Full Form of SEBI

Full Form of SEBI – Securities and Exchange Board of India

The full form of SEBI is the Securities and Exchange Board of India is the market regulator of securities markets in India and was formed with a view to establishing a facilitating market environment while at the same time curbing unfair trade practices.

History

Prior to 1992, India’s capital market was regulated by the Controller of Capital Issue (CCI) through the powers delegated to it under the Capital Issues Control Act, 1947. The Act gave the Central Government the power to dictate the amount of capital a company could raise and the price at which it could be raised, which was more often than not, at par value. This resulted in the shares being offered to the public being highly undervalued. While it meant gains for small investors, it also meant the companies could not get the right value for their business.

On account of the gradual opening up of the economy, the CCI was repealed and replaced by SEBI by way of enactment of the Securities and Exchange Board of India Act, 1992. SEBI was established as a non-statutory body in 1988 and was given the power to become the statutory and apex regulatory authority for securities markets through the SEBI Act, 1992. SEBI has encouraged appropriate pricing of capital issues and securities by way of enforcement of various regulations in exercise of its powers.

SEBI was constituted with the following key objectives:

  • To be the regulating agency for the securities market and promote the development of the same.
  • Regulate the activities of market intermediaries.
  • To protect the interests of investors.
  • Oversee and administer regulations and other enactments related to the securities market.
Full-form-of-SEBI

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Members

The management of SEBI is to vest in the following members:

  • Chairman of the Board.
  • Two members who are officials from the Ministry of Central Government that deals with Finance and the Companies Act administration.
  • One member is an official of the Reserve Bank of India.
  • Five other members appointed by the Central Government – at least three of them should be appointed as whole-time members.

Structure

The execution of the functions and responsibilities of SEBI are carried out through the concerned departments within SEBI. The following are the roles performed by its key departments.

DepartmentFunctions
Commodity Derivatives Market Regulation Department.Supervising the functioning and operations of Commodity Derivatives exchanges.
Corporate Finance Department• Issuance and listing of securities
• Merger/ demerger, amalgamation, reduction in capital.
• Corporate governance and accounting/auditing standards.
• Corporate restructuring through Takeovers/ buybacks.
• Delisting, etc.
Department of Economic and Policy Analysis• Policy analysis
• Regulatory research
• Statistics and Publication
• Commodity research
Department of Debt and Hybrid SecuritiesMatters related to corporate bonds, listed debt securities, Real Estate Investment Trust, Infrastructure Investment Trust.
Enforcement Department – 1Enforce legal proceedings and action against market irregularities.
Enforcement Department – 2Handles appeals against SEBI orders filed in other courts of law and tribunals.
Inquiries and Adjudication DepartmentHandles hearings and adjudication brought on by other departments of SEBI against market violators who are within SEBI’s purview.
Recovery and Refund DepartmentInitiates and handles recovery proceedings against market violators who were directed to pay fees/penalties/refund to investors and have failed to do so.
Division of Foreign Portfolio Investors & Custodians.Monitoring and regulating activities of Foreign Portfolio Investors and Custodians.
Integrated Surveillance Department.Market surveillance of all segments of the securities market.
Investigations DepartmentConducts examination and investigation of all types of violations related to the securities market.
Investment Management DepartmentRegisters and regulates mutual funds, venture capital funds, foreign venture capital investors, Foreign Institutional Investors, Portfolio Managers, custodians, etc.
Market Intermediaries Regulation & Supervision Department.Registration and monitoring of all market intermediaries like stockbrokers, credit rating agencies, debenture trustees, etc.
Market Regulation DepartmentFormulation of policies and supervision of stock exchanges, depositories, clearing corporations, etc.
Office of International AffairsEngages with foreign regulators and law enforcement agencies to promote international cooperation as regards regulations and enforcement.
Office of Investor Assistance and Education.Handles investor complaints.

Powers and Functions

It has the following powers and functions to enable it to meet the main objects with which it was formed:

Functions-of-SEBI

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#1 – To Develop and Regulate the Securities Market

  • Regulating stock exchanges and any other securities markets. In doing so, SEBI would also be involved in the execution of the powers and functions delegated to it under the Securities Contracts Regulation Act, 1956.
  • Regulating instances of substantial acquisition of shares and take-over of companies.
  • Specify and detail the various requirements for listing and transfer of securities.
  • Undertaking inspection, inquiry, and audit of stock exchanges and others connected with securities markets.
  • Calling for information from banks or any other body involved in transactions under investigative scrutiny by SEBI.
  • Calling for information in India or outside India prevents or detects instances of violation of securities laws.
  • Conducting research related to the securities market for the purpose of achieving its objects.
  • Levying of fees, penalties, and other charges in its endeavor to enforce discipline in the securities market.

#2 – To Regulate the Activities of Market Intermediaries

And such other intermediaries who may be associated with the securities market in any manner.

SEBI also governs the registration of and regulates the working of alternate investment venues such as

#3 – Protection of Interests of Investors/securities Market

To protect the interest of investors, SEBI has the power to take the following measures:

Securities and Exchange Board of India can make regulations by notification, with the prior approval of the Central Government, in relation to, among other things:

  • Issue of capital
  • Transfer of securities
  • Matters to be disclosed by companies issuing securities
  • Condition for grant of certificate of registration of intermediaries and market participants regulated by it, fees to be paid, manner of suspension or cancellation of the certificate.

#5 – Powers of Investigation

Securities and Exchange Board of India can appoint any Investigating Authority to investigate any intermediary or any other person connected with the securities market when it has reason to believe that transactions are being carried out in a manner detrimental to the interest of investors or in violation of any of the laws in force.

SEBI can call for the production of books or such other documents connected to the violation, inspect the documents, summon persons in relation to the issue, and examine witnesses.

Conclusion

SEBI acts as the market regulator for the securities market in India, much like the Securities and Exchange Commission is to the US. By the various powers it has over issuers, market participants, and investors, SEBI strives to protect the interests of investors by making market practices more regulated, fair, and transparent.

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