The Securities and Exchange Board of India (SEBI) is the Indian regulatory organisation that oversees and supervises the country’s capital markets. It was founded on April 12, 1988, in Mumbai. SEBI is critical to the growth and supervision of the financial market, as well as to safeguarding investors’ concerns and fostering market fairness and transparency.
History
The Indian securities market was largely unregulated before the establishment of SEBI. In 1984, the government set up the Committee on the Regulation of the Stock Market, which recommended the establishment of a regulatory body to oversee and regulate the securities market.
Based on the committee’s recommendations, SEBI was established in 1988 through an act of Parliament. Over the years, SEBI has undergone several changes to strengthen its regulatory framework and ensure the smooth functioning of the securities market in India.
Composition
SEBI is governed by a board of directors consisting of a chairperson, two full-time members, and five part-time members appointed by the central government. The board of directors makes policy decisions and regulates the securities market. SEBI also has several departments and regional offices nationwide to monitor and regulate the securities market effectively.
Functions
SEBI performs various functions to regulate and develop the securities market in India. Some of the primary functions of SEBI are as follows:
Regulating the securities market
SEBI regulates the securities market by issuing guidelines, rules, and regulations to ensure the smooth functioning of the market. It also regulates intermediaries such as brokers, depositories, and mutual funds to protect investors’ interests.
Promoting transparency and fairness in the market
SEBI aims to promote transparency and fairness in the securities market by ensuring companies disclose all relevant information to investors. It also regulates insider trading and market manipulation to prevent fraud and malpractices.
Protecting investors’ interests
SEBI has several initiatives to protect investors’ interests, such as investor education programs, investor grievance redressal mechanisms, and investor protection funds. It also regulates companies to ensure that they follow ethical and transparent practices.
Developing the securities market
SEBI plays a crucial role in developing the securities market in India by introducing new products and services such as derivatives, exchange-traded funds, and alternative investment funds. It also encourages the growth of the capital market by simplifying regulations and increasing market efficiency.
Significance
SEBI plays a vital role in ensuring the development and regulation of the securities market in India. Some of the significant contributions of SEBI to the Indian securities market are as follows:
Improved market efficiency
SEBI’s regulatory framework has improved market efficiency by introducing new products and services, simplifying regulations, and promoting transparency and fairness in the market.
Enhanced investor protection
SEBI’s initiatives to protect investors’ interests have improved investor confidence in the securities market. Investor education programs, grievance redressal mechanisms, and investor protection funds have helped investors to make informed decisions and seek redressal in case of any grievances.
Increased foreign investment
SEBI’s regulatory framework has made the Indian securities market more attractive to foreign investors. Introducing foreign portfolio investment and simplifying regulations for foreign investors have increased foreign investment in the Indian securities market.
Development of new products and services
SEBI’s efforts to develop the securities market have introduced new products and services such as derivatives, exchange-traded funds, and alternative investment funds. These new products and services have increased market depth and liquidity and provided investors with new investment options.
