The Securities and Exchange Board of India
The securities market in India is regulated by The Securities and Exchange Board of India. SEBI deals with all matters related to the development and regulation of the stock market were constituted on April 12, 1988, as a non-contributory body. It was given statutory status and powers through an ordinance promulgated on January 30, 1992. Its headquarters is at Mumbai with its regional offices at Kolkata, Delhi and Chennai.
SEBI is 9 member body including the chairman. The chairman is nominated by the Union Government. Two members are the officers of central ministries and one member is from RBI. Other five members – Nominated by the Union Government of India. Ajay Tyagi is the current chairman since 2017. The initial capital of the Securities and Exchange Board of India was 7·5 crore and all day today expenses of SEBI are met with the interest obtained from the investment.
Functions of SEBI
- To safeguard the interests of investors and to regulate the capital market with suitable measures is the prime aim of SEBI. It also protects the stock market from malpractices.
- It is the only authority in India that regulates the business of stock exchanges and other securities market.
- Stock Brokers, Sub-brokers, Share Transfer Agents, Trustees, Merchant Bankers, Underwriters, and Portfolio Managers etc. are registered with SEBI and regulated by itself.
- It is monitoring companies take-overs and acquisition of shares.
- Investment plans of mutual funds are also registered and regulated by SEBI
- Training the persons associated with security markets and also to encourage investors’ education are vested with the Securities and Exchange Board of India.
Decisions taken by SEBI to re-establish the credit of capital market
- Share Price and Premium Determination – The Securities and Exchange Board of India allows Indian companies to determine their share prices and premium on those shares. But determined price and premium amount will be equally applicable to all without any discrimination.
- Underwriters – work as underwriter the minimum asset limit is to be 20 lakh. It can cancel the registration underwriters if any irregularity is found in the purchase of unsubscribed part of the share’ issue.
- Control on Share Brokers – Under new rules, every broker and sub-broker has to have to get registered with SEBI and any stock exchange in India.
- Insider Trading- Companies and their employees usually adopt malpractices in Indian capital market to variate share prices. To check this type of insider trading, SEBI introduced Securities and Exchange Board of India (Insider Trading) Regulation 1992 which will ensure honesty in the capital market and will develop a feeling of faith among investors to promote investments in the capital market in the long run.
- Control on Mutual Funds – Mutual Funds Regulation was introduced by the Securities and Exchange Board of India in 1993. It has the control of all mutual funds of the government and private sector.
- Control on Foreign Institutional Investors– every foreign institutional investor has to register with SEBI for participating in Indian capital market.