About SEBI
The Securities and Exchange Board of India is the regulator of India’s securities and capital markets, working for investor protection, fair practices and a sound financial system.
Key facts
- Established: 12 April 1988, first as a non-statutory body.
- Statutory status: SEBI Act, 1992, giving it autonomous powers.
- Headquarters: Mumbai; regional offices in Delhi, Kolkata, Chennai, Ahmedabad and other cities.
- Chairperson: appointed by the Government of India.
- Board: government nominees, RBI representatives and independent members.
Objectives
- Investor protection from fraud and unfair practice.
- Market regulation of intermediaries such as brokers and investment bankers.
- Market development for efficiency and transparency.
- Fair practices for institutional and retail investors alike.
Three powers
| Power | Meaning |
|---|
| Quasi-legislative | Drafts regulations and guidelines |
| Quasi-executive | Investigates, inspects, enforces penalties |
| Quasi-judicial | Adjudicates disputes and decides penalties |
Functions
| Type | Examples |
|---|
| Regulatory | Registers and regulates exchanges and intermediaries; oversees takeovers under the Takeover Code; curbs insider trading |
| Protective | Bans fraudulent practices; regulates disclosures; runs awareness drives |
| Developmental | Financial literacy; new instruments such as REITs and InvITs; online trading and electronic settlement |
Key regulations
| Regulation | Purpose |
|---|
| Prohibition of Insider Trading, 2015 | Stops misuse of price-sensitive information |
| LODR, 2015 | Listed companies must disclose material information |
| Takeover Code, 2011 | Covers share or voting-right acquisition, protects minority holders |
| ICDR, 2018 | Governs public issue of equity and debt |
| Mutual Funds, 1996 | Protects mutual fund investors |
| REITs and InvITs | Transparency in real estate and infrastructure investing |
Investor protection and surveillance
- SCORES (SEBI Complaints Redress System) lets investors file and track complaints.
- Corporate governance norms safeguard shareholders.
- Market surveillance flags unusual price or volume moves; data analytics detects insider trading; algorithmic and high-frequency trading is monitored.
Innovation and adaptation
- Introduced derivatives, REITs and InvITs; promoted green bonds and ESG investing.
- Regulatory sandbox lets fintech firms test products in a controlled setting.
- During COVID-19, it cut margin requirements and relaxed compliance norms; it has also tightened cybersecurity and adopted digital signatures and electronic disclosures.
Concerns
- Hard to detect pump-and-dump style manipulation.
- Complex to regulate automated, high-frequency trading.
- Limited jurisdiction over cross-border deals and foreign entities.
- Constant cyber risk as markets digitise.
Way forward
- Stronger surveillance and wider grievance redress.
- AI and analytics for spotting anomalies.
- ESG disclosures and sustainable finance.
- Cooperation with global regulators.
Exam angle
- Set up: 1988; statutory: 1992 Act; HQ: Mumbai.
- Complaint portal: SCORES.
- Instruments: REITs, InvITs; ICDR and LODR are common abbreviations.