Concept of Securities and Exchange Board of India (SEBI)

First established in 1988 as a non-statutory body to regulate the security market, with the passing of the SEBI Act 1992 by Indian Parliament, the Securities and Exchange Board of India (SEBI) became an autonomous body on 30th January, 1992. 

It now works as a statutory body with the main objective of protecting the interests of investors and regulation and promotion of the securities market. 

With its headquarters at the Bandra Kurla Complex in Mumbai, it has its northern regional office in New Delhi, eastern regional office in Kolkata, southern office in Chennai, and the western unit in Ahmedabad. In 2013-14, local branches opened in Patna, Kochi, Bhubaneshwar, Guwahati, and Chandigarh. 

Management of SEBI

The SEBI is managed by its members:

• Chairman of SEBI who is nominated by the Union Government of India.

( Madhabi Puri Buch replaced Ajay Tyagi as the Chairperson on 1st March 2022

Madhabi Puri Buch is the first woman chairperson of SEBI).

• Two officers from the Union Finance Ministry
• One member from the Reserve Bank of India 
• Five other members (three full-time and two part-time) are nominated by the Union Government of India.
• A total of 20 departments are functioning under SEBI, which include corporation finance, economic and policy analysis, debt and hybrid securities, enforcement, human resources, investment management, commodity derivatives market regulation, and legal affairs. 

Functions of SEBI

• SEBI is a constituency of three powers rolled into one. They are quasi-legislative, quasi-judicial, and quasi-executive. 
• These powers regulate, investigate, enforce action, and pass rules and orders.
• The basic function of SEBI is regulation of the security market and protecting the interests of investors. 
• Fulfilment of functions is carried out in three categories – 

1. Issuers – by providing provision of a marketplace where issuers increase the finance
2. Investors – by providing safe and accurate and precise information
3. Intermediaries – by the provision of professional competitors

• Other functions of SEBI are – 

1. Prohibition of fraudulent trade affairs
2. Provision of adequate education of the security market for the intermediaries
3. Ensuring proper research and development of the security market for it to be efficient at all times
4. Regulation of foreign port investors, credit rating agencies, and depository operations

Achievements of SEBI 

• SEBI has gained respect from domestic and global investors for its prompt and consistent action in improving the efficacy of the market. 
• Introduction of  T+5 rolling cycle, T+3 rolling cycle, and T+2 in April 2003 removes the hassle of the slow and cumbersome process of physical certificates, delay in postal services, forgery, and theft, and makes the settlement process efficient, within 2 days of the date of the trade.
• The participation of SEBI in the Satyam fiasco and global meltdown has liberated the takeover code to facilitate investments.
• After no broker defaults since 2001, the objective of SEBI has been to increase the price of market stability and ensure steady growth of the market. This has been successfully achieved by it for the last 25 years. 
• This steady growth with time has made it possible for the Indian capital market to be compared to the mature market. 
• SEBI has efficiently ensured a well-functioning market by the dematerialization of shares, initiating nationwide electronic trading and risk management systems, establishing clearing corporations and shortening of settlements, and nurturing the mutual fund industry. 
• To counter the volatility of the market, several initiatives have been made to improve analytical capability, strengthen surveillance, and promotion of research. 

Securities Appellate Tribunal (SAT)

Established by the Central government, under Section 15 K of the SEBI Act, SAT is a statutory body formed 

• to hear grievances against orders passed by SEBI or by an adjudicating officer under the SEBI Act.
• to hear grievances against orders passed by the Pension Fund Regulatory and Development Authority (PFRDA).
• To hear grievances against orders passed by the Insurance Regulatory Development Authority of India (IRDAI).

Appeals must be made within 45 days of the order being passed. 

With its headquarters in Mumbai itself, it comprises a presiding officer appointed by the Central government with the Chief Justice of India. There are two other officers. 

Conclusion 

Although the objective of SEBI has been met, proper emphasis on prudential regulation has not been given. A public interest litigation (PIL) has been filed by the India Rejuvenation Initiative challenging the procedure for key appointments adopted by the Govt of India.

Improvements in research and review along with cleaning the policy space in the market will further enhance the barometer of success.  Incorporation of fit senior employees and entry of proper talents will strengthen, monitor, and improve market intelligence. This will lead to the overall growth of SEBI and also of the different departments it regulates.