On April 12, 1992, the SEBI Act 1992 established the Securities and Exchange Board of India (SEBI) as the controlling body for the Indian securities market.
What is SEBI?
In essence, SEBI is a statutory agency of the Indian government that was founded on April 12th, 1992. To encourage transparency in the Indian investment sector, it was introduced.
Along with its headquarters in Mumbai, the organisation has regional offices around the country in cities including New Delhi, Ahmedabad, Kolkata, and Chennai.
Who is the CEO of SEBI?
The head of India’s securities watchdog, the Securities and Exchange Board of India (SEBI), is Madhabi Puri Buch. She is not just SEBI’s first non-IAS chairperson but also its first female chairperson.
Objectives of SEBI
The task of policing the operation of the Indian capital market falls to SEBI. To protect investors’ interests, SEBI’s goals as a regulatory organisation include monitoring and controlling the Indian securities market.
By putting into place a number of rules and regulations and creating investment-related standards, it seeks to foster a safe investment environment.
Moreover, preventing fraud in the Indian stock market was one of the other primary goals.
Organizational Structure of SEBI
There is a corporate structure at SEBI India. Senior management, department heads, a board of directors, and numerous important departments are all present.
More specifically, the SEBI organisational structure consists of over 20 departments, each of which is managed by a department head who in turn is managed by a general hierarchy.
The nine specified officers who make up the hierarchical structure are as follows:
- The Indian Union Government nominated the chairman.
- Two representatives of the Indian Union Finance Ministry.
- One RBI member, or Reserve Bank of India, member.
- The Indian Union Government nominated the other five members.
Some of SEBI’s most important divisions are highlighted in the list below:
- The department of information technology.
- The Custodians and Foreign Portfolio Investors.
- International Affairs Office.
- A national securities market institute.
- Department of Investment Management.
- Department of Commodity and Derivative Market Regulation.
- Human Resources Division
In addition to these, additional significant departments handle matters connected to law, finance, and enforcement.
Functions and Powers of SEBI
Being a regulatory organisation, SEBI has the authority to carry out essential duties. Such authority granted to the regulatory body is listed in the SEBI Act of 1992. As a result of its duties, SEBI acts as a financial intermediary, a defender of traders and investors, and an issuer of securities.
The suggestions below provide a quick overview of the subject.
Functions of SEBI
- To safeguard Indian investors’ interests in the securities industry.
- To encourage the growth and smooth operation of the securities market.
- To control the securities market’s commercial activities.
- Providing a platform for various professionals, such as portfolio managers, bankers, stockbrokers, investment advisers, merchant bankers, registrars, and share transfer agents.
- To oversee the duties assigned to participants, including foreign portfolio investors, credit rating companies, custodians of assets, and depositors.
- To inform investors about securities markets and the middlemen that operate inside them.
- To outlaw unethical and dishonest business practises in the securities market and related areas.
- To keep track of stock purchases and corporate takeovers.
- To maintain the effectiveness and modernity of the securities market through appropriate research and development strategies.
Powers of SEBI
1. Quasi-Judicial Powers
SEBI India can make decisions in matters of fraud and unethical behaviour in the securities market.
The aforementioned SEBI authority supports the securities market’s transparency, accountability, and fairness.
2.Quasi-Executive Powers
The Book of Accounts and other important papers can be examined by SEBI to spot infractions or gather proof of them. The regulatory body has the authority to enforce rules, render verdicts, and pursue legal action against violators if it discovers someone breaking the rules.
3.Quasi-Legislative Powers
The authoritative body has been given the authority to create relevant rules and regulations in order to safeguard investors’ interests. These regulations frequently include listing requirements, insider trading restrictions, and crucial disclosure standards.
To stop fraud in the securities market, the body creates rules and regulations.
When it comes to the authority and duties of SEBI, the Supreme Court of India and the Securities Appellate Tribunal are in charge. The two supreme entities must do all necessary tasks and make all necessary judgements.
Advantages of SEBI
1. Short-term likelihood of increased returns
Investing in the stock market has the potential to generate larger inflation-beating returns in a shorter amount of time than other investment options like PPF and fixed deposits. People can considerably boost their chances of obtaining superior returns by adhering to the fundamentals of the stock market, such as preparing the trade and performing due diligence.
2. Purchased stock in the listed company and became a shareholder
No matter how few shares you purchase, the moment you do so, you gain proportionate control over the company’s shares.
3. Unparalleled liquidity
Comparing stock investing to other investment strategies, it provides a level of liquidity that is essentially unmatched. Investors can naturally decide fast whether to buy or sell a security. If someone needs access to money right away, they can always sell their shares and do so.
4. A regulatory agency that protects the interests of the public
The Securities and Exchange Board of India regulates and keeps an eye on the stock market. SEBI is charged with monitoring all developments and defending the interests of all parties. Once more, this goes a long way towards safeguarding their interests from any fraudulent action or business.
Disadvantages of SEBI
1. Volatility risks are rising
Due to how volatile and dynamic markets are, investing in shares has some risks. Share prices routinely go through peaks and valleys in a single day. Despite the low likelihood of a big failure, it might take years for the market to recover from a crisis’ worst consequences. These fluctuations are frequently unpredictable, which puts assets at risk.
2. The profit margins can be eroded by the brokerage
An investor must pay the broker a set percentage of the purchase price or sale price of each share they choose to buy or sell. Profitability could thus be put in danger.
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