21 April 2018

Role of SEBI in the Development of Capital Markets

Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in 1988 and given statutory powers on 30th January 1992 through the SEBI Act, 1992. The headquarters is located at Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmadabad respectively. The following are the roles of SEBI:

SEBI and Investor Protection

SEBI has taken various steps to strengthen investor confidence and interest in the Secondary Market. This includes rationalisation and refinement of margin system such as mark to market margin, volatility margin etc.

SEBI and the Primary Market

SEBI has issued guidelines for all companies for disclosure of information and protection of investor’s interest. It is no longer necessary for companies to obtain prior permission for raising of capital from the market. For issues above Rs.100 Crore book building requirement has been introduced. Bankers to the Issue and portfolio managers have to be registered with SEBI.

SEBI and the Secondary Market

  1. The governing bodies of Stock Exchange have been recognised, restructured and broad-based.
  2. SEBI has drawn up a comprehensive plan of inspecting all Stock Exchanges to determine the extent of compliance with SEBI guidelines.
  3. Computerised screen based trading has been introduced on all major stock exchanges.
  4. All Stock Exchanges (SEs) have been directed to set up a clearing house or cleaning corporation. SEBI has accepted the Dave Committee recommendations on improving the working of OTCEI.
  5. The Bombay Stock Exchange (BSE) has been asked to reduce trading period from 14 days to 7 days for B group shares. The BSE has been allowed to introduce a revised Carry Forward System.
  6. Brokers, sub-brokers have been brought under the regulatory framework of SEBI.
  7. Penal action is taken by SEBI against any member for violation of SEBI Act.
  8. Registers to Issues and Share Transfer Agents have been brought under SEBI.
  9. Merchant Banking activity has been statutory brought under SEBI.
  10. SEBI has issued guidelines pertaining to buy-back of shares.

SEBI and Mutual Funds

All Mutual Funds have to be registered with the SEBI. UTI (Unit Trust of India) has also been brought under SEBI. SEBI has issued guidelines to provide for portfolio disclosure, standardisation of accounting policies, valuation norms for determining net asset value and pricing.