The Securities Exchange Board of India (SEBI) has led the charge of India’s securities market since the 1990s. Its current chairperson is Madhabi Puri Buch. It’s a non-statutory body that operates under the jurisdiction of the Ministry of Finance for investor protection and to advise the Government. Primarily SEBI is the frontier to protect the stock market, like RBI manages the monetary funds. This body regulates the stock market’s fortunes made and lost in an instant. Let’s go through its evolution, outcomes, responsibilities and how it is to work at SEBI today.
What is SEBI?
SEBI is the authoritative body whose fundamental objective is to seek injunctions and other legal remedies representing the interests of the securities market and investors in legal proceedings and enforcement of security laws. Promoting fair, transparent, and efficient economic growth and stability is central to SEBI’s mission.
The Need for SEBI
It emerged in response to investor distrust post-scandals like the Harshad Mehta scam, offering a beacon of stability. Unlike previous attempts at regulation, SEBI wielded authority to investigate fraud and ensure investor safety, setting a precedent for global market vigilance and stability.
Key Responsibilities of SEBI
SEBI oversees its functions with the backing of the Supreme Court of India and the Securities Appellate Tribunal, ensuring fairness and accountability. It regulates primary and secondary markets, and short-term, and long-term money markets for investors’ protection. Its main responsibilities involve:
- Prevention of Insider Trading and Protection of Investors’ Interests: SEBI fiercely tackles insider trading, preserving market fairness with strict rules. It champions investor protection, boosting confidence and awareness, and fostering transparency, accountability, and fairness.
- Creating and Implementing a Code of Conduct: SEBI enforces a robust code of conduct, ensuring ethics and market integrity while eradicating malpractices.
- Registration of Intermediaries and Regulatory Measures: SEBI monitors brokers, bankers, and mutual funds, ensuring compliance through audits, investigations, and legal actions, safeguarding investors’ interests with regulatory prowess.
- Penal Provisions for Violation of Code of Conduct: SEBI enforces market integrity with penalties for breaches, ensuring ethical conduct, and rendering verdicts on fraud and misconduct swiftly.
- Framework for Listing and Delisting of Securities: SEBI shapes listing rules, and safeguards investors with regulations on insider trading and disclosures, fostering fairness in stock exchanges for smooth operations.
Penalties and Actions that can be imposed by SEBI
It regulates market players like brokers, advisors, and portfolio managers, with powers to suspend or cancel registrations for serious breaches. Prohibitions from market access safeguard investors and market integrity, with penalties tailored to violations. SEBI’s enforcement includes warnings, restrictions, and mandatory compliance to rectify failures and ensure adherence. Penalties, both monetary and non-monetary, deter fraud and misconduct, ensuring a fair and secure securities market for investors.
SEBI enhances penalty powers to deter law violations, empowering regulators. Penalties are imposed in serious cases, backed by prosecution. In defiance, SEBI resorts to criminal action, particularly in severe breaches. SEBI can penalize individuals for SEBI Act violations, reinforcing market integrity. It wields authority over non-compliance, imposing penalties to thwart fraud in securities markets.
Relevance of SEBI in 2024
SEBI’s board meeting on March 15, 2024, heralded pivotal decisions to enhance India’s financial realm. Notably, plans for same-day trade settlement, termed T+0, were unveiled, with a transition to instantaneous settlement anticipated within a year. SEBI Chair Madhabi Puri emphasized the urgency for technological advancements to facilitate immediate settlement, aiming to bypass the current one-hour delay.
Additionally, SEBI introduced regulations for Real Estate Investment Trusts (REITs), including guidelines for Small and Medium REITs, fostering investor protection and regulating fractional property ownership. These measures signal SEBI’s commitment to fortifying India’s financial markets for sustained growth and stability.
SEBI’s proactive approach to fortifying India’s financial markets aligns with Finspire Academy’s mission of grooming future finance leaders. By staying abreast of SEBI’s latest initiatives, students at Finspire Academy are well-prepared to navigate and contribute to the evolving finance landscape. Aspiring commerce students seeking to thrive in dynamic finance fields find a home at finspireacademy.com. Equipping learners with analytical prowess, communication skills, and technical know-how, the academy prepares them to tackle evolving industry demands.
