SEBI And its role in Financial Market

• The capital market started emerging as a new sensation in India during the end of the 1970s.
• However, with the popularity of stocks, a number of malpractices also started rising like price
rigging, unofficial private placements, non-compliance with the provisions of the Companies
Act, insider trading, violation of stock exchange rules and regulations, delay in making delivery
of shares and many others.
• As this time, the Indian Government realized the need for establishing an authority to reduce
these malpractices and regulate the working of the Indian securities market as the majority of
Indian People started losing their trust in the stock market.
• Soon after, SEBI (Securities and Exchange Board of India) was set up in the year 1988.
• Initially, SEBI acted as a watchdog and lacked the authority of controlling and regulating the
affairs of the Indian capital market.
• Nonetheless, in the year 1992, it got the statutory status and became an autonomous body to
control the activities of the entire stock market of the country.
SEBI And its role in Financial Market

• The statutory status of the SEBI authorized it to conduct the following activities:-

• SEBI got the power of regulating and approving the by-laws of stock exchanges.

• It could inspect the accounting books of the recognized stock exchanges in the
country. It could also call for periodical returns from such stock exchanges.

• SEBI became empowered to inspect the books and records of financial

Intermediaries.
SEBI And its role in Financial Market
• It could constrain companies for getting listed on any stock exchange.

• It could also handle the registration of stockbrokers.

• SEBI is headquartered in Mumbai and having its regional offices in New Delhi, Chennai,
Kolkata, and Ahmedabad. You can also find SEBI’s local offices in Jaipur, Guwahati,
Bangalore, Patna, Bhubaneswar, Chandigarh, and Kochi.

• At present, 23 stock exchanges are currently operating in India, including NSE and BSE.
The operations of all these stock exchanges are regulated by the guidelines of SEBI.
 The organizational structure of SEBI
• Mr. Ajay Tyagi is the current chairman of SEBI.

• He was appointed on the 10th of January, 2017 and took over the charge with effect from 1st
March 2017 from Mr. U.K. Sinha.

• SEBI consists of one chairman and other board members.

• The honorable chairman is nominated by the Central Government.

• Out of the eight board members, two members are nominated by the Union Finance Ministry and
one member is nominated by the RBI.

• The rest five members of the board are nominated by the Union Government.
 The objectives of SEBI

• SEBI’s responsibility is to ensure that the securities market in India functions in an

orderly manner.

• It is made to protect the interests of investors and traders in the Indian stock market by
providing a healthy environment in securities and to promote the development of, and to
regulate the equity market.

• Further, as stated earlier, one of the prime reason for establishing SEBI was to prevent
malpractices in the Indian capital market.
 SEBI’S MAIN ROLES IN
THE INDIAN FINANCIAL MARKET
• Issuer of securities. These are the companies listed in the stock exchange which raise funds
through the issue of shares. SEBI ensures that the issue of IPOs and FPOs can take place in a
transparent and healthy way.

• Players in the capital market i.e. the traders and investor. The capital markets are functioning
only because the traders exist. SEBI is responsible for ensuring that the investors don’t become
victims of any stock market manipulation or fraud.

• — Financial Intermediaries. They act as mediators in the securities market and ensure that the
stock market transactions take place in a smooth and secure manner. SEBI monitors the activities
of the stock market intermediaries like brokers and sub-brokers.