Securities and Exchange Securities and Exchange Board of IndiaBoard of India

Contents:-

A Brief History Introduction SEBI - Preamble Objectives Functions Contributions Summary

2

A Brief HistoryPrior to SEBI the security markets and stock exchange were regulated by several Acts, which were:

The Bombay Securities Contracts Control Act, 1925 The Capital Issues (Control) Act, 1947 The Securities Contracts (Regulation) Act, 1956 Registrar of Companies (The Indian Companies Act, 1956)

For a healthy growth of capital markets and to prevent malpractices in trading, the Government subsequently decided to “set up a separate board for the regulation and orderly functioning of Stock Exchange and the securities industry”

3

A Brief History (Contd…)

In July 1987, the Cabinet Committee on Economic Affairs approved the broad features of SEBI and process of establishment of SEBI was commenced

The statement of Purpose and Approach outlined twin objectives of SEBI as,

- promoting healthy and orderly development of securities markets and

- ensuring adequate investor protection and emphasized the developmental philosophy with which SEBI would operate

4

Introduction

SEBI was established as a statutory authority through an Ordinance promulgated on 30.01.1992 by the President of India

SEBI is the regulator for the Securities Market in India It is managed by a Board comprising of nine members including

the chairman Paradoxically this is a positive outcome of the Harshad Mehta

Securities Scam of 1990-91

5

SEBI - 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"

6

SEBI- Collective Investment Scheme - BEWARE of Unrealistic High Returns-

SEBI Capital Markets

7

Purpose and Role of SEBI

Issuers

Investors

Intermediaries

8

Basic Objectives

To protect the interests of investors in securities

To promote the development of Securities Market

To regulate the securities market and

For matters connected therewith or incidental thereto

9

Powers of SEBI

Powers relating to stock exchanges and intermediaries:

SEBI has wide powers regarding the stock exchanges and intermediaries dealing in securities

10

Powers of SEBI (Contd…)

Powers relating to monetary penalties:

SEBI’ has been empowered to impose monetary penalties on capital market intermediaries and other participants for a range of violations

It can even impose suspension of their registration for a short period

11

Powers of SEBI (Contd…)

Powers to initiate actions relating to functions assigned:

SEBI has a power to initiate actions in regard to functions assigned

For example, it can issue guidelines to different intermediaries or can introduce specific rules for the protection of interests of investors

12

Powers of SEBI (Contd…)

Powers under Securities Contracts (Regulation) Act :

For effective regulation of stock exchanges, the Ministry of Finance issued a Notification on 13 September, 1994 delegating several of its powers under the Securities Contracts (Regulation) Act to SEBI

13

Functions of SEBI

The SEBI performs functions to meet its objectives.

Functions can be broadly divided into:

Protective functions

Developmental functions

Regulatory functions

14

Functions of SEBI (Contd…)

Protective Functions- It Checks Price Rigging It Prohibits Insider trading SEBI prohibits fraudulent and Unfair Trade Practices SEBI undertakes steps to educate investors SEBI promotes fair practices and code of conduct in security market

15

Functions of SEBI (Contd…)

Developmental Functions-

SEBI promotes training of intermediaries of the securities market. SEBI tries to promote activities of stock exchange by adopting flexible and

adoptable approach in following way: SEBI has permitted internet trading through registered stock

brokers. SEBI has made underwriting optional to reduce the cost of

issue. Even initial public offer of primary market is permitted through

stock exchange.16

Functions of SEBI (Contd…)

Regulatory Functions- It has framed rules and regulations and a code of conduct to regulate the

intermediaries such as merchant bankers, brokers, underwriters, etc. It registers and regulates the working of all those who are associated with

stock exchange in any manner. It registers and regulates the working of mutual funds etc. It regulates takeover of the companies. It conducts inquiries and audit of stock exchanges.

17

Change in the Market

The complete transformation of the trading, clearing and settlement infrastructure

Dramatic transformation to a paperless market and transparent trading system

Cutting the settlement cycle and now going forward towards a T+1 settlement system

SEBI has made the markets much safer for investors18

Contributions

Issue of guidelines Public interest advertisements Dealing with complaints of investors Investor education Investor surveys Introduction to stockinvest Disclosures by companies

19

Board Members of SEBI

20

Shri U. K. Sinha,Chairman, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051

Shri Rajeev Kumar AgarwalWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051

Shri Prashant SaranWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051.

Shri Arvind MayaramSecretary,Department of Economic Affairs,Ministry of Finance, New DelhiMember NominatedShri V. K. Jairath194 B Kalpatru Horizon,S.K. Ahire Marg, Worli,Mumbai 400018Member Appointed

Shri S. RamanWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051.

BOARD MEMBERS (contd..)

21

Shri Anand SinhaDeputy GovernorReserve Bank of IndiaMember Nominated

Shri Naved MasoodSecretary,Ministry of Corporate AffairsMember Nominated

Shri Prakash Chandra ChhotarayIRS (Retired Chairman of IncomeTax Settlement Commission,New Delhi)Part-time Member

Summary

For the development of any economy Capital Market, which is one of the main organ to mobilize funds of huge

order shall evolve all steps to develop the market simultaneously bringing in the credibility in the financial market, which is

watched world wide through effective and speedy implementable regulations, ultimately,

protecting the interest of the Investors and the Country

22

Know your Stock Markets

Major Stock Exchanges in India: National Stock Exchange (NSE) Bombay Stock Exchange (BSE) MCX’SX Stock Exchange (MCX’sx)

Various products for investments: Equities Derivatives Commodities Currencies / Forex

23SEBI- A Critical Analysis