Securities and Exchange Board of India (SEBI) is the regulatory authority which regulates the securities market in India. The main purpose of setting up SEBI is to keep a check on the malpractices and protect the investors' interest. It provides a market place to the issuers where they can raise finance easily and fairly, protects the investors and supply accurate and correct information and also provides for a competitive professional market to the intermediaries. The objective is to regulate the activities of stock market, promote the development of stock exchange and regulate and develop code conduct for intermediaries like brokers, underwriters etc.
Before Securities and Exchange Board of India (SEBI) came into existence, Controller of Capital Issues regulated the capital markets as per the Capital Issues (Control) Act, 1947. Initially SEBI was a non-statutory body which was established in 1988. On 12 April 1992 it became an autonomous body under the government of India and enshrined with statutory powers under the SEBI Act, 1992 passed by the Parliament. Headquarters of SEBI is located at Mumbai and 4 other regional offices are situated at Ahmedabad, Chennai, Kolkata and New Delhi. It is divided into 5 departments which are headed by respective executive director and has formed 2 advisory committees which deal with primary and secondary markets and constitute eminent persons, market players and association of investors. Section 4 of the SEBI Act, 1992 provides for the management of the board which comprises of a Chairman, 2 members from the Union Finance Ministry, 1 member from the RBI and 5 other members among which 3 are the whole-time members appointed by the Central Government. Mr. Ajay Tyagi is the present Chairman of the Securities and Exchange Board of India (SEBI).
Functions of SEBI
Section 11 of the SEBI Act, 1992 deals with the powers and functions of the Board. The functions of SEBI include regulatory, protective and development functions. Regulatory functions include inspection of books and accounts of financial intermediaries, registration and regulation of brokers, advisors, underwriters, merchant bankers, portfolio managers and other intermediaries, registration and regulation of collective investment schemes, mutual funds and venture capital funds and regulating substantial acquisition of shares and takeovers. Protective functions include monitoring and checking of share trading in securities market and price rigging, prohibiting unfair, illegal and fraudulent practices in securities market. Development functions include promotion and development activities in stock exchange, permitting internet trading through registered stock brokers and increasing the business in stock exchange.