Introduction

• The Securities and Exchange Board of India originated as an informal entity on 12^th April 1988, by a resolution of the Indian government.
• It attained statutory status in 1992 when the Securities and Exchange Board of India Act, 1992 became effective on 30^th January 1992.

How SEBI came into Existence?

• Before SEBI came into existence, Controller of Capital Issues was the regulatory authority; it derived authority from the Capital Issues (Control) Act, 1947.
  • In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.
• Initially SEBI was a non-statutory body without any statutory power.
  • It became autonomous and given statutory powers by SEBI Act, 1992.
• The headquarters of SEBI is situated in Mumbai. The regional offices of SEBI are located in Ahmedabad, Kolkata, Chennai and Delhi.

What is the Structure of SEBI?

• Board and Committees:
  • SEBI Board consists of a chairman and several other whole time and part time members.
  • SEBI also appoints various committees, whenever required, to look into the pressing issues of that time.
  • SEBI has around 42 committees, including Committee on Corporate Governance, Committee on Fair Market Conduct, High Power Steering Committee on Cyber Security, Intermediary Advisory Committee, etc.
• Securities Appellate Tribunal (SAT):
  • Further, a Securities Appellate Tribunal (SAT) has been constituted to protect the interest of entities that feel aggrieved by SEBI’s decision.
  • SAT consists of a Presiding Officer and two other Members.
  • It has the same powers as vested in a civil court. Further, if any person feels aggrieved by SAT’s decision or order, they can appeal to the Supreme Court.

What are the Powers and Functions of SEBI?

• Type of Body:
  • SEBI is a quasi-legislative and quasi-judicial body which can draft regulations, conduct inquiries, pass rulings and impose penalties.
• Functions:
  • Issuers – By providing a marketplace in which the issuers can increase their finance.
  • Investors – By ensuring safety and the supply of precise and accurate information.
  • Intermediaries – By enabling a competitive professional market for intermediaries.
• Amendment:
  • By Securities Laws (Amendment) Act, 2014, SEBI is able to regulate any money pooling scheme worth Rs. 100 cr. or more and attach assets in cases of non-compliance.
• Other Functions:
  • SEBI Chairman has the authority to order "search and seizure operations". SEBI board can also seek information, such as telephone call data records, from any persons or entities in respect to any securities transaction being investigated by it.
  • SEBI performs the function of registration and regulation of the working of venture capital funds and collective investment schemes including mutual funds.
  • It also works for promoting and regulating self-regulatory organizations and prohibiting fraudulent and unfair trade practices relating to securities markets.

What is the Equal Opportunity Policy of SEBI?

• SEBI came up with the official circular of Equal Opportunity Policy in 2019.
• It provides equal opportunity to Persons with Disability (PwD) before SEBI.
• It provides facilities, posts, assisted devices and other amenities to PwDs.

What are the Issues Associated with SEBI?

• In recent years SEBI role became more complex, the capital markets regulator is at a crossroads.
• There is excessive focus on regulation of market conduct and lesser emphasis on prudential regulation.
• SEBI statutory enforcement powers are greater than its counterparts in the US and the UK as it is armed with far greater power to inflict serious economic injury.
• It can impose serious restraints on economic activity, this is done based on suspicion, leaving it to those affected to shoulder the burden of disproving the suspicion, somewhat like preventive detention.
• Its legislative powers are near absolute as the SEBI Act grants wide discretion to make subordinate legislation.
• The component of prior consultation with the market and a system of review of regulations to see if they have met the articulated purpose is substantially missing. As a result, the fear of the regulator is widespread.
• Regulation, either rules or enforcement, is far from perfect, particularly in areas like insider trading.
• The Securities offering documents are extraordinarily bulky and have substantially been reduced to formal compliance rather than resulting in substantive disclosures of high quality.