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SEBI - Functions and Importance

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Functions and Powers of Securities and Exchange Board of India (SEBI)

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:

  •     issuers of securities
  •     investors
  •     market intermediaries

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 . A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards.


Powers

For the discharge of its functions efficiently, SEBI has been vested with the following powers:

  •     to approve by−laws of Securities exchanges.
  •     to require the Securities exchange to amend their by−laws.
  •     inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
  •     inspect the books of accounts of financial intermediaries.
  •     compel certain companies to list their shares in one or more Securities exchanges.
  •     registration of Brokers and sub-brokers

SEBI committees

  •     Technical Advisory Committee
  •     Committee for review of structure of infrastructure institutions
  •     Advisory Committee for the SEBI Investor Protection and Education Fund
  •     Takeover Regulations Advisory Committee
  •     Primary Market Advisory Committee (PMAC)
  •     Secondary Market Advisory Committee (SMAC)
  •     Mutual Fund Advisory Committee
  •     Corporate Bonds & Securitisation Advisory Committee

 

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