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Indian Economy / Capital Markets

Securities and Exchange Board of India

For regulating the securities market in India, Securities and Exchange Board of India (SEBI) was established for the first time in 1988 as a non-statutory body. SEBI was given a statutory status through SEBI Act, 1992. Headquarters of SEBI is located at Mumbai.

The chairman of SEBI is appointed by the Government of India. Two members are chosen from Ministry of Finance, Government of India. Another member is from Reserve Bank of India. The Government of India nominates the remaining 5 members, of which at least 3 members will be whole-time members.

Important Functions of SEBI

  • SEBI regulates the capital market, issues detailed guidelines for capital issues and functions as a protector of investors.

  • It registers and regulates the functioning of market intermediaries like registrars, stock brokers, issue managers and other related agencies.

  • It registers and regulates the unfair and fraudulent trade practices related to the security markets.

  • SEBI plays key role in prohibiting insider trading.

Over a period of time, Amendments were made to SEBI Act, 1992 and more powers were given to SEBI. The additional functions are

  • Power to conduct the search and seizure operations including call records on its own instead of depending on other agencies.

  • Providing for nominating facility to mutual funds.

  • Power to fight winding up petitions against errant intermediaries and declare certain fraudulent transactions.

  • Protecting the assets of the genuine investors lying with the brokers or other intermediaries.

  • It can impose stiff fines and hence can deter market irregularities and wrongdoings.