The Securities and Exchange Board of India (SEBI) is the
regulatory body
A regulatory agency (regulatory body, regulator) or independent agency (independent regulatory agency) is a government authority that is responsible for exercising autonomous dominion over some area of human activity in a licensing and regulatin ...
for
securities
A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
and
commodity market
A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investin ...
in
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
under the
ownership
Ownership is the state or fact of legal possession and control over property, which may be any asset, tangible or intangible. Ownership can involve multiple rights, collectively referred to as title, which may be separated and held by different ...
of
Ministry of Finance A ministry of finance is a part of the government in most countries that is responsible for matters related to the finance.
Lists of current ministries of finance
Named "Ministry"
* Ministry of Finance (Afghanistan)
* Ministry of Finance and Eco ...
within the
Government of India
The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...
. It was established on 12 April 1988 as an executive body and was given
statutory
A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by le ...
powers on 30 January 1992 through the
SEBI Act, 1992.
History
Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-statutory body for regulating the securities market. It became an autonomous body on 30 January 1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by the
Indian Parliament
The Parliament of India ( IAST: ) is the supreme legislative body of the Republic of India. It is a bicameral legislature composed of the president of India and two houses: the Rajya Sabha (Council of States) and the Lok Sabha (House of the ...
. SEBI has its headquarters at the business district of
Bandra Kurla Complex
The Bandra Kurla Complex is a business and residential district in the city of Mumbai, India. It is a prominent upscale commercial hub which commands some of the highest property rates in the country. According to MMRDA, the complex is t ...
in
Mumbai
Mumbai (, ; also known as Bombay — the official name until 1995) is the capital city of the Indian state of Maharashtra and the ''de facto'' financial centre of India. According to the United Nations, as of 2018, Mumbai is the second- ...
and has Northern, Eastern, Southern and Western Regional Offices in
New Delhi
New Delhi (, , ''Naī Dillī'') is the capital of India and a part of the National Capital Territory of Delhi (NCT). New Delhi is the seat of all three branches of the government of India, hosting the Rashtrapati Bhavan, Parliament House ...
,
Kolkata
Kolkata (, or , ; also known as Calcutta , the official name until 2001) is the capital of the Indian state of West Bengal, on the eastern bank of the Hooghly River west of the border with Bangladesh. It is the primary business, comme ...
,
Chennai
Chennai (, ), formerly known as Madras ( the official name until 1996), is the capital city of Tamil Nadu, the southernmost Indian state. The largest city of the state in area and population, Chennai is located on the Coromandel Coast of th ...
, and
Ahmedabad
Ahmedabad ( ; Gujarati: Amdavad ) is the most populous city in the Indian state of Gujarat. It is the administrative headquarters of the Ahmedabad district and the seat of the Gujarat High Court. Ahmedabad's population of 5,570,585 (per t ...
respectively. It has opened local offices at
Jaipur
Jaipur (; Hindi Language, Hindi: ''Jayapura''), formerly Jeypore, is the List of state and union territory capitals in India, capital and largest city of the Indian States and union territories of India, state of Rajasthan. , the city had a pop ...
and
Bangalore
Bangalore (), officially Bengaluru (), is the capital and largest city of the Indian state of Karnataka. It has a population of more than and a metropolitan population of around , making it the third most populous city and fifth most ...
and has also opened offices at
Guwahati
Guwahati (, ; formerly rendered Gauhati, ) is the biggest city of the Indian state of Assam and also the largest metropolis in northeastern India. Dispur, the capital of Assam, is in the circuit city region located within Guwahati and is the ...
,
Bhubaneshwar
Bhubaneswar (; ) is the capital and largest city of the States and territories of India, Indian state of Odisha. The region, especially the old town, was historically often depicted as ''Ekamra Kshetra'' (area (''kshetra'') adorned with mango tr ...
,
Patna
Patna (
), historically known as Pataliputra, is the capital and largest city of the state of Bihar in India. According to the United Nations, as of 2018, Patna had a population of 2.35 million, making it the 19th largest city in India. ...
,
Kochi
Kochi (), also known as Cochin ( ) ( the official name until 1996) is a major port city on the Malabar Coast of India bordering the Laccadive Sea, which is a part of the Arabian Sea. It is part of the district of Ernakulam in the state of K ...
and
Chandigarh
Chandigarh () is a planned city in India. Chandigarh is bordered by the state of Punjab to the west and the south, and by the state of Haryana to the east. It constitutes the bulk of the Chandigarh Capital Region or Greater Chandigarh, which al ...
in Financial Year 2013–2014.
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.
The SEBI is managed by its members, which consists of the following:
* The chairman is nominated by the Union Government of India.
* Two members, i.e., Officers from the Union Finance Ministry.
* One member from the
Reserve Bank of India
The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible for ...
.
* The remaining five members are nominated by the Union Government of India, out of them at least three shall be whole-time members.
After the amendment of 1999, collective investment schemes were brought under SEBI except
nidhis, chit funds and cooperatives.
Organisation structure
Madhabi Puri Buch took charge of chairman on 1 March 2022, replacing
Ajay Tyagi
Ajay or Ajai may refer to:
People
* Ajay (given name)
* Abe Ajay (1919–1998), American artist
* Ajay (actor), Indian actor prominent in Telugu cinema
Places
* Ajai Wildlife Reserve, northeastern Uganda
* Ajay River, a major river in Jharkhand ...
, whose term ended on 28 February 2022.
Madhabi Puri Buch is the first women chairperson of SEBI.
Current Board members
The board comprises:
List of Chairpersons
List of Chairmen:
National Apex Bodies
*
National Institute of Securities Markets of India
Functions and responsibilities
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 there with or incidental there to".
SEBI has to be responsive to the needs of three groups, which constitute the market:
* issuers of securities
* investors
* market intermediaries
SEBI has three powers rolled into one body:
quasi-legislative,
quasi-judicial
A quasi-judicial body is non-judicial body which can interpret law. It is an entity such as an Arbitration, arbitration panel or tribunal, tribunal board, that can be a public administrative agency but also a contract- or private law en ...
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 appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice
Tarun Agarwala, former Chief Justice of the
Meghalaya High Court
The Meghalaya High Court is the High Court of the state of Meghalaya. It was established in March 2013, after making suitable amendments in the Constitution of India and North-Eastern Areas (Re-organisation) Act of 1971. Earlier, a bench of t ...
. A second appeal lies directly to the
Supreme Court
A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...
. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards.
Powers
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
* to approve by−laws of Securities exchanges.
* to require the Securities exchange to amend their by−laws.
* inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
* inspect the books of accounts of financial intermediaries.
* compel certain companies to list their shares in one or more Securities exchanges.
* registration of Brokers and sub-brokers.
♦ SEBI committees
* Technical Advisory Committee
* Committee for review of structure of infrastructure institutions
* Advisory Committee for the SEBI Investor Protection and Education Fund
* Takeover Regulations Advisory Committee
* Primary Market Advisory Committee (PMAC)
* Secondary Market Advisory Committee (SMAC)
* Mutual Fund Advisory Committee
* Corporate Bonds & Securitisation Advisory Committee
♦ There are two types of brokers:
*Discount brokers
*Merchant brokers
''Eliminate malpractices in security market''
Major achievements
SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively and successively. SEBI is credited for quick movement towards making the markets electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in April 2002 and further to
T+2 in April 2003. The rolling cycle of T+2
means,
Settlement
Settlement may refer to:
*Human settlement, a community where people live
*Settlement (structural), the distortion or disruption of parts of a building
* Closing (real estate), the final step in executing a real estate transaction
*Settlement (fin ...
is done in 2 days after
Trade date
Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market.
An early form of trade, barter, saw the direct excha ...
.
SEBI has been active in setting up the regulations as required under law. SEBI did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome by passing Depositories Act, 1996.
SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco. In October 2011, it increased the extent and quantity of disclosures to be made by Indian corporate promoters.
In light of the global meltdown, it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI has increased the application limit for retail investors to ₹ 200,000, from ₹ 100,000 at present.
On the occasion of World Investor Week 2022, SEBI Executive Director Shri G. P. Garg launched a book on Financial Literacy. This book is a joint effort between Metropolitan Stock Exchange of India Limited and CASI New York.
Controversies
Supreme Court of India
The Supreme Court of India ( IAST: ) is the supreme judicial authority of India and is the highest court of the Republic of India under the constitution. It is the most senior constitutional court, has the final decision in all legal matters ...
heard a
Public Interest Litigation The chief instrument through which judicial activism has flourished in India is public interest litigation (PIL) or social action litigation (SAL). ''Public interest litigation'' (PIL) refers to litigation undertaken to secure public interest and de ...
(PIL) filed by
India Rejuvenation Initiative
The India Rejuvenation Initiative is an Indian anti-corruption organization formed by a group of retired and serving bureaucrats. IRI raises issues affecting common people. Started in the year 2005 by a group of people drawn from all walks of life ...
that had challenged the procedure for key appointments adopted by
Govt of India
The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...
. The petition alleged that, "The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which directly impacted its balance and could compromise the role of the SEBI as a watchdog."
On 21 November 2011, the court allowed petitioners to withdraw the petition and file a fresh petition pointing out constitutional issues regarding appointments of regulators and their independence. The
Chief Justice of India
The chief justice of India (IAST: ) is the chief judge of the Supreme Court of India as well as the highest-ranking officer of the Indian Judiciary. The Constitution of India grants power to the president of India to appoint, in consultation w ...
refused the
finance ministry's request to dismiss the
PIL and said that the court was well aware of what was going on in SEBI.
Hearing a similar petition filed by Bengaluru-based advocate Anil Kumar Agarwal, a two judge Supreme Court bench of Justice
Surinder Singh Nijjar
Surinder Singh Nijjar (7 June 1949 – 26 March 2021) was a judge of the Supreme Court of India. J. Nijjar was formerly the Chief Justice of Calcutta High Court. J. Nijjar was a known name in the field of arbitration law, having delivered man ...
and Justice
HL Gokhale
Hemant Laxman Gokhale is a former judge of the Supreme Court of India.
He was a chief justice of Madras High Court before being appointed to the Supreme Court of India as a Judge in 2009.
He also served as Chief Justice of Allahabad High Court ...
issued a notice to the Govt of India, SEBI chief
UK Sinha and Omita Paul, Secretary to the President of India.
Further, it came into light that
Dr. K. M. Abraham(the then whole time member of SEBI Board) had written to the
Prime Minister
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is not ...
about malaise in SEBI. He said, "The regulatory institution is under duress and under severe attack from powerful corporate interests operating concertedly to undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor Omita Paul, were trying to influence many cases before SEBI, including those relating to Sahara Group, Reliance, Bank of Rajasthan and MCX.
SEBI and Regional Securities Exchanges
SEBI in its circular dated May 30, 2012 gave exit – guidelines for Securities exchanges. This was mainly due to illiquid nature of trade on many of 20+ regional Securities exchanges. It had asked many of these exchanges to either meet the required criteria or take a graceful exit. SEBI's new norms for Securities exchanges mandates that it should have minimum net-worth of 1 billion and an annual trading of 10 billion. The Indian Securities market regulator SEBI had given the recognized Securities exchanges two years to comply or exit the business.
Process of de-recognition and exit
Following is an excerpts from the circular:
# Exchanges may seek exit through voluntary surrender of recognition.
# Securities where the annual trading turnover on its own platform is less than 10 billion can apply to SEBI for voluntary surrender of recognition and exit, at any time before the expiry of two years from the date of issuance of this Circular.
# If the Securities exchange is not able to achieve the prescribed turnover of 10 billion on continuous basis or does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of this Circular, SEBI shall proceed with compulsory de-recognition and exit of such Securities exchanges, in terms of the conditions as may be specified by SEBI.
# Securities Exchanges which are already de-recognised as on date, shall make an application for exit within two months from the date of this circular. Upon failure to do so, the de-recognised exchange shall be subject to compulsory exit process.
SEBI departments
SEBI regulates Indian financial market through its 20 departments.
* Commodity Derivatives Market Regulation Department (CDMRD)
* Corporation Finance Department (CFD)
* Department of Economic and Policy Analysis (DEPA)
* Department of Debt and Hybrid Securities (DDHS)
* Enforcement Department – 1 (EFD1)
* Enforcement Department – 2 (EFD2)
* Enquiries and Adjudication Department (EAD)
* General Services Department (GSD)
* Human Resources Department (HRD)
* Information Technology Department (ITD)
* Integrated Surveillance Department (ISD)
* Investigations Department (IVD)
* Investment Management Department (IMD)
* Legal Affairs Department (LAD)
* Market Intermediaries Regulation and Supervision Department (MIRSD)
* Market Regulation Department (MRD)
* Office of International Affairs (OIA)
* Office of Investor Assistance and Education (OIAE)
* Office of the chairman (OCH)
* Regional offices (ROs)
See also
*
Forward Markets Commission (India)
The Forward Markets Commission (FMC) is the regulatory body for the commodity market and futures market in India. It is a division of the Securities and Exchange Board of India, Ministry of Finance, Government of India. As of July 2014, it reg ...
*
Securities commission
*
Financial regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
*
List of financial regulatory authorities by country
The following is an incomplete list of financial regulatory authorities by country.
List
A-B
* Afghanistan - Da Afghanistan Bank (DAB)
* Albania - Albanian Financial Supervisory Authority (FSA)
* Algeria - Commission d'Organisation et de S ...
*
Securities exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for the ...
*
Regulation D (SEC)
In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt them from such registration. R ...
*
Institute of Chartered Accountants of India
The Institute of Chartered Accountants of India (ICAI) is India's largest professional accounting body under the administrative control of Ministry of Corporate Affairs, Government of India. It was established on 1 July 1949 as a statutory bod ...
*
Institute of Company Secretaries of India
The Institute of Company Secretaries of India (ICSI) is a premier national professional body in India under the ownership of Ministry of Corporate Affairs, Government of India with the objective of promoting, regulating and developing the prof ...
*
List of stock exchanges in the Commonwealth of Nations
This is a list of active stock exchanges in the Commonwealth of Nations (Full Members). The Commonwealth of Nations features member-states located on all major continents and represents almost one-third of the Earth's population. Some states ha ...
References
External links
Securities and Exchange Board of IndiaSEBI Latest CircularsSEBI Annual Reports
{{Authority control
Executive branch of the government of India
Regulatory agencies of India
Organisations based in Mumbai
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
Government agencies established in 1992
Government agencies of India
Economic history of India (1947–present)
Financial services companies based in Mumbai
1988 establishments in Maharashtra