Securities And Exchange Board Of India

It was established on 12 April 1988 as an executive body and was given statutory powers on 30 January 1992 through the SEBI Act, 1992.SEBI's establishment brought about a centralized regulatory framework, consolidating regulatory functions related to securities trading, issuance, and intermediation under one umbrella.

Securities and Exchange Board of India

Securities and Exchange Board of India
SEBI Bhavan, Mumbai
Agency overview
Formed	April 12, 1988; 36 years ago (1988-04-12) (Established) January 30, 1992; 32 years ago (1992-01-30) (Acquired Statutory Status)
Type	Regulatory agency
Headquarters	Mumbai, Maharashtra
Employees	867+ (2020)
Agency executive	Madhabi Puri Buch, Chairperson
Parent department	Ministry of Finance, Government of India
Child agencies	Forward Markets Commission Association of Mutual Funds of India National Securities Depository Limited Central Depository Services Limited
Key document	Securities and Exchange Board of India Act, 1992
Website	sebi.gov.in
Footnotes

The Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-statutory body for regulating the securities market. Before it came into existence, the Controller of Capital Issues was the market's regulatory authority, and derived power from the Capital Issues (Control) Act, 1947. SEBI became an autonomous body on 30 January 1992 and was accorded statutory powers with the passing of the SEBI Act, 1992 by the Parliament of India. It 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. Up until June 2023, it also had 17 local offices spread all over India to promote investor education; however, 16 of them were closed as part of a restructuring exercise.

SEBI is managed by its board of members, which consist of the following people:

• The chairman, who is nominated by the Union Government of India.
• Two members 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, and out of them at least three should be whole-time members.

After the amendment of 1999, collective investment schemes were brought under SEBI except nidhis, chit funds and cooperatives.

 

Madhabi Puri Buch took charge of chairman on 1 March 2022, replacing Ajay Tyagi, whose term ended on 28 February 2022. Madhabi Puri Buch is the first woman chairperson of SEBI.

Current Board members

The board comprises:

List of Chairpersons

List of Chairmen:

• National Institute of Securities Markets of India

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

 

Powers

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.
• eliminate malpractices in security market.

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

SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively and successively. It is credited for quick movement towards making the markets electronic and paperless by introducing the T+5 rolling cycle in July 2001, the T+3 in April 2002, and the T+2 in April 2003. The rolling cycle of T+2 means that settlement is done in 2 days after trade date. SEBI has also been active in setting up the regulations as required under law. It 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 the Depositories Act, 1996.

SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.^{[citation needed]} In October 2011, it increased the extent and quantity of disclosures to be made by Indian corporate promoters. In light of the global 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 (US$2,500) from ₹100,000 (US$1,300) at present.

On the occasion of World Investor Week 2022, SEBI Executive Director Shri G. P. Garg launched a book on Financial Literacy. This book is a joint effort between Metropolitan Stock Exchange of India Limited and CASI New York.

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 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 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.

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.

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 ₹ 1 billion and an annual trading of ₹ 10 billion. The Indian Securities market regulator SEBI had given the recognized Securities exchanges two years to comply or exit the business.

Process of de-recognition and exit

Following is an excerpts from the circular:

1. Exchanges may seek exit through voluntary surrender of recognition.
2. Securities where the annual trading turnover on its own platform is less than ₹ 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 ₹ 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 regulates Indian financial market through its 20 departments.