Securities And Exchange Board Of India (sebi)
Introduction
According to the guidelines of the Securities and Exchange Board of India Act, 1992, the Securities and Exchange Board of India (SEBI) is a statutory entity that was founded on April 12, 1992. The main duties of the Securities and Exchange Board of India include promoting and regulating the securities market as well as safeguarding the interests of investors in securities.
Let's look at the history of SEBI's founding, organization, and powers in this article.
A Succinct History of How Sebi Was Created:
• The Capital Issues (Control) Act of 1947 granted the Controller of Capital Issues permission to act as the regulatory body prior to the foundation of SEBI.
• The SEBI was founded as the country of India's capital markets' regulator in accordance with a decision adopted by the Indian government in April 1988.
• At first, SEBI lacked any statutory jurisdiction and was a non-statutory organization.
• It was given autonomy and legislative authority by the SEBI Act of 1992.
• Mumbai is home to the SEBI's main office. The regional offices of SEBI are located in Delhi, Chennai, Kolkata, and Ahmedabad.
Composition
• SEBI is an autonomous organization that reports to the Union Finance Ministry. The members of the Security and Exchange Board of India (SEBI) are as follows:
o Members:
Two officers from the Union Finance Ministry serve as members.
The Reserve Bank of India has one representative.
The Union Government of India appoints the remaining five members. Three of the five members should work full-time.
o Chairman: nominated by the Union Government of India.
• Securities Appellate Tribunal – SAT
o Furthermore, a Securities Appellate Tribunal – SAT has been established to protect the interests of entities that believe they have been wronged by any of SEBI's decisions.
o The SAT, which consists of a Presiding Officer and two other Members, has the same powers as a civil court.
o Furthermore, anyone who is dissatisfied with the SAT's decision or order may file an appeal with the Supreme Court.
SEBI'S Duties And Powers
Certain authority and responsibilities for the SEBI are set forth in the Securities and Exchange Board of India Act, 1992.
It has the power to establish policies, procedures, standards, and guidelines for both primary and secondary securities markets.
Intermediaries and certain financial institutions that operate in the securities markets must abide by SEBI's rules and regulations. SEBI has the power to control the following sectors:
1. Participants, depositories, and custodians
2. Trust deeds and debenture trustees
3. Insider trading, FIIs, merchant bankers, and mutual funds are all examples of insider trading.
4. Portfolio managers, investment advisors, capital issue registrars, and share transfer agents
5. Stockbrokers, sub-brokers, underwriters, bankers to issues and venture capital funds, as well as substantial share acquisitions and takeovers.
Additionally, it releases policies on operational transparency, bonus and preferred issues, issue pricing, investor protection, and other financial instruments.
A quasi-legislative and quasi-judicial organization, SEBI has the power to create rules, carry out investigations, make decisions, and apply sanctions.
It satisfies the criteria for three categories:
• Issuers – By providing a marketplace for issuers to increase their financing.
• Investors – By ensuring the security and availability of precise and accurate information.
• Intermediaries – By enabling a competitive professional intermediary market.
In accordance with the Securities Laws (Amendment) Act of 2014, SEBI is now empowered to regulate any money pooling arrangement of Rs. 100 crore or more and seize assets in the event of non-compliance.
The SEBI Chairman has the power to direct "search and seizure operations."
In conjunction with any securities transaction that is the subject of an inquiry by the SEBI board, any person or business may be asked for information, such as telephone call data records.
Successes of SEBI
• Achievements of the T+2 and T+1 systems used in SEBI Trading Settlement.
• The Securities and Exchange Board of India instructed all exchanges to set a daily price band of 10% and a weekly overall limit of 25% in 1996–1997 in order to lessen unwelcome volatility.
• The Securities and Exchange Board of India implemented an index-based circuit breaker system effective at 10%, 15%, and 20% movement either way to stop all stock and derivatives markets in India.
• Certificates for dematerialized shares from 1999.
• SEBI was given the responsibility of certifying FII registrations in 2003. The Securities and Exchange Board of India has put in place sufficient checks and balances to stop the flow of illicit funds into Indian markets, discouraging FII investments in P-notes.
• Entry loads for mutual fund schemes were outlawed in 2009.
• The allotment of a minimum number of shares to individual investors, strict regulation of how IPO profits are used, and more openness on the part of businesses and their bankers. A new e-IPO mechanism for electronic bidding in public offerings has also been created by SEBI to assist investors in making cost-effective bids for shares.
• Investors can file structured complaints using the SEBI Complaints Redress System - SCORES, a web-based centralized grievance redress system provided by the Securities and Exchange Board of India.
• The Securities and Exchange Board of India sets itself apart from other Indian regulators by being a financially independent regulator with its own revenue sources, which the International Organization of Securities Commissions (IOSCO) recognized as one of the pillars of the Indian securities settlement system in its Financial Sector Assessment Programme (FSAP).
Deficiencies of SEBI
• In recent years, SEBI's function has grown more complex, and the capital markets regulator is at a turning point.
• Regulation of market conduct is overemphasized, while prudential regulation receives little attention.
• As a result of the SEBI Act's vast capacity to introduce supplemental laws, its legislative authority is almost unrestricted.
• A method of reviewing regulations to evaluate if they have achieved their stated aim and the element of prior market engagement are conspicuously missing. Many people are therefore terrified of the regulator.
• Regulation, whether it takes the shape of laws or their implementation, is far from ideal, particularly when it comes to topics like insider trading.
• The lengthy Securities offering paperwork contain only formal compliance information rather than in-depth, high-quality disclosures.
Conclusion
In the past three decades, the SEBI has made a lot of adjustments, allowing it to offer a T+1 settlement trading system. The function of SEBI as a regulator will grow more difficult in the next years as a result of developing technology like algorithmic trading.