Role of SEBI in Capital Market: Developments and Challenges

INTRODUCTION

The SEBI, that is, the Securities and the Exchange Board of India, is the national regulatory body for the securities market, set up under the securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith and incidental too.

As per the SEBI act, 1992, the power and functions of the Board encompass the regulation of Stock Exchanges and other securities markets; registration and regulation of the working stock brokers, sub-brokers, bankers to an issue (a public offer of capital), trustees of trust deeds, registrars to an issues, merchant bankers, under writers, portfolio managers, investment advisors and such other intermediaries who may be associated with the stock market in any way; registration and regulations of mutual funds; promotion and regulation of self-regulatory organizations; prohibiting Fraudulent and unfair trade practices and insider trading in securities markets; regulating substantial acquisition of shares and takeover of companies; calling for information from, undertaking inspection, conducting inquiries and audits of stock exchanges, intermediaries and self-regulatory organizations of the securities market; performing such functions and exercising such powers as contained in the provisions of the Capital Issues(Control) Act,1947 and the Securities Contracts (Regulation) Act, 1956, levying various fees and other charges, conducting necessary research for above purposes and performing such other functions as may be prescribes from time to time.

SEBI as the watchdog of the industry has an important and crucial role in the market in ensuring that the market participants perform their duties in accordance with the regulatory norms. The Stock Exchange as a responsible Self Regulatory Organization (SRO) functions to regulate the market and its prices as per the prevalent regulations. SEBI play complimentary roles to enhance the investor protection and the overall quality of the market.

MISSION OF SEBI

Securities & Exchange Board of India (SEBI) formed under the SEBI Act, 1992 with the prime objective of :

• Protecting the interests of investors in securities,
• Promoting the development of, and
• Regulating, the securities market and for matters connected therewith or incidental thereto. Focus being the greater investor protection, SEBI has become a vigilant watchdog

PREAMBLE

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.[1]

FUNCTIONS AND POWERS OF SEBI

Chapter IV of Act highlights the Powers and Functions of SEBI[2]

REGULATORY FUNCTIONS

1. Regulation of Business in the Stock Exchanges.
2. Registration and Regulation of the Working of Intermediaries and Mutual Funds, Venture Capital Funds & Collective Investment Schemes.
3. Prohibiting fraudulent and unfair trade practices and insider trading in the securities market.
4. Investor education and the training of intermediaries.
5. Inspection and inquiries.
6. Regulating substantial acquisition of shares and take-overs.
7. 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;
8. Levying fees or other charges for carrying out the purposes of this section.

DEVELOPMENTAL FUNCTIONS

1. Promoting investor™s education and training of intermediaries.
2. Conducting research and publishing information useful to all market participants.
3. Promotion of fair practices and self regulatory organizations.

POWERS OF SEBI

1. Power to call periodical returns from recognized stock exchanges.
2. Power to compel listing of securities by public companies.
3. Power to levy fees or other charges for carrying out the purposes of regulation.
4. Power to call information or explanation from recognized stock exchanges or their members.
5. Power to grant approval to byelaws of recognized stock exchanges.
6. Power to control and regulate stock exchanges.
7. Power to direct enquiries to be made in relation to affairs of stock exchanges or their members.