Thinking of venturing into India’s stock market and worried that you may face frauds like the one shown in SCAM 92? Don’t worry that’s not gonna happen again because of SEBI (Securities and Exchange Board of India)
This article is your shortcut to understanding SEBI’s role in ensuring that the playground of the stock market remains fair for all.
Who is SEBI?
SEBI (Securities and Exchange Board of India) is a regulatory body for the securities and commodity markets in India. Established on 12 April 1992 in Mumbai, Maharashtra, SEBI has outposts sprinkled across cities like Delhi, Kolkata, Chennai, Bengaluru, Jaipur, Kochi, Lucknow, Shimla, Hyderabad, and Ahmedabad.
SEBI role is a lot like a referee in a game – making sure everyone plays by the rules. Its main task? To keep the stock market transparent and protect the interests of those investing their hard-earned money.
It keeps a watchful eye and ensures that everything is above board, from companies issuing stocks to the investors buying them.
Why was SEBI created?
The birth of SEBI wasn’t random. Back in the 70s and 80s, India’s stock market was somewhat like the wild west – scams, delays in share deliveries, etc were common occurrences.
SEBI was established to restore order and trust in Indian financial markets. It tightened rules, increased transparency, and made the market more systematic for participants.
What is the structure of SEBI
Just as a company has various departments handling different roles, SEBI is structured with a chairman, representatives from the finance ministry, The Reserve Bank, and others appointed by the government.
Moreover, it houses multiple departments overseeing areas like economic analysis, finance, human resources, legal affairs, and even market regulations.
Whom does SEBI govern?
If the stock market is a bustling marketplace then SEBI acts as both the marketplace inspector, ensuring no one sells rotten fruit, and the town crier, announcing news and rules. It watches over:
Companies looking to raise money by selling shares through IPOs and FPOs
It looks after the rights of everyday individuals who invest their savings in hope of good returns from the markets and ensure that their money is protected from scams.
SEBI keeps a close eye on intermediaries like brokers, Depository participants, and other intermediaries like RAs(Research Analysts) and RIAs(Registered Investment Advisors) ensuring that those advising or selling investment products have the investors’ best interests at heart.
SEBI’s oversight ensures that the market operates fairly and efficiently. Whether it’s by regulating mutual funds, overseeing investment banks, or ensuring that financial advisors act ethically, SEBI’s goal is clear: a transparent and fair market for all.
SEBI’s Powers and Objectives
SEBI has three main powers over all market participants:
These powers allow it to act as both investigator and adjudicator in cases related to securities market violations. This unique role enables SEBI to undertake a range of actions to ensure fair and transparent markets.
SEBI possesses quasi-executive powers to enforce securities laws and regulations, including issuing directions, conducting investigations, taking enforcement actions, searching and seizing, and entering into consent orders. These powers enable SEBI to maintain market integrity and protect investor interests effectively.
SEBI’s quasi-legislative powers empower it to create subsidiary legislation, adapt to market trends, regulate market participants, involve stakeholders, and subject its rules to judicial review. These powers contribute to a fair, efficient, and investor-friendly securities market in India.
The primary objective?
To protect you, the investor. By promoting a fair market, preventing misdeeds, and ensuring a transparent system, SEBI aims to make the stock market a trustworthy place for everyone’s financial aspirations.
The stock market might seem like a complex palace with lots of rooms filled with numbers and jargon. But behind the scenes, SEBI ensures that this complex world remains transparent, safe, and efficient for everyone involved.
So be assured about your investments as SEBI will always be there to protect you against any kind of securities fraud.