SEBI - Introduction

In 1988 the Securities and Exchange Board of India (SEBI) was established by
the Government of India through an executive resolution, and was subsequently
upgraded as a fully autonomous body (a statutory Board) in the year 1992 with
the passing of the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In
place of Government Control, a statutory and autonomous regulatory board with defined
responsibilities, to cover both development & regulation of the market, and independent powers have
been set up. Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

The basic objectives of the Board were identified as:

• to protect the interests of investors in securities;

• to promote the development of Securities Market;
• to regulate the securities market and
• for matters connected therewith or incidental thereto.

Since its inception SEBI has been working targetting the securities and is attending to the fulfillment of
its objectives with commendable zeal and dexterity. The improvements in the securities markets like
capitalization requirements, margining, establishment of clearing corporations etc. reduced the risk of
credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the
eligibility criteria, the code of obligations and the code of conduct for different intermediaries like,
bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit
rating agencies, underwriters and others. It has framed bye-laws, risk identification and risk
management systems for Clearing houses of stock exchanges, surveillance system etc. which has
made dealing in securities both safe and transparent to the end investor.

Another significant event is the approval of trading in stock indices (like S&P CNX Nifty & Sensex) in
2000. A market Index is a convenient and effective product because of the following reasons:

• It acts as a barometer for market behavior;

• It is used to benchmark portfolio performance;
• It is used in derivative instruments like index futures and index options;
• It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national level, and also to
diversify the trading products, so that there is an increase in number of traders including banks,
financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the
Exchanges. In this context the introduction of derivatives trading through Indian Stock Exchanges
permitted by SEBI in 2000 AD is a real landmark.

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory framework for
derivatives trading and suggest bye-laws for Regulation and Control of Trading and Settlement of
Derivatives Contracts. The Board of SEBI in its meeting held on May 11, 1998 accepted the
recommendations of the committee and approved the phased introduction of derivatives trading in India
beginning with Stock Index Futures. The Board also approved the "Suggestive Bye-laws" as
recommended by the Dr LC Gupta Committee for Regulation and Control of Trading and Settlement of
Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM)
in the Indian Stock Index Futures Market. The report was submitted in november 1998.

However the Securities Contracts (Regulation) Act, 1956 (SCRA) required amendment to include
"derivatives" in the definition of securities to enable SEBI to introduce trading in derivatives. The
necessary amendment was then carried out by the Government in 1999. The Securities Laws
(Amendment) Bill, 1999 was introduced. In December 1999 the new framework was approved.

Derivatives have been accorded the status of `Securities'. The ban imposed on trading in derivatives in
1969 under a notification issued by the Central Government was revoked. Thereafter SEBI formulated
the necessary regulations/bye-laws and intimated the Stock Exchanges in the year 2000. The
derivative trading started in India at NSE in 2000 and BSE started trading in the year 2001.
SEBI - SEBI Administration

The Securities and Exchange Board of India Act, 1992 is having retrospective
effect and is deemed to have come into force on January 30, 1992. Relatively
a brief act containing 35 sections, the SEBI Act governs all the Stock
Exchanges and the Securities Transactions in India.

A Board by the name of the Securities and Exchange Board of India (SEBI) was constituted under the
SEBI Act to amminister its provisions. It consists of one Chairman and five members.

One each from the department of Finance and Law of the Central Government, one from the Reserve
Bank of India and two other persons and having its head office in Bombay and regional offices in
Delhi, Calcutta and Madras.

The Central Government reserves the right to terminate the services of the Chairman or any member
of the Board. The Board decides questions in the meeting by majority vote with the Chairman having
a second or casting vote.

Section 11 of the SEBI Act provides that to protect the interest of investors in securities and to
promote the development of and to regulate the securities market by such measures, it is the duty of
the Board. It has given power to the Board to regulate the business in Stock Exchanges, register and
regulate 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, etc., also to register and regulate the working of collective investment schemes
including mutual funds, to prohibit fraudulent and unfair trade practices and insider trading, to regulate
take-overs, to conduct enquiries and audits of the stock exchanges, etc.

All the stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deed,
registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and
such other intermediary who may be associated with the Securities Markets are to register with the
Board under the provisions of the Act, under Section 12 of the Sebi Act. The Board has the power to
suspend or cancel such registration. The Board is bound by the directions vested by the Central
Government from time to time on questions of policy and the Central Government reserves the right
to supersede the Board. The Board is also obliged to submit a report to the Central Government each
year, giving true and full account of its activities, policies and programmes. Any one of the aggrieved
by the Board's decision is entitled to appeal to the Central Government.
Securities and Exchange Board of
India

Investment
Directory > Business > Investment > Securities and Exchange Board of India
Securities And Exchange Board Of India - SEBI
The regulatory body for the investment market in India. The purpose of this board is to
maintain stable and efficient markets by creating and enforcing regulations in the market
place.
Investopedia Says: The Securities and Exchange Board of India is similar to the U.S.
SEC. The SEBI is relatively new (1992) but is a vital component in improving the quality
of the financial markets in India both to attract foreign investors and to protect Indian
investors.
See Also: Dalal Street, National Commodities And Derivatives Exchange - NCDEX,
Securities & Exchange Commission - SEC, Securities Exchange Act of 1934, Sensex,
Uniform Securities Act, Wall Street
Related Links:
Find out how this regulatory body protects the rights of investors. Policing The Securities
Market: An Overview Of The SEC
Before you blame your advisor for your losses, be sure you know your rights and
responsibilities. Tips For Resolving Disputes With Your Financial Advisor

Wikipedia
Directory > Reference > Wikipedia > Securities and Exchange Board of India
Securities and Exchange Board of India
Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed
by the Government of India in 1992 with its head office at Mumbai.

Functions
Its main functions are providing for

• regulating the business in stock exchanges and any other securities markets

• 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.

• 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.

• registering and regulating the working of venture capital funds and collective
investment schemes including mutual funds;

• promoting and regulating self-regulatory organisations;

• prohibiting fraudulent and unfair trade practices relating to securities markets;

• promoting investors' education and training of intermediaries of securities

markets;

• prohibiting insider trading in securities;

• regulating substantial acquisition of shares and takeover of companies;

• calling for information from, undertaking inspection, conducting inquiries and

audits of the stock exchanges, mutual funds and other persons associated with the
securities market and intermediaries and self- regulatory organisations in the
securities market;

• calling for information and record from any bank or any other authority or board
or corporation established or constituted by or under any Central, State or
Provincial Act in respect of any transaction in securities which is under
investigation or inquiry by the Board;19

• performing such functions and exercising such powers under the provisions of
[...]20 Securities Contracts (Regulation) Act, 1956, as may be delegated to it by
the Central Government;

• levying fees or other charges for carrying out the purpose of this section;

• conducting research for the above purposes;

• calling from or furnishing to any such agencies, as may be specified by the Board,
such information as may be considered necessary by it for the efficient discharge
of its functions;21

• performing such other functions as may be prescribed.