Chapter 14: About SEBI (Securities and Exchange Board of India)

1. Introduction and Statutory Background

• Official Name: Securities and Exchange Board of India (SEBI).
• Inception: SEBI originally started operations in 1988 through an administrative order of the Government of India.
• Statutory Status: It was established as a statutory body by the Parliament of India in 1992.
• Primary Mandate:
  1. Protect the interests of investors in the securities market.
  2. Regulate the Indian securities market.
  3. Develop and foster the growth of the Indian securities market.

2. Organizational Setup and Geographical Presence

• Headquarters: SEBI Bhavan, located in Mumbai.
• Regional Offices: Operational across four main zones:
  • Delhi (Northern Region)
  • Kolkata (Eastern Region)
  • Chennai (Southern Region)
  • Ahmedabad (Western Region)
• Local Offices: Situated across various states to ensure widespread regulatory reach and investor awareness.

3. Key Regulatory Functions and Scope of Oversight

A. Regulation of Market Intermediaries

• Mandatory Registration: All stock brokers and intermediaries facilitating the buying and selling of shares on stock exchanges must be registered with SEBI to operate.
• Compliance Framework: Intermediaries must adhere strictly to the rules, regulations, and guidelines established by SEBI to safeguard investor interests.
• Entities Under Regulatory Oversight:
  • Stock Exchanges
  • Stock Brokers
  • Depositories and Depository Participants (DPs)
  • Portfolio Managers
  • Merchant Bankers
  • Share Transfer Agents

B. Regulation of Mutual Funds

• Governing Framework: Mutual funds collect funds from diverse investors and invest in various schemes according to investor choices under rules formulated by SEBI.
• Mandatory Disclosures: SEBI mandates that mutual funds must disclose:
  • Details of the specific investment scheme.
  • Where the pooled money will be invested.
  • Fees and expenses charged to the investor.
  • Periodic financial performance disclosures.

C. Investor Education and Grievance Redressal

• Investor Awareness: SEBI actively educates investors regarding securities market processes and risks.
• Grievance Resolution: Facilitates mechanisms and platforms for the redressal of investor grievances against registered market entities.
• Official Web Portal: Official disclosures, rules, and functions are available at www.sebi.gov.in.

4. Structured Summary Table: Overview of SEBI

5. Key Takeaways & Exam-Relevant Terms

• Statutory Body: An official organization created by an Act of Parliament with legal authority (SEBI became statutory in 1992).
• Market Intermediaries: Entities such as brokers, merchant bankers, and portfolio managers who connect investors to the market and must register with SEBI.
• Periodic Disclosures: Standardized reporting mandated by SEBI for mutual funds regarding investment destinations, fees, and scheme details.