Securities and exchange board of india

Securities and Exchange Board Securities and Exchange Board of Indiaof India

A CRITICAL ANALYSIS

Flow of Presentation• A Brief History• Introduction• SEBI - Preamble• Objectives• Functions• Contributions• Summary

MET-IOM SEBI- A Critical Analysis 2

A Brief HistoryPrior to SEBI the security markets and stock exchange were regulated by several Acts, which were:• The Bombay Securities Contracts Control Act, 1925• The Capital Issues (Control) Act, 1947• The Securities Contracts (Regulation) Act, 1956• Registrar of Companies (The Indian Companies Act, 1956)

For a healthy growth of capital markets and to prevent malpractices in trading, the Government subsequently decided to “set up a separate board for the regulation and orderly functioning of Stock Exchange and the securities industry”


A Brief History (Contd…)

• In July 1987, the Cabinet Committee on Economic Affairs approved the broad features of SEBI and process of establishment of SEBI was commenced

• The statement of Purpose and Approach outlined twin objectives of SEBI as,

- promoting healthy and orderly development of securities markets and- ensuring adequate investor protection and emphasized the developmental

philosophy with which SEBI would operate


Introduction• SEBI was established as a statutory authority through an

Ordinance promulgated on 30.01.1992 by the President of India

• SEBI is the regulator for the Securities Market in India

• It is managed by a Board comprising of nine members including the chairman

• Paradoxically this is a positive outcome of the Harshad Mehta Securities Scam of 1990-91


SEBI - PREAMBLE

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 therewith or incidental thereto"


Purpose and Role of SEBI• SEBI was set up with the main purpose of keeping a check on

malpractices and protect the interest of investors. It was set up to meet the needs of three groups

• Issuers:• For issuers it provides a market place in which they can raise finance fairly and

easily

• Investors:• For investors it provides protection and supply of accurate and correct

information

• Intermediaries:• For intermediaries it provides a competitive professional market


Basic Objectives

• To protect the interests of investors in securities

• To promote the development of Securities Market

• To regulate the securities market and

• For matters connected therewith or incidental thereto


Powers of SEBI

• Powers relating to stock exchanges and intermediaries:

• SEBI has wide powers regarding the stock exchanges and intermediaries dealing in securities

• It can ask information from the stock exchanges and intermediaries regarding their business transactions for inspection/scrutiny and other purposes


Powers of SEBI (Contd…)

• Powers relating to monetary penalties:

• SEBI’ has been empowered to impose monetary penalties on capital market intermediaries and other participants for a range of violations

• It can even impose suspension of their registration for a short period



• Powers to initiate actions relating to functions assigned:

• SEBI has a power to initiate actions in regard to functions assigned

• For example, it can issue guidelines to different intermediaries or can introduce specific rules for the protection of interests of investors



• Powers under Securities Contracts (Regulation) Act :

• For effective regulation of stock exchanges, the Ministry of Finance issued a Notification on 13 September, 1994 delegating several of its powers under the Securities Contracts (Regulation) Act to SEBI

• SEBI is also empowered by the Finance Ministry to nominate three members on the Governing Body of every stock exchange instead of earlier practice of government making such nominations



• Powers to regulate business of stock exchanges :

• SEBI is empowered to regulate the business of stock exchanges

• Intermediaries associated with the securities market as well as mutual funds, fraudulent and unfair trade practices relating to securities and regulation of acquisition of shares and takeovers of companies



• Powers relating to insider trading:

• SEBI has power to regulate insider trading or can regulate the functions of merchant bankers


Functions of SEBI

• The SEBI performs functions to meet its objectives.

• Functions can be broadly divided into:

• Protective functions

• Developmental functions

• Regulatory functions


Functions of SEBI (Contd…)

• Protective Functions-• It Checks Price Rigging• It Prohibits Insider trading• SEBI prohibits fraudulent and Unfair Trade Practices• SEBI undertakes steps to educate investors • SEBI promotes fair practices and code of conduct in security market



• Developmental Functions-

• SEBI promotes training of intermediaries of the securities market.• SEBI tries to promote activities of stock exchange by adopting

flexible and adoptable approach in following way:• SEBI has permitted internet trading through registered stock brokers.• SEBI has made underwriting optional to reduce the cost of issue.• Even initial public offer of primary market is permitted through stock

exchange.



• Regulatory Functions-• It has framed rules and regulations and a code of conduct to regulate

the intermediaries such as merchant bankers, brokers, underwriters, etc.

• It registers and regulates the working of all those who are associated with stock exchange in any manner.

• It registers and regulates the working of mutual funds etc.• It regulates takeover of the companies.• It conducts inquiries and audit of stock exchanges.


Change in the Market• The complete transformation of the trading, clearing and

settlement infrastructure

• Dramatic transformation to a paperless market and transparent trading system

• Cutting the settlement cycle and now going forward towards a T+1 settlement system

• SEBI has made the markets much safer for investors


Contributions• Issue of guidelines• Public interest advertisements• Dealing with complaints of investors• Investor education• Investor surveys• Introduction to stockinvest• Disclosures by companies


Board Members of SEBI

MET-IOM

Shri U. K. Sinha,Chairman, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051

Shri Rajeev Kumar AgarwalWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051

Shri Prashant SaranWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051.

Shri Arvind MayaramSecretary,Department of Economic Affairs,Ministry of Finance, New DelhiMember NominatedShri V. K. Jairath194 B Kalpatru Horizon,S.K. Ahire Marg, Worli,Mumbai 400018Member Appointed

Shri S. RamanWhole-Time Member, SEBI,SEBI Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai - 400051.

SEBI- A Critical Analysis 21

BOARD MEMBERS (contd..)

MET-IOM

Shri Anand SinhaDeputy GovernorReserve Bank of IndiaMember Nominated

Shri Naved MasoodSecretary,Ministry of Corporate AffairsMember Nominated

Shri Prakash Chandra ChhotarayIRS (Retired Chairman of IncomeTax Settlement Commission,New Delhi)Part-time Member

SEBI- A Critical Analysis 22

Summary• For the development of any economy• Capital Market, which is one of the main organ to mobilize

funds of huge order• shall evolve all steps to develop the market • simultaneously bringing in the credibility in the financial

market, which is watched world wide• through effective and speedy implementable regulations,

ultimately, protecting the interest of the Investors and the Country


Know your Stock Markets• Major Stock Exchanges in India:• National Stock Exchange (NSE)• Bombay Stock Exchange (BSE)• MCX’SX Stock Exchange (MCX’sx)

• Various products for investments:• Equities• Derivatives• Commodities• Currencies / Forex


Terminologies used in Stock Markets• Primary Market and Secondary Market• Broker or Brokerage Firm• Know Your Customers (KYC)• Demat• Trading• Delivery• Intraday

• Blue Chip Stocks• Bull and Bear Market


Terminologies used in Stock Markets• Investor and Speculator• Quote• Settlement• Portfolio• Liquidity• Volatility• Hedging• Arbitrage• Insider Trading


Know more about Stock Markets• https://www.nseindia.com

• https://www.bseindia.com

• http://www.moneycontrol.com

• http://www.managementparadise.com/forums/stock-markets-tips-gyan/22083-definations-every-word-used-stock-market-known-must-read.html

• http://www.tmxmoney.com/en/research/glossary.html

• http://www.timothysykes.com/2013/06/trading-terms-you-need-to-know/


Presented By-Sr. No.

Name Roll No.

1 ANSHARI NAWED ABDUL VAHID 61

2 ATTRA GURUDEV RAVINDERSINGH 62

3 COUTINHO JOHN PETER 63

4 JAIN ASHISH GANPATHLAL 74

5 KHAN DANISH WAHID 80

6 PAYYAPPATE RASHMI RAVINDRAN 103


Thank You

Economy & Finance

Securities and exchange board of india