SEBI Bhavan, Mumbai headquarters
|Formed||April 12, 1988|
January 30, 1992 (Acquired Statutory Status)
|Jurisdiction||Government of India|
The Securities and Exchange Board of India (SEBI) is the regulator of the securities and commodity market in India owned by the Government of India. It was established in 12 april 1988 and given Statutory Powers on January 30 1992 through the SEBI Act, 1992.
Securities and Exchange Board of India (SEBI) was first established in 1988 (originally formed in 1992) as a non-statutory body for regulating the securities market. It became an autonomous body on 12 April 1992 and was accorded statutory powers with the passing of the SEBI Act 1992 by the Indian Parliament. Soon SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India. SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai, and Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore and has also opened offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013–2014.
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.
The SEBI is managed by its members, which consists of the following:
After the amendment of 1999, collective investment schemes were brought under SEBI except nidhis, chit funds and cooperatives.
Ajay Tyagi was appointed chairman on 10 February 2017, replacing U K Sinha,and took charge of the chairman office on 1 March 2017. In February 2020, Ajay Tyagi's term as chairman of SEBI was extended by another six months.
The board comprises:
|Gurumoorthy Mahalingam||Whole time member|
|S.K Mohanty||Whole time member|
|Ananta Barua||Whole time member|
|Madhabi Puri Buch||Whole time member|
|N S Vishwanathan||Part-time member|
|Anand Mohan Bajaj||Part-time member|
|K V R Murty||Part-time member|
|V Ravi Anshuman||Part-time member|
List of Chairmen:
|Ajay Tyagi||10 February 2017||present|
|U K Sinha||18 February 2011||10 February 2017|
|C. B. Bhave||18 February 2008||18 February 2011|
|M. Damodaran||18 February 2005||18 February 2008|
|G. N. Bajpai||20 February 2002||18 February 2005|
|D. R. Mehta||21 February 1995||20 February 2002|
|S. S. Nadkarni||17 January 1994||31 January 1995|
|G. V. Ramakrishna||24 August 1990||17 January 1994|
|Dr. S. A. Dave||12 April 1988||23 August 1990|
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to".
SEBI has to be responsive to the needs of three groups, which constitute the market:
SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High Court.A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards.
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
♦ SEBI committees
♦ There are two types of brokers:
Eliminate malpractices in security market
SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively and successively. SEBI is credited for quick movement towards making the markets electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in April 2002 and further to T+2 in April 2003. The rolling cycle of T+2means, Settlement is done in 2 days after Trade date. SEBI has been active in setting up the regulations as required under law. SEBI did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome by passing Depositories Act, 1996.
SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.[ citation needed ] In October 2011, it increased the extent and quantity of disclosures to be made by Indian corporate promoters. In light of the global meltdown, it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI has increased the application limit for retail investors to ₹ 200,000, from ₹ 100,000 at present.
Supreme Court of India heard a Public Interest Litigation (PIL) filed by India Rejuvenation Initiative that had challenged the procedure for key appointments adopted by Govt of India. The petition alleged that, "The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which directly impacted its balance and could compromise the role of the SEBI as a watchdog."On 21 November 2011, the court allowed petitioners to withdraw the petition and file a fresh petition pointing out constitutional issues regarding appointments of regulators and their independence. The Chief Justice of India refused the finance ministry's request to dismiss the PIL and said that the court was well aware of what was going on in SEBI. Hearing a similar petition filed by Bengaluru-based advocate Anil Kumar Agarwal, a two judge Supreme Court bench of Justice SS Nijjar and Justice HL Gokhale issued a notice to the Govt of India, SEBI chief UK Sinha and Omita Paul, Secretary to the President of India.
Further, it came into light that Dr KM Abraham (the then whole time member of SEBI Board) had written to the Prime Minister about malaise in SEBI. He said, "The regulatory institution is under duress and under severe attack from powerful corporate interests operating concertedly to undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor Omita Paul, were trying to influence many cases before SEBI, including those relating to Sahara Group, Reliance, Bank of Rajasthan and MCX.
SEBI in its circular dated May 30, 2012 gave exit – guidelines for Securities exchanges. This was mainly due to illiquid nature of trade on many of 20+ regional Securities exchanges. It had asked many of these exchanges to either meet the required criteria or take a graceful exit. SEBI's new norms for Securities exchanges mandates that it should have minimum net-worth of Rs. 1 billion and an annual trading of Rs. 10 billion. The Indian Securities market regulator SEBI had given the recognized Securities exchanges two years to comply or exit the business.
Following is an excerpts from the circular:
1.Exchanges may seek exit through voluntary surrender of recognition.
2.Securities where the annual trading turnover on its own platform is less than Rs 10 billion can apply to SEBI for voluntary surrender of recognition and exit, at any time before the expiry of two years from the date of issuance of this Circular.
3.If the Securities exchange is not able to achieve the prescribed turnover of Rs 10 billion on continuous basis or does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of this Circular, SEBI shall proceed with compulsory de-recognition and exit of such Securities exchanges, in terms of the conditions as may be specified by SEBI.
4.Securities Exchanges which are already de-recognised as on date, shall make an application for exit within two months from the date of this circular. Upon failure to do so, the de-recognised exchange shall be subject to compulsory exit process.
SEBI regulates Indian financial market through its 20 departments.
Inter-connected Stock Exchange Ltd. (ISE) is an Indian national-level stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its trading members. It started its operation in 1998 in Vashi, Mumbai, and has 841 trading members, who are located in 18 cities. These intermediaries are administratively supported through the regional offices at Delhi, Kolkata, Patna, Ahmedabad, Coimbatore and Nagpur, besides Mumbai.
Madhya Pradesh Stock Exchange (MPSE) was a stock exchange located at Indore, Madhya Pradesh, India. It was a SEBI recognized Permanent Stock Exchange, until its de-recognition in 2015. Established in 1919, it was 3rd oldest stock exchange in India, and a leading stock exchange under outcry system.
The Ahmedabad Stock Exchange (ASE) is the second oldest exchange of India located in the city of Ahmedabad in the Western part of the country. It is recognised by Securities Contract (Regulations) Act, 1956 as permanent stock exchange. Its logo consists of the Swastika which is one of the most auspicious symbols of Hinduism depicting wealth and prosperity.
The National Spot Exchange Limited (NSEL) was India's first electronic commodity spot exchange that was established in view of the then Prime Minister's vision to create a “single market” across the country for both manufactured and agricultural produce. The Economic Survey of 2002-03 of the Government of India also recommended setting up a national-level, integrated market for agricultural products, as did the Planning Commission. This was followed by the Rangarajan Committee, which too sought a national spot market.
Delhi Stock Exchange (DSE) is a defunct stock exchange located in New Delhi.
Guwahati Stock Exchange (GSE) is a defunct stock exchange located in Gauhati, Assam.
Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of southern Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).
Chandrasekhar Bhaskar Bhave is an Indian financial regulator. He was appointed as Chairman of the Securities and Exchange Board of India (SEBI) in February 2008 for a period of three years.He was succeeded by Upendra Kumar Sinha as the chairman of SEBI after his tenure. He was SEBI's senior executive director from 1992 - 1996. After that he became Chairman and Managing Director of the then newly created National Securities Depository Limited (NSDL). He is also member of the governments technology advisory group, TAGUP. He is the chairperson of the Indian Institute for Human Settlements (IIHS).
The Forward Markets Commission (FMC) was the chief regulator of commodity futures markets in India. As of July 2014, it regulated Rs 17 trillion worth of commodity trades in India. It is headquartered in Mumbai and this financial regulatory agency is overseen by the Ministry of Finance. The Commission allows commodity trading in 22 exchanges in India, of which 6 are national.
A securities commission is a government department or agency responsible for financial regulation of securities products within a particular country. Its powers and responsibilities vary greatly from country to country, but generally cover the setting of rules as well as enforcing them for financial intermediaries and stock exchanges.
National Institute of Securities Markets (NISM) is an Indian public trust and an educational institute and staff college of SEBI established in 2006 by the Securities and Exchange Board of India (SEBI) the regulator for the securities market in India. The institute has a flagship programme which is Post Graduate Programme in Securities Market, certification programmes, academic programmes, training programmes, capacity building and skill development programmes in securities markets. The institute also provides financial education and standards to improve financial literacy in the country. The institute is located in Vashi, Navi Mumbai, India. A 72-acre campus at Patalganga, for the institute, was inaugurated by Narendra Modi, incumbent Prime Minister of India, on 24 December 2016. NISM is an powerful autonomous body governed by a Board of Governors. Ajay Tyagi, the Chairman of SEBI, is the incumbent chairman of NISM. Shri SK Mohanty, Whole Time Member, SEBI has taken additional charge as the Director of NISM. The Institute is divided into six schools that address the different participants of the Indian financial market.
The OTC Exchange Of India (OTCEI), also known as the Over-the-Counter Exchange of India, is based in Mumbai, Maharashtra. It is India's first exchange for small companies, as well as the first screen-based nationwide stock exchange in India. OTCEI was set up to access high-technology enterprising promoters in raising finance for new product development in a cost-effective manner and to provide a transparent and efficient trading system to investors.
Financial Stability and Development Council (FSDC) is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India. An apex-level FSDC is not a statutory body. The recent global economic meltdown has put pressure on governments and institutions across the globe to regulate their economic assets. This council is seen as India's initiative to be better conditioned to prevent such incidents in future. The new body envisages to strengthen and institutionalise the mechanism of maintaining financial stability, financial sector development, inter-regulatory coordination along with monitoring macro-prudential regulation' of economy. No funds are separately allocated to the council for undertaking its activities.
The India Rejuvenation Initiative is an Indian anti-corruption organization formed by a group of retired and serving bureaucrats. IRI raises issues affecting common people. Started in the year 2005 by a group of people drawn from all walks of life, IRI focussed its attention towards corruption prevalent at the top echelons of Indian polity.
Sandeep Parekh, born 1971, is an Indian financial sector lawyer who founded Finsec Law Advisors, Mumbai. He attended St. Columba's School in New Delhi, India. He worked as an executive director at the Securities and Exchange Board of India, (SEBI), India’s securities regulator, where he headed the Enforcement department and was the General Counsel. He has been the youngest person to hold the post at the regulator. Previously, he had worked in law firm Wilmer, Cutler & Pickering, in Washington, D.C. He holds an LL.M. degree from Georgetown University and an LL.B. degree from Delhi University. He was a faculty member of the Indian Institute of Management Ahmedabad, India's premier management school, and is currently a visiting faculty member there.
Chitra Ramkrishna was the first woman managing director and chief executive officer of the National Stock Exchange (NSE), an institution founded in the early 1990s to reform the capital market in India, and now ranking as the world's largest exchange in cash market trades and as one of the top three exchanges in index and stock derivatives.
NSEL case relates to a payment default at the National Spot Exchange Limited that occurred in 2013 involving Financial Technologies India Ltd, when a payment default took place after a commodities market regulator, the Forward Markets Commission (FMC), directed NSEL to stop launching contracts. This led to the closure of the Exchange in July 2013.
Securities Laws (Amendment) Act, 2014 is a legislation in India which provided the securities market regulator Securities and Exchange Board of India (SEBI) with new powers to effectively pursue fraudulent investment schemes, especially ponzi schemes. The bill also provides guidelines for the formation of special fast trial courts.
The NSE co-location scam relates to the market manipulation at the National Stock Exchange of India, India's leading stock exchange. Allegedly select players obtained market price information ahead of the rest of the market, enabling them to front run the rest of the market, possibly breaching the NSE's purpose of demutualisation exchange governance and its robust transparency-based mechanism. The alleged connivance of insiders by rigging NSE's algo-trading and use of co-location servers ensured substantial profits to a set of brokers. This multi-dollar, widespread market fraud came to light when markets' regulator, the Securities and Exchange Board of India (SEBI), received the first anonymous complaint through a whistle-blower's letter in January 2015. The whistle-blower alleged that trading members were able to capitalise on advance knowledge by colluding with some exchange officials. The overall default amount through NSE's high-frequency trading (HFT) is estimated to be 50,000 crores over five years.
Circular trading is a type of securities fraud that can take place in stock markets, causing price manipulation and often related to pump and dump schemes. Circular trading occurs when identical sell orders are entered at the same time with the same number of shares and the same price. As a result, there is no beneficial change in ownership of shares, but there is the appearance of an increased trade volume. Circular trading can be achieved by several parties colluding to achieve the fraudulent outcome. This is not to be confused with wash trading, which is where the same outcome is achieved but occurs through the actions of one investor, rather than a group.
|Wikimedia Commons has media related to Securities and Exchange Board of India .|