Why do we need a regulatory body for Investor protection in India?• India is an ` Informationally weak market• Boosting capital market demands restoring the confidence of investors who have been beaten down by repeated scams• Progressively softening interest rates and an under performing economy have eroded investment options, and require enhanced investing skills.
SECURITIES AND EXCHANGE BOARD OF INDIA. The establishment of the securities and exchange board of india(SEBI) was a land mark government measure to monitor and regulate capital market activities and to promote healhty development of the market. SEBI was set up as a non-statutory body. Securities and Exchange Board of India (SEBI) is a autonomous body created by the Government of India in 1988 and given statutory form in 1992 with the SEBI Act 1992 It took almost four years for the government to bring about a separate legislation in the name of securities and exchange board of India act, 1992 conferring statutory powers.
SEBI ACT 1992 The Securities and Exchange Board of India Act, 4th April, 1992. An Act to provide for the establishment of a Board to protect the interests of Investors in securities and to promote the development of, and to regulate, The SEBI Act was amended to meet the requirements of changing needs of the securities market and responding to the development. The mission of SEBI is to make India as one of the best securities market of the world and SEBI as one of the most respected regulator in the world.
SEBI Management Board Members• The board consists of: – A Chairman – Two members from amongst the officials of the ministry of central government dealing with finance and administration of the Companies Act, 1956. – One member amongst the officials of the Reserve Bank – Five other members, of whom at least three to be the whole time members, appointed by the central government
VARIOUS DEPARTMENTS UNDER SEBI• The Primary market• The Issue management and intermediaries department• The Secondary Market• Institutional investment(MF and FII), mergers and acquisition• Legal department looks after all legal matters• Investigation department carries out inspection and investigation
OBJECTIVES OF SEBI1. Registering and regulating the working of stock brokers, sub-brokers, share transfer agents , underwriters……….who may be associated securities market in any manner.2. Registering and regulating the working of collective investment scheme including mutual funds.3. Prohibiting insider trading in securities.4. Regulating substantial acquisition of shares and takeovers of companies.
Contd……• 5. Calling for information from ,undertaking inspection ,conducting inquiries and audits of stock exchanges and intermediaries and self regulatory organizations in the securities market.• 6. Performing such function and exercising such powers under the provisions of the capital issues (control) act 1947 and SCRA 1956 ,as may be delegated to it by the central government.• 7. Performing such other functions as may be prescribed.
POWERS OF SEBI Regulating the business in stock exchanges and any other securities markets Registering and regulating the working of stock brokers, sub– brokers etc. Promoting and regulating self-regulatory organizations Prohibiting fraudulent and unfair trade practices Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, intermediaries, self – regulatory organizations, mutual funds and other persons associated with the securities market.
FUNCTIONSIt shall be the duty of the board to protect the interests of investors in securities and promote the development of, and to regulate the securities market, by such measures as it thinks fit.The measures may provide for –1. Regulating the business in stock exchange and any other securities markets;2. Registering and regulating the working of stock brokers , sub brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;3. Registering and regulating the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the board may, by notification , specify in this behalf;
Contd…4. Registering and regulating the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the board may, by notification , specify in this behalf;5. Promoting and regulating self- regulatory organizations;6. Prohibiting fraudulent and unfair trade practices relating to securities markets;7. Promoting investors’ education and training of intermediaries of securities markets;8. Prohibiting insider trading in securities;9. Regulating substantial acquisition of shares and take- over of companies;
Contd…10. Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market, intermediaries and self- regulatory organizations in the securities market;11. Calling for information and record from any bank or any other authority or board or corporation in respect of any transaction in securities which is under investigation or inquiry by the board;12. Performing such functions and exercises such powers under the provisions of the securities contracts (regulation) act, 1956 ,as may be delegated to it by the central government ;13. Levying fees or other charges for carrying out the purposes of this session;14. Conducting research for the above purposes;
Contd…15. Calling from or furnishing to any such agencies, as may be specifies by the board, such information as may be considered necessary by it for the efficient discharge of its functions;16. The board may take measures to undertake inspection of any book, or register, or other document or record of any public listed company, or a public company which intend to get its securities listed on any recognized stock exchange where the board has reasonable grounds to believe that such company has been indulging in under trading or fraudulent and unfair trade practices relating to security market