A

Research Project Report

On
“SECURITY EXCHANGE BOARD OF INDIA
(SEBI)”
By
Mr. Bandal Omkar Rohidas
[PGDM Semester I Roll No:TGBS2123005]
Specialization: Sustainable Finance
Batch: 2021 – 23
Under the Guidance of
Internal Guide
Prof. Saher Kapdi
(Program Manager)

Terna Global Business School

Nerul, Navi Mumbai-400706
2021

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 DECLARATION

This is to declare that I Omkar Rohidas Bandal, student of Terna Global Business School
(TGBS), Nerul PGDM (Sustainable Finance) batch 2021-2023, has given original data and
information to the best of my knowledge in the project report titled “ SECURITY
EXCHANGE
BOARD OF INDIA (SEBI) ” is a record of independent work carried out by me.
I also agree in principal not to share the vital information with any other person
outside the organization and that I have not submitted it for any award or any other title,
degree or diploma.

Date: 08 April 2022

Place: Navi Mumbai Signature of the Student
Name: Omkar Rohidas Bandal
Roll No: TGBS2123005
Specialization: Sustainable Finance
Batch: 2021-23

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 Table of contents

Particular Page No.

Exicutive summary 4
Introduction 5
History of the topic 6
Objectives of the study 7
Relevance of the topic 8
Details of the study 9
Role of SEBI 9
Power of SEBI 10
Objective of SEBI 11
Function of SEBI 12
SEBI New margin rules 14
India’s market regulator takes a step towards sustainable finance 15
Learning and Observation 16
Suggestions 17
Conclusion 18
Refferences 19

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 EXICUTIVE SUMMARY

SEBI plays an important role in regulating all the players operating in the Indian capital
market. It attempts to protect the interest of investors and aims at developing the capital
markets by enforcing various rules and regulations.

SEBI is a statutory regulatory body established on the 12th of April, 1992. It monitors
and regulates the Indian capital and securities market while ensuring to protect the interests of
the investors, formulating regulations and guidelines.

SEBI has a corporate framework comprising of various departments each managed by a

department head. There are about 20 departments under SEBI. Some of these departments are
corporation finance, economic and policy analysis, debt and hybrid securities, enforcement,
human resources, investment management, commodity derivatives market regulation, legal
affairs, and more.

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 INTRODUCTION

Sebi is known to be a Securities and Exchange Board of India. The Sebi is the controller
for the securities market in India. It was launched in 1922 under the SEBI Act. It is known to
be a regulatory body of goverment in India.

SEBI plays an essential part in monitoring all the performers working in the Indian
capital markets. It ventures to guard the interest of investors in mutual fund investment.
Mutual funds investments like Equity Mutual funds, Debt Mutual Funds, Income Funds and
many more. Also, points at improving the capital markets by implementing different rules
and regulations.

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 HISTORY OF THE TOPIC

Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on 30
January 1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by
the Indian Parliament. SEBI 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. It has opened local offices at
Jaipur and Bangalore and has also opened offices at Guwahati, Bhubaneshwar, Patna, Kochi
and Chandigarh in Financial Year 2013–2014.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 1947.

The SEBI is managed by its members, which consists of the following:

The chairman is nominated by the Union Government of India.

Two members, i.e., Officers 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, out of them
at least three shall be whole-time members.
After the amendment of 1999, collective investment schemes were brought under SEBI
except nidhis, chit funds and cooperatives.

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 OBJECTIVE OF THE STUDY

1.To know the approaches of its work, and power granted to the stock exchange board of
India under the SEBI Act 1992.

2 What is the organizational structure of the SEBI and how its Various Departments are
headed at each level and what are their functions.

3. What are the guidelines issued by the stock exchange Board of India in recent year to
protect the interest of the investor.

4. What is the role, power, and function of the SEBI.

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 RELEVANCE OF THE TOPIC

 As I selected the specification in sustainable finance, the selected topic is important

for the basic understanding of how SEBI controller for the securities market in India.

 Important to know the role of SEBI.

 And also know the power and functions of SEBI

 India’s market regulator takes a step towards sustainable finance.

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 DETAILS OF THE STUDY

Role of SEBI

This regulatory authority acts as a watchdog for all the capital market participants and its
main purpose is to provide such an environment for the financial market enthusiasts that
facilitate the efficient and smooth working of the securities market. SEBI also plays an
important role in the economy.

To make this happen, it ensures that the three main participants of the financial market are
taken care of, i.e. issuers of securities, investors, and financial intermediaries.

1. Issuers of securities
These are entities in the corporate field that raise funds from various sources in the market.
This organization makes sure that they get a healthy and transparent environment for their
needs.

2. Investor
Investors are the ones who keep the markets active. This regulatory authority is responsible
for maintaining an environment that is free from malpractices to restore the confidence of the
general public who invest their hard-earned money in the markets.

3. Financial Intermediaries
These are the people who act as middlemen between the issuers and investors. They make the
financial transactions smooth and safe.

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 POWER OF SEBI

1. Powers relating to stock exchanges & intermediaries

SEBI has wide powers regarding the stock exchange and intermediaries dealing in
securities. It can ask information from the stock exchanges and intermediaries regarding their
business transactions for inspection or scrutiny and other purpose.

2. Power to impose monetary penalties

SEBI has been empowered to impose monetary penalties on capital market
intermediaries and other participants for a range of violations. It can even impose suspension
of their registration for a short period.

3. Power to initiate actions in functions assigned

SEBI has a power to initiate actions in regard to functions assigned. For example, it can
issue guidelines to different intermediaries or can introduce specific rules for the protection
of interests of investors.

4. Power to regulate insider trading

SEBI has power to regulate insider trading or can regulate the functions of merchant bankers.

5. Powers under Securities Contracts Act

For effective regulation of stock exchange, the Ministry of Finance issued a Notification on
13 September, 1994 delegating several of its powers under the Securities Contracts
(Regulations) Act to SEBI. SEBI is also empowered by the Finance Ministry to nominate
three members on the Governing Body of every stock exchange.

6. Power to regulate business of stock exchanges

SEBI is also empowered to regulate the business of stock exchanges, intermediaries
associated with the securities market as well as mutual funds, fraudulent and unfair trade
practices relating to securities and regulation of acquisition of shares and takeovers of
companies

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 OBJECTIVE OF SEBI

The board is playing a dual role by working as a controlling authority and Development
institutions for achieving its objectives. The main objectives are:

• Investors Protection

• Steady flow of saving

• Fair practices by the issue

• Promotion of efficient services

• Transparency in work

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 FUNCTIONS OF SEBI

We can classify the functions of SEBI into three categories:

● Protective functions
● Developmental functions
● PRegulatory functions

1. PROTECTIVE FUNCTIONS:
As the name suggests, the main focus of this function of SEBI is to protect the interest
of investor and security of their investment As protective functions SEBI performs following
functions:

(i) SEBI checks Price Rigging:

Price Rigging means some people manipulate the prices of securities for inflation or
depressing the market price of securities. SEBI prohibits such practice to avoid fraud and
cheating which can happen to any investor,

(ii) SEBI prohibits Insider trading:

Any person which is connected with a company such as directors, promoters, workers
etc is called Insiders. Insider can use this information for their personal benefits or make a
profit from it, such process is known as Insider Trading.

(iii) SEBI prohibits fraudulent and Unfair Trade Practices:

SEBI always restricts the companies which make misleading statements which are likely
to induce the sale or purchase of securities by any other person.

(iv) SEBI sometimes educate the investors so that become able to evaluate the securities and
always invest in profitable securities.

(v) SEBI issues guidelines to protect the interest of debenture holders.

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(vi) SEBI is empowered to investigate cases of insider trading and has provision for stiff fine
and imprisonment.

(vii) SEBI has stopped the practice of allotment of preferential shares unrelated to market
prices.

2. DEVELOPMENTAL FUNCTIONS:

(ii) SEBI promotes training of intermediaries of the securities market.

(ii) SEBI tries to promote activities of stock exchange by adopting a flexible and
adaptable approach in following way.

3. REGULATORY FUNCTIONS:

(1) SEBI has framed rules and regulations and a code of conduct to regulate the
intermediaries such as merchant bankers, brokers, underwriters, etc.

(ii) These intermediaries have been brought under the regulatory purview and private
placement has been made more restrictive.

(iii) SEBI registers and regulates the working of stock brokers, sub-brokers, share transfer
agents, trustees, merchant bankers and all those who are associated with stock exchange in
any manner.

(iv) SFBI registers and regulates the working of mutual funds etc.

(V) SEBI regulates takeover of the companies.

(vi) SEBI conducts inquiries and audit of stock exchanges.

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 SEBI NEW MARGIN RULES

In September 2020, SEBI implemented new rules on margin pledge. The rule is expected to
bring transparency and prevent misuse of clients’ securities by brokerage firms. The new
margin rules were directed to come into effect from June 1, but were delayed due to
pandemic pushing the implementation date to September 1.

The new margin rules by SEBI mandate the following:

The stock, being pledged, is to remain in the investor’s de-mat account. As the stock is not
changing accounts, the benefits from corporate events accrue directly to the investors

Upfront collection of margins by brokers for any purchase or sale of securities, penalizing
any sort of failure to do so. Clients could meet the margin requirements by the end of the day,
which is now changed to the beginning of the day

Power of Attorney (POA) cannot be assigned in the favor of the brokers for pledging. As
under the old system, brokers could demand POA from the investors to execute decisions on
their behalf

Margin pledge created separately for investors requiring margin

Buy Today Sell Tomorrow (BTST) not allowed anymore for shares bought on margin. For a
BTST trade, it can be initiated only if the net available margin is equal to or greater than 20
percent of the transaction value.

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With plans to standardise ESG rating, India’s market regulator takes a
step towards sustainable finance

 The Securities and Exchange Board of India (SEBI) has released a consultation paper,
in which it has suggested standards for environmental, social and governance (ESG)
rating providers.

 Globally, there is an increased demand for corporates to have clear environmental,

social and governance (ESG) reporting and investors are visibly interested in this as
well.

 SEBI’s efforts are aimed to bring standardisation in the process of ESG rating, and
indicates the seriousness with which corporate India is looking at the process.

 As the threat of climate change grows, there is a push for climate finance globally.
This was highlighted during the COP26 climate conference as well.

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 LEARNING AND OBSERVATION

 The overall objectives of SEBI are to protect the interest of investors and to promote
the development of stock exchange and to regulate the activities of stock market.

 SEBI also plays an important role in the economy.

 Power and function of the SEBI.

 SEBI new margin rules

 ESG rating, India’s market regulator takes a step towards sustainable finance

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 SUGGESTIONS

In the light of recommendations of various committees and criticisms of analysts of capital

market, a number of suggestions can be made to improve SEBI’s performance in future.

SEBI needs to be vested with more powers; among these mention may be made of the
following important ones:

To monitor effectively the working of stock exchanges.

To insist on companies for the supply of extensive information on a regular basis.

To penalize members of stock exchanges who were found to violate securities laws.

To debar wrond-does from any activity in the stock market and impose on them civil
penalties
and initiate criminal proceedings.

To make rules about the manipulative practices.

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 CONCLUSION

The stock market is one of the most important indicators of a country's economic health. The
foremost job of a regulator is to safeguard investor's interests and make sure that there aren't
any malpractices happening in the trade and investors aren't cheated.

The SEBI performs various protective, developmental and regulatory functions to meet its objectives.

SEBI was set up with the main purpose of keeping a check on malpractice and protect the interests of
investors.

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 REFERENCES

https://www.sebi.gov.in/powers-and-functions.html

www.slideshare.com

https://en.m.wikipedia.org/wiki/Securities_and_Exchange_Board_of_
India

https://www.elearnmarkets.com/blog/sebi-purpose-objective-
functions-sebi/#role-of-sebi

https://tavaga.com/tavagapedia/sebi/

https://india.mongabay.com/2022/02/sebi-proposes-regulation-of-esg-
ranking-providers/

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