What is SEBI(Securities and Exchange Board of India)?
•SEBI was founded in 1988 by the Government of India.
•SEBI was in statutory power in 1992.
•SEBI the regulator for the securities market in India.
PURPOSE OF THE SEBI ACT:
(1) For investor it provides protection, supply of accurate, correct information.
(2) Promote the development of securities market.
(3) Regulate the Securities market.
(4) Ignore the Fraudulent & Unfair Trade practices relating to securities market.
Functions of SEBI:
(A) Regulatory function :
(1) Registration of Brokers, Sub Brokers, other players in the market.
(2)Registration of collective investment schemes & Mutual Funds.
(3) (A) Prohibition of Fraudulent.
(B) Unfair trade practices.
(4) Controlling insider trading and takeover Bids & Imposing penalties for such practices.
(B) Development functions :
(1) Investor education.
(2) Training of intermediaries.
(3) Promotion of fair practices & code of conduct of all SROS.
(4) (A) Conducting Research.
(B) Publishing Information Useful to all Market Participants.
Ex: Brokers, investors, exchanges
(C) Organization functions :
(1) The activities of SEBI have been divided into five (5) operational departments.
(2) Each department is headed by an Executive Director.
Role of SEBI in Capital Markets:
- SEBI has Power to make rules for controlling stock exchange.
- To provide license to dealers and brokers.
- To Stop fraud in Capital Market.
- To Control the Merge, Acquisition and Takeover the companies.
- To audit the performance of stock market.
- Introduction of derivative contracts on Volatility Index.
- To Require report of Portfolio Management Activities.
- To educate the investors.
Power of SEBI:
(1) SEBI has the right to search and seizure where just cause can be given. In matters of security trading, SEBI has the power to restrict and allow trading in a given scrip without any external (ex: judicial or executive) intervention.
(2) Mutual funds cannot invest more than 10 per cent of the total net assets of a scheme in the short-term deposits of a single bank, said the Securities and Exchange Board of India.
(3)The SEBI has also defined 'short term' for funds Investment purposes as a period not exceeding 91 days.
Why do we need a regulatory body in India?
➡India is an 'Informationally' weak market.
➡Boosting capital market demands restoring the confidence of lay investors who have been beaten down by repeated scams.
➡Progressively softening interest rates and an under performing economy have eroded investment options, and require enhanced investing skills.
Evaluation Of SEBI' s Performance :
[Enhancing disclosures]
➡In most case only the minimum information required under the Companies Act is made available
➡The manner in which the swap ratio is fixed and what the management thinks of the same is largely taken for granted.
➡valuation reports are made available for inspection, but access is not easy for all investors.
SEBI(Securities and Exchange Board of India) :
Address of SEBI Offices :
↗Head Office:
Mittal court 'A' Wing, Ground floor 224
Nariman Point, Mumbai - 400 021 PH: 2850451, 52, 53, 54, 55 FAX:204 5633
↗Northern Regional Office:
Block No.1, Rajendra Bhawan Rajendra Place.
District Centre New Delhi - 110 008 PH: 573 2313, 9784 FAX: 5768992
↗Eastern Regional Office:
FMC Fortuna, 5th Floor, 234/3A AJC Bose Road.
Calcutta 700 020 PH:240 2435, 307, 6105 FAX: 240 4307