NEED AND ROLE OF SECURITIES AND EXCHANGE BOARD OF INDIA

  We all had been listening and reading about the various investment options in a race to get some good return on our investments. Having a large audience out there investing into various financial tools and various companies offering various investment options had you ever thought who keeps an eye on all this transactions. There must be some official body. How things go on so smoothly? Who is the real care taker behind?



The regulator, controller and promoter of the securities market in India is SEBI i.e. Securities and Exchange Board of India. Established in the year 1988 by the government of India, the Securities and Exchange Board of India was enacted on April 12, 1992 in accordance with the provisions of the SEBI Act, 1992, the year in which the Rs.5,000 crore Harshad Mehta securities scam hit Indian stock markets. The action taken in 1992 was in response to SEBI found ineffective and just left out as a watchdog and had less power and authority so as to control and regulate securities market. Having its Headquarters at the business district of Bandra Kurla Complex in Mumbai SEBI also has its Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively.

Where did the need of SEBI aroused from?

With the growth in the exchanges taking places in the stock markets, parallel a lot of malpractices also started in stock markets such as price rigging, violation of rules, regulations of stock exchange and listing requirements, unofficial premium on new issue, and delay in delivery of shares and many more. Seeing these malpractices the customers started losing faith and confidence in the stock exchange. The idea of securities exchange would have collapsed soon when the government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India (SEBI).

PURPOSE AND ROLE OF SEBI:

SEBI set up with an aim to keep a check on malpractices and to protect the interest of investors was having its primary motto to meet the needs of three groups of people:
1. Issuers:
To provide all its issuers a platform to raise their finances in an easy and fair manner.
2. Investors:
For investors it aims at providing and maintaining a platform that provides protection and supply of accurate and correct information.
3. Intermediaries:
Provide a competitive professional market for its intermediaries.

What does Preamble of SEBI speak?

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as:
1. To protect the interests of investors in securities.
2. To promote the development of securities market, and
3. To regulate the securities market and for matters connected therewith or incidental thereto.

Functions of SEBI

According to the provisions of SEBI Act, the Board holds the duty to protect the interests of investors, to promote the development of, and to regulate the securities market, by taking such measures that it thinks fit.

1. To register and regulate the working of registrars to an issue, stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, merchant bankers, portfolio managers, underwriters, investment advisers and such other intermediaries who are associated with securities markets in any form.
2. To regulate the businesses in stock exchanges and other securities markets.
3. To promote and regulate self-regulatory organisations.
4. To promote investors education and training of intermediaries of securities markets.
5. To prohibit fraudulent and unfair trade practices relating to securities markets.

To read all functions of SEBI in detail visit: http://www.sebi.gov.in/cms/sebi_data/about_us/act15ac.html#ch4

Powers of SEBI

1. Power to lay Rules and regulations before Parliament.
2. Power for levying Penalties and Adjudication.
3. SEBI has got all powers to conduct Investigations, issue directions etc in all cases.
4. It has got powers to suspect company's Finances, Accounts and Audit and conduct a check on the same.

To read in detail the Powers of SEBI visit: http://www.sebi.gov.in/cms/sebi_data/about_us/act15ac.html#ch4

Major achievements

Having started in the year 1988 SEBI has gone through a long run and has enjoyed successful journey as a regulator by pushing systematic reforms aggressively and successively. A 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 is one of the incredible offerings of SEBI to the securities market. With its contributions and immediate improvements securities market in India had grown really good all these days.
Rolling cycle of T+2^: It means Settlement is done in 2 days after Trade date.
Acting actively SEBI has been setup the regulations as required under law.
By passing Depositories Act, 1996, SEBI did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome. The Act also prevented the issue of fake share certificates floating in the market.
A huge change was introduction of SEBI’s electronic trading, with investors and traders even able to work from home.
SEBI has also found instrumental in taking immediate and effective steps in light of the global meltdown and the Satyam fiasco. Major steps were taken in October 2011, to increase the extent and quantity of disclosures to be made by Indian corporate promoters. The new takeover rules were made which makes it mandatory for all shares encumbered by promoters or by persons acting in concert with promoters to be disclosed. Looking towards the need in light of the global meltdown, SEBI liberalised the takeover code to facilitate investments and increased the application limit to 2 lakh that was 1 lakh previously.

With the needful updation as per the requirements of the market SEBI had done a fluent job in its past and is looked ahead for the same.