Professional Documents
Culture Documents
In 1988 the Securities and Exchange Board of India 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 has been set up. Paradoxically this is a positive outcome of the Securities Scam.
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.
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.
How SEBI came into picture
The World Bank and the International Monetary Fund (IMF) have introduced a
benchmark i.e., Financial Services Assessment Programme (FSAP) to strengthen the
monitoring of financial systems in the context of the IMF’s bilateral surveillance and the
World Bank’s financial sector development work. The FSAP is designed to help
countries enhance their resilience to crisis and cross-border contagion, and to foster
growth by promoting financial system soundness and financial sector diversity. 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 endeavors to achieve
the standards of IOSCO/FSAP. Amendments will be required to be made in the
Securities Laws especially the SEBI Act, which will facilitate India and SEBI to achieve
above objective.
SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeals process to create
accountability. There is a Securities Appellate Tribunal which is a three-member tribunal
and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi.
A second appeal lies directly to the Supreme Court.
SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and
successively (e.g. the quick movement towards making the markets electronic and
paperless rolling settlement on T+2 basis). SEBI has been active in setting up the
regulations as required under law.
SEBI has also been instrumental in taking quick and effective steps in light of the global
meltdown and the Satyam fiasco. It had increased the extent and quantity of disclosures
to be made by Indian corporate promoters. More recently, in light of the global melt
down, it liberalised the takeover code to facilitate investments by removing regulatory
strictures. Other functions can be
SEBI has the authority to inspect the books of accounts, records and
documents of a mutual fund, its trustees, AMC and custodian where it
deems it necessary
SEBI (Mutual Funds) Regulations, 1996 lays down the provisions for the
appointment of the trustees and their obligations
Every new scheme launched by a mutual fund needs to be filed with SEBI
and SEBI reviews the document in regard to the disclosures contained in
such documents.
SEBI is vested with powers to take action against these practices relating
to securities market manipulation and misleading statements to induce
sale/purchase of securities.
I) Stock Watch System, which has been put in place, surveillance over
insider trading would be further strengthened.
I) SEBI distributed the booklet titled “A Quick Reference Guide for Investors”
to the investors
III) SEBI has also issued messages in the interest of investors on National
Channel and Regional Stations on Doordarshan.
I) Performing Such Functions And Exercising Such Powers Under The Provisions
Of The Securities Contracts (Regulation) Act, 1956 As May Be Delegated To It
By The Central Government;
J) Levying Fees Or Other Charges For Carrying Out The Purposes Of This Section