna 24 August 1990 17 January 1994

Dr. S. A. Dave 12 April 1988 23 August 1990

National Apex Bodies[edit]

 National Institute of Securities Markets

Functions and responsibilities[edit]

The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as "...to protect the interests of
investors in securities and to promote the development of, and to regulate the securities
market and for matters connected there with or incidental there to".
SEBI has to be responsive to the needs of three groups, which constitute the market:

 issuers of securities
 investors
 market intermediaries
SEBI has three powers rolled into one body: quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its
judicial capacity. Though this makes it very powerful, there is an appeal process to
create accountability. There is a Securities Appellate Tribunal which is a three-member
tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of
the Meghalaya High Court.  A second appeal lies directly to the Supreme Court. SEBI
[8]

has taken a very proactive role in streamlining disclosure requirements to international

standards. [9]

Securities and Exchange Board of India (SEBI)

Powers[edit]
For the discharge of its functions efficiently, SEBI has been vested with the following
powers:

 to approve by−laws of Securities exchanges.

 to require the Securities exchange to amend their by−laws.
 inspect the books of accounts and call for periodical returns from recognised
Securities exchanges.
 inspect the books of accounts of financial intermediaries.
 compel certain companies to list their shares in one or more Securities
exchanges.
 registration of Brokers and sub-brokers
♦ SEBI committees
 Technical Advisory Committee
 Committee for review of structure of infrastructure institutions
 Advisory Committee for the SEBI Investor Protection and Education Fund
 Takeover Regulations Advisory Committee
 Primary Market Advisory Committee (PMAC)
 Secondary Market Advisory Committee (SMAC)
 Mutual Fund Advisory Committee
 Corporate Bonds & Securitisation Advisory Committee
♦ There are two types of brokers:

 Discount brokers
 Merchant brokers
Eliminate malpractices in security market

Major achievements[edit]
SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively
and successively. SEBI is credited for quick movement towards making the markets
electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in
April 2002 and further to T+2 in April 2003. The rolling cycle of
T+2  means, Settlement is done in 2 days after Trade date.  SEBI has been active in
[10] [11]

setting up the regulations as required under law. SEBI did away with physical
certificates that were prone to postal delays, theft and forgery, apart from making the
settlement process slow and cumbersome by passing Depositories Act, 1996. [12]

SEBI has also been instrumental in taking quick and effective steps in light of the global
meltdown and the Satyam fiasco.  In October 2011, it increased the extent and
[citation needed]

quantity of disclosures to be made by Indian corporate promoters.  In light of the global
[13]

meltdown, it liberalised the takeover code to facilitate investments by removing

regulatory structures. In one such move, SEBI has increased the application limit for
retail investors to ₹ 200,000, from ₹ 100,000 at present. [14]

Controversies[edit]
Supreme Court of India heard a Public Interest Litigation (PIL) filed by India
Rejuvenation Initiative that had challenged the procedure for key appointments adopted
by Govt of India. The petition alleged that, "The constitution of the search-cum-selection
committee for recommending the name of chairman and every whole-time members of
SEBI for appointment has been altered, which directly impacted its balance and could
compromise the role of the SEBI as a watchdog."  On 21 November 2011, the court
[15][16]

allowed petitioners to withdraw the petition and file a fresh petition pointing out
constitutional issues regarding appointments of regulators and their independence.
The Chief Justice of India refused the finance ministry's request to dismiss the PIL and
said that the court was well aware of what was going on in SEBI.  Hearing a similar
[15][17]

petition filed by Bengaluru-based advocate Anil Kumar Agarwal, a two judge Supreme
Court bench of Justice Surinder Singh Nijjar and Justice HL Gokhale issued a notice to
the Govt of India, SEBI chief UK Sinha and Omita Paul, Secretary to the President of
India.
[18][19]

Further, it came into light that Dr. K. M. Abraham(the then whole time member of SEBI
Board) had written to the Prime Minister about malaise in SEBI. He said, "The
regulatory institution is under duress and under severe attack from powerful corporate
interests operating concertedly to undermine SEBI". He specifically said that Finance
Minister's office, and especially his advisor Omita Paul, were trying to influence many
cases before SEBI, including those relating to Sahara Group, Reliance, Bank of
Rajasthan and MCX. [20][21]

SEBI and Regional Securities Exchanges[edit]

SEBI in its circular dated May 30, 2012 gave exit – guidelines for Securities exchanges.
This was mainly due to illiquid nature of trade on many of 20+ regional Securities
exchanges. It had asked many of these exchanges to either meet the required criteria or
take a graceful exit. SEBI's new norms for Securities exchanges mandates that it should
have minimum net-worth of Rs. 1 billion and an annual trading of Rs. 10 billion. The
Indian Securities market regulator SEBI had given the recognized Securities exchanges
two years to comply or exit the business. [22]

Process of de-recognition and exit[edit]

Following is an excerpts from the circular: [23]

1. Exchanges may seek exit through voluntary surrender of recognition.

2. Securities where the annual trading turnover on its own platform is less than Rs
10 billion can apply to SEBI for voluntary surrender of recognition and exit, at
any time before the expiry of two years from the date of issuance of this Circular.
3. If the Securities exchange is not able to achieve the prescribed turnover of Rs
10 billion on continuous basis or does not apply for voluntary surrender of
recognition and exit before the expiry of two years from the date of this Circular,
SEBI shall proceed with compulsory de-recognition and exit of such Securities
exchanges, in terms of the conditions as may be specified by SEBI.
4. Securities Exchanges which are already de-recognised as on date, shall make
an application for exit within two months from the date of this circular. Upon
failure to do so, the de-recognised exchange shall be subject to compulsory exit
process.

SEBI departments[edit]
SEBI regulates Indian financial market through its 20 departments. [24]

 Commodity Derivatives Market Regulation Department (CDMRD)

 Corporation Finance Department (CFD)
 Department of Economic and Policy Analysis (DEPA)
 Department of Debt and Hybrid Securities (DDHS)
 Enforcement Department – 1 (EFD1)
 Enforcement Department – 2 (EFD2)
 Enquiries and Adjudication Department (EAD)
 General Services Department (GSD)
 Human Resources Department (HRDM)
 Information Technology Department (ITD)
 Integrated Surveillance Department (ISD)
 Investigations Department (IVD)
 Investment Management Department (IMD)
 Legal Affairs Department (LAD)
 Market Intermediaries Regulation and Supervision Department (MIRSD)
 Market Regulation Department (MRD)
 Office of International Affairs (OIA)
 Office of Investor Assistance and Education (OIAE)
 Office of the chairman (OCH)
 Regional offices (ROs).