Why does Securities Market need Regulators? The absence of conditions of perfect competition in the securities market makes the role of the Regulator extremely important. The regulator ensures that the market participants behave in a desired manner so that securities market continues to be a major source of finance for corporate and government and the interest of investors are protected. Who regulates the Securities Market? The responsibility for regulating the securities market is shared by Department of Economic Affairs (DEA), Department of Company Affairs (DCA), Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). 

SEBI - An Introduction ::* The Securities and Exchange Board of India (SEBI) was constituted on April 12,1988 as a nonnon-statutory body through an Administrative Resolution of the Government. * for dealing with all matters relating to the development and regulation of the securities market and investor protection and to advise the Government on all these matters.

WHY ¶ SEBI ACT, 1992 · ?
* In 1992, the Bombay Stock Exchange (BSE), the leading stock exchange in India, witnessed the first major scam masterminded by Harshad Mehta. * Analysts felt that if more powers had been given to SEBI, the scam would not have happened. * As a result, the Government of India (GoI) brought in a separate legislation by the name of 'SEBI Act 1992' and conferred statutory powers to it. Since then, SEBI had introduced several stock market reforms. These reforms significantly transformed the face of Indian stock markets.    

SEBI was given statutory status and powers through an Ordinance passed on January 30,1992. SEBI was established as a statutory body on February 21, 1992. The Ordinance Was replaced by an Act of Parliament on April 4, 1992. The preamble of the SEBI Act, 1992 enshrines the OBJECTIVES of SEBI ² to protect the interest of investors in securities market and to promote the development of and to regulate the securities market. market.

Administration of SEBI ::* The head office of the board is situated in Mumbai & its regional offices are at Delhi, Calcutta and Chennai.  The board consists of :- a Chairman; : Two members from the ministries of the central government dealing with finance & law;  One member from the Reserve Bank of India;  Five other members of whom at least three shall be the full time members appointed by Central government.  Chairman & other members ± persons of ability, integrity & standing having special knowledge or experience of law,finance,economics,accountancy,administration or other discipline which in the opinion of central govt, shall be useful to SEBI.

Functions and powers of SEBI Functions of SEBI i. Regulate the business in stock exchange & other securities markets. ii. Registering and regulating the working of the depositories ,participants ,foreign institutional investors & other intermediaries,as board may specify. iii. Registering and regulating the working of venture capital funds and collective investment schemes, including mutual funds. iv. Registering & regulating self regulatory organisations(SRO). v. Prohibiting fraudulent & unfair trade practices related to securities market.

vi. Promoting investors education and training of intermediaries of securities markets. vii. Prohibiting insider trading in securities. viii. Regulating substantial acquisition of shares & take over of companies. ix. Calling for information from, undertaking inspection, conducting enquiries & audits of stock exchanges, mutual funds, SRO¶s. x. Performing such functions under Securities Contract (Regulation) Act,1956 as delegated to SEBI by the Central govt.

Powers of SEBISEBIi.

The discovery & production of books of accounts & other documents at place & time specified by SEBI. Summoning and enforcing the attendance of persons & examining them on oath.


iii. Inspection of any books, registers or any other document of any person like stock brokers, share transfer agents, of the company & other intermediaries in securities markets.