Securities and Exchange Board of India: Its objectives, functions, and powers

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The Securities and Exchange Board of India or Sebi is the regulator of securities and the commodity market in India which is owned by the Government of India. Established on 12 April 1988, as a non-statutory body, SEBI was given its Statutory Powers on 30 January 1992 via the SEBI Act, 1992. With its headquarter in Mumbai, SEBI also has 4 regional offices in New Delhi, Chennai, Kolkata, and Ahmedabad along with other local offices across prominent cities in India.securities and exchange board of india

Securities and Exchange Board of India – Functions of Sebi

The Preamble of SEBI describes the basic functions of the SEBI in the simple words – ‘to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.’ This board is generally responsive to the needs of 3 groups:

  • Issuers of securities: SEBI works toward providing a marketplace to the investors where they can efficiently and fairly raise their funds.
  • Investors: SEBI protects and supplies accurate information to investors.
  • Market Intermediaries: SEBI works towards providing a professional and competitive market to the intermediaries.

Must Read: World Bank – History, Facts, Functions, and Objectives

Securities and Exchange Board of India – Functions of SEBI

The three functions of SEBI are:

  • Quasi-legislative
  • Quasi-judicial
  • Quasi-executive

This means that SEBI drafts regulations, conduct investigation, and enforces action, passes rulings and orders. The all-in-one combination of SEBI makes it all the more powerful but it also has an appeal process to create accountability. This brings in the Securities Appellate Tribunal which is a 3-member tribunal, currently headed by the former Chief Justice of the Meghalaya High Court, Justice Tarun Agarwala.

Securities and Exchange Board of India

Sebi Objectives

Speaking about its objective, SEBI ensures that the Indian capital market works in a systematic manner, providing investors with a transparent environment for their investments. This board aims at preventing any and all kinds of malpractices in the capital market of India and promotes the development of the capital markets.

Its major objectives can also be stated as:

  • Monitoring the activities of the stock exchange.
  • Safeguarding the rights of the investors.
  • Curbing fraudulent practices by maintaining a balance between statutory regulations and self-regulation.
  • Defining the code of conduct for the brokers, underwriters, and other intermediaries.

Also Read BRICS – Why was BRICS formed, its full form, objectives & developments

Securities and Exchange Board of India

Powers of Sebi

SEBI regulates and performs several functions such as checking the books of accounts of stock exchanges and call for periodical returns, approving by-laws of stock exchanges, inspecting the books of financial intermediaries such as banks, compelling certain companies to get listed on one or more stock exchanges, and handling the registration of brokers.

With over 25 departments, SEBI has tons of powers and responsibilities. Some of them are stated below:

Protective Powers of Sebi

  • Checking price manipulation.
  • Banning Insider trading.
  • Prohibiting unfair and fraudulent trade practices.
  • Promoting a fair code of conduct in the security market.
  • Takin the efforts to educate the investors regarding ways to evaluate the investment options better.

Securities and Exchange Board of India

Regulatory Powers of Sebi

  • Designing a code of conduct, rules, and regulations to regulate the brokers, underwriters, and other intermediaries.
  • Governing a company’s takeover.
  • Regulating and registering the workings of share transfer agents, stockbrokers, merchant bankers, trustees, and others who are linked with the stock exchange.
  • Regulating and registering mutual funds.
  • Conducting audits and inquiries of stock exchanges.

Developmental Powers of Sebi

  • Facilitating the training of intermediaries.
  • Promoting activities of the stock exchange by having an adaptable and flexible approach.

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