SEBI- Securities and Exchange Board of India – The Complete Guide Of SEBI

Posted by  Fintra , updated 2022-03-30

SEBI- Securities and Exchange Board of India – The Complete Guide Of SEBI

Headquartered in Mumbai, India, the Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity markets under the ownership of the Ministry of Finance, Government of India. The Securities and Exchange Board of India (SEBI), constituted as a non-statutory body on April 12, 1988, received Statutory Powers on 30 January, 1992 through the SEBI Act, 1992. The Preamble of the SEBI defines its basic functions as to safeguard the investor's interests in securities, facilitate the development, and regulate the securities market. SEBI has regional offices in New Delhi, Chennai, Kolkata, Ahmedabad, and various other local regional offices across prominent cities in India.

In this blog, Fintra will highlight the following topics about the Securities and Exchange Board of India (SEBI):

  1. What Is The Securities and Exchange Board of India (SEBI)?
  2. The Structure Of The Securities and Exchange Board of India (SEBI)
  3. The Functions And Power of The Securities and Exchange Board of India (SEBI)
  4. The Mutual Fund Regulations By The Securities and Exchange Board of India (SEBI)
  5. The Securities and Exchange Board of India (SEBI) Guidelines on Mutual Funds Reclassification  

                              functions SEBI

What Is The Securities and Exchange Board of India (SEBI)?

The Securities and Exchange Board of India (SEBI) is essentially a statutory body of the Indian Government that acts as a market regulator by monitoring and regulating the Indian capital and securities market. It also regulates the functioning of the mutual funds, stock market, etc. SEBI was introduced to facilitate transparency in the investment market of India.

SEBI ensures the Indian capital market functions systematically and provides investors a transparent environment for their investments. In simple terms, SEBI's primary goal was to prevent malpractices in the Indian capital market along with promoting the development of the capital markets.

The Structure Of The Securities and Exchange Board of India (SEBI)

SEBI's framework resembles a corporate structure that comprises various departments which are managed by a department head. Besides this, it also has a Board of Directors, senior management, and several crucial departments. It's believed that there are approximately 20 departments under SEBI, and some of these are economic and policy analysis, debt and hybrid securities, corporation finance, enforcement, human resources, investment management, commodity derivatives market regulation, legal affairs, and more. The SEBI's hierarchical structure comprises of the following designated officers:

 The list below highlights some of the most vital departments of SEBI: 

The Information Technology Department (ITD)

The Foreign Portfolio Investors and Custodians (FPI&C)

Office of International Affairs

National Institute of Securities Market (NISM)

Investment Management Department

Commodity and Derivative Market Regulation Department

Human Resource Department

Corporation Finance Department (CFD)

Department of Economic and Policy Analysis (DEPA-I, II, & III)

Legal Affair Department

Treasury and Accounts Divisions (T&A)

Besides the above-mentioned departments, the other crucial departments take care of the legal, financial and enforcement-related affairs. 

The Functions And Power of The Securities and Exchange Board of India (SEBI)

                             SEBI Functions

Since it's a regulatory body, the Securities and Exchange Board of India (SEBI) has several powers to perform vital functions. The SEBI Act of 1992 bears a list of such powers granted in the regulatory body. 

The functions of SEBI are as follows: 

Securities and Exchange Board of India (SEBI) has a few main powers that are as follows:

  1. Quasi-Judicial: SEBI has the authority to pass judgements linked to fraud and other unethical practices occurring in the securities market. This enables to ensure transparency, fairness, and accountability.  
  2. Quasi-Executive: SEBI is authorised to enforce regulations and pass judgements. It can take legal actions against any violators. SEBI is also empowered to examine the Books of accounts and other documents coming across any violation of the regulations. 
  3. Quasi-Legislative: To protect the interest of investors, SEBI reserves the power to frame rules and regulations. Few of its regulations consist of listing obligations, insider trading regulations, and disclosure requirements. These regulations have been developed to get rid of the malpractices which are prevalent in the securities market. Despite possessing these powers, the results of SEBI’s functions have to still go through the Securities Appellate Tribunal and the Supreme Court of India.

When it comes to the powers and functions of SEBI, the Supreme Court of India and the Securities Appellate Tribunal do tend to have an upper hand. Moreover, all the SEBI's functions and related decisions first have to go through the two apex bodies.

                            SEBI regulates

The Mutual Fund Regulations By The Securities and Exchange Board of India (SEBI)

The Securities and Exchange Board of India Regulations has formulated a set of guidelines to manage mutual funds in India. As per the guidelines, mutual funds have to be registered under the Trusts Act, 1882. Moreover, mutual funds which exclusively deal with the money market must register with the RBI. Even the Asset Management Companies (AMC) that manage mutual funds should be SEBI approved, and the AMC's trustees must ensure that the mutual funds are performing as per the regulations. It is also assigned the responsibility of monitoring the overall performance of mutual funds.

SEBI has further issued various mutual funds regulations which the asset management companies, sponsors, and shareholders must abide by. Some of them are as follows:

At the end of every calendar year, mutual funds have to ensure they have been abiding by the guidelines issued by the Securities and Exchange Board of India. Along with this, they are also required to make their constituents of the indices public by publishing them on their respective websites.

                        SEBI and Mutual Funds 

The Securities and Exchange Board of India (SEBI) Guidelines on Mutual Funds Reclassification  

Conclusion

From the above information, we can note that the Securities and Exchange Board of India (SEBI) plays a vital role in regulating all the players who operate in the Indian capital market. SEBI also strives to protect the investor's interest, and it aims to develop the capital markets by implementing various rules and regulations. 

 

 

 

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