Smt Kashibai Navale College Of

Engineering Department Of
Management Studies

Subject
Financial Markets And Banking Operations

Report On
Role Of SEBI In Capital Market

Reported To
Dr Sanket Charkha sir

Reported By
Ms Pournima Koli
 SEBI

Securities and Exchange Board of India (SEBI) is a statutory regulatory body

entrusted with the responsibility to regulate the Indian capital markets. It
monitors and regulates the securities market and protects the interests of the
investors by enforcing certain rules and regulations.
SEBI was founded on April 12, 1992, under the SEBI Act, 1992. Headquartered in
Mumbai, India, SEBI has regional offices in New Delhi, Chennai, Kolkata and
Ahmedabad along with other local regional offices across prominent cities in
India.
The objective of SEBI is to ensure that the Indian capital market works
systematically and provide investors with a transparent environment for their
investment. To put it simply, the primary reason for setting up SEBI was to
prevent malpractices in the capital market of India and promote the
development of the capital markets

Role of SEBI in Indian Capital Market

is the regulator to control the Indian capital market. Since its establishment in
1992, it is doing hard work for protecting the interests of Indian investors. SEBI
gets an education from past cheating with naive investors of India. Now, SEBI is
more strict with those who commit fraud in the capital market.
The role of the security exchange board of India (SEBI) in regulating the Indian
capital market is very important because the government of India can only open
or take the decision to open a new stock exchange in India after getting advice
from SEBI.

If SEBI thinks that it will be against its rules and regulations, SEBI can ban any
stock exchange to trade in shares and stocks.
Now, we explain the role of SEBI in regulating the Indian Capital Market more
deeply with the following points:
1. Power to make rules for controlling stock exchange :
SEBI has the power to make new rules for controlling the stock exchange in India.
For example, SEBI fixed the time of trading 9 AM and 5 PM in the stock market.
2. To provide licenses to dealers and brokers :
SEBI has the power to provide a license to dealers and brokers of the capital
market. If SEBI sees that any financial product is of a capital nature, then SEBI
can also control that product and its dealers. One of the main examples is the
ULIPs case. SEBI said, " It is just like mutual funds and all banks and financial and
insurance companies who want to issue it, must take permission from SEBI."

3. To Stop fraud in Capital Market :

SEBI has many powers for stopping fraud in the capital market
It can ban the trading of those brokers who are involved in fraudulent and unfair
trade practices relating to the stock market.
It can impose penalties on capital market intermediaries if they involve in
insider trading.
4. To Control the Merge, Acquisition and Takeover of the companies :

Many big companies in India want to create a monopoly in the capital market.
So, these companies buy all other companies or deal of merging. SEBI sees
whether this merger or acquisition is for the development of a business or to
harm the capital market.

5. To audit the performance of the stock market :

SEBI uses its powers to audit the performance of different Indian stock
exchanges for bringing transparency in the working of stock exchanges.

6. To make new rules on carry-forward transactions :

Share trading transactions carry forward can not exceed 25% of the broker's
total transact

7. To create a relationship with ICAI :

ICAI is the authority for making new auditors of companies. SEBI creates a good
relationship with ICAI for bringing more transparency in the auditing work of
company accounts because audited financial statements are a mirror to see the
real face of the company and after this investors can decide to invest or not
invest. Moreover, investors of India can easily trust audited financial reports.
After Satyam Scam, SEBI is investigating with ICAI, whether CAs are ethically
doing their duty or not.

8. Introduction of derivative contracts on Volatility Index :

For reducing the risk of investors, SEBI has now been decided to permit Stock
Exchanges to introduce derivative contracts on the Volatility Index, subject to
the condition that;

a. The underlying Volatility Index has a track record of at least one year.

b. The Exchange has in place the appropriate risk management framework for
such derivative contracts.

2. Before the introduction of such contracts, the Stock Exchanges shall submit
the following:

i. Contract specifications

ii. Position and Exercise Limits

iii. Margins

iv. The economic purpose it is intended to serve

v. Likely contribution to market development

vi. The safeguards and the risk protection mechanism adopted by the exchange
to ensure market integrity, protection of investors and smooth and orderly
trading.
vii. The infrastructure of the exchange and the surveillance system to effectively
monitor trading in such contracts, and
viii. Details of settlement procedures & systems
ix. Details of backtesting of the margin calculation for one year considering a call
and a put option on the underlying with a delta of 0.25 & -0.25 respectively and
actual value of the underlying. Link

9. To Require report of Portfolio Management Activities :

SEBI has also the power to require a report of portfolio management to check
the capital market performance. Recently, SEBI sent a letter to all Registered
Portfolio Managers of India demanding a report.

10. To educate the investors :

From time to time, SEBI arranges scheduled workshops to educate the investors.
On 22 May 2010, SEBI imposed a workshop.

2013
These regulations may be called the Securities and Exchange Board of India
(Issue and Listing of Non-Convertible Redeemable Preference Shares)
Regulations, 2013.
(2) They shall come into force on the date of their publication in the Official
Gazette.
Definitions
(1) In these regulations unless the context otherwise requires, the terms defined
herein shall bear the meanings assigned to them below, and their cognate
expressions shall be construed accordingly,–
(a)"abridged prospectus" shall have the same meaning assigned to it in or
under sub-section (1) of Section 2 of the Companies Act, 1956and shall
contain such additional disclosures as specified by Board from time to time
(b)“Act” means the Securities and Exchange Board of India Act, 1992
(c)"advertisement" includes notices, brochures, pamphlets, circulars, show
cards, catalogues, hoardings, placards, posters, insertions in the newspaper,
pictures, films, cover pages of offer documents or any other print medium,
radio, television programmes through any electronic medium;
(d)"bank" includes any bank included in the Second Schedule to the Reserve
Bank of India Act, 1934
(e)“Board” means the Securities and Exchange Board of India established under
provisions of Section 3 of Act;
(f)“book building” means a process undertaken before the filing of the
prospectus with the Registrar of Companies utilizing circulation of a notice,
circular, advertisement or another document by which the demand for the
non-convertible redeemable preference share proposed to be issued by an
issuer is elicited and the price and quantity of such securities is assessed;
(g)"designated stock exchange" means a stock exchange in which securities of
the issuer are listed or proposed to be listed and which is chosen by the
issuer for a particular issue under these regulations;
(h)"innovative perpetual debt instrument" means an innovative perpetual
debt instrument issued by a bank following the guidelines framed by the
Reserve Bank of India
(i)"issuer" means any public company in terms of section 3 of the Companies
Act, 1956, public sector undertaking or statutory corporation which makes
or proposes to make an issue of non-convertible redeemable preference
shares following these regulations or which has its securities listed on a
recognized stock exchange or which seeks to list its non-convertible redeemable
preference shares on a recognized stock exchange;
(j)“Listing Agreement” means a listing agreement to be entered into between
the issuer and the stock exchange where the non-convertible redeemable
preference shares are proposed to be listed in the form as may be specified by
the Board from time to time;
(k)"non-convertible redeemable preference share" means a preference share
which is redeemable following the provisions of the Companies Act, 1956 and
does not include a preference share which is convertible into or exchangeable
with equity shares of the issuer at a later date, with or without the option
of the holder
(l)"perpetual non-cumulative preference share" means a perpetual non-
cumulative preference share issued by a bank following the guidelines
framed by the Reserve Bank of India;
(m)"private placement" means an offer or invitation to subscribe to the non-
convertible redeemable preference shares in terms of sub-section (3) of
section 67 of the Companies Act, 1956
(n)"promoter" has the same meaning as in the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
(o)"public issue" means an offer or invitation by an issuer to the public to
subscribe to the non-convertible redeemable preference shares which are
not like private placement;

2015

(1) These regulations may be called the Securities and Exchange Board
of India (3[Issue and Listing of Municipal Debt Securities]) Regulations,
2015
 (2) .(2) These regulations shall come into force on the date of their
publication in the Official Gazette.
Definitions.2
.(1) In these regulations, unless the context otherwise requires, the terms
defined shall bear the meanings assigned to them below, and their
cognate expressions shall be construed accordingly,–
(a)“Act” means the Securities and Exchange Board of India Act,1992 (15
of 1992);
(b)“advertisement” includes all forms of communication including
notices, brochures, pamphlets, show cards, catalogues, hoardings,
placards, posters, insertions in the newspaper, cover pages of offer
documents, pictures, films, etc., in any print media or electronic media
or social media, radio, television programme;
(c)"Board" means the Securities and Exchange Board of India established
under section 3 of the Act;4
(d) “constitution document” shall mean the Central or State Act,
Rules, Regulations or charter under which the issuer has been
established or incorporated or notified
e) “credit enhancement” shall mean any arrangement including
subordination, insurance, letter of credit, over-collateralization,
undertakings, guarantees, letter of comfort etc.;
(f) “designated stock exchange” shall mean a recognized stock exchange
in which securities of an issuer are listed or proposed to be listed
and which is chosen by the issuer as a designated stock exchange
for a particular issue of municipal debt securities under these regulations;
(g) “draft offer document” shall mean the draft offer document filed
with the Board about a public issue under these regulations

2018

(1) These regulations may be called the Securities and Exchange Board of India
(Appointment of Administrator and Procedure for Refunding to the Investors)
Regulations, 2018.
(2) They shall come into force on the date of their notification in the Official
Gazette.

Definitions.
(1) In these regulations, unless the context otherwise requires,-
a)“Act” means the Securities and Exchange Board of India
Act, 1992 [15 of 1992];
b)“Administrator” means a person registered with the
Insolvency and Bankruptcy Board of India as an Insolvency
Resolution Professional and who has been engaged by the
Recovery Officer for these regulations
.c)“advertisement” includes-
(i)notices, brochures, pamphlets, circulars, show-cards,
catalogues, hoardings, placards, posters, insertions in
newspapers, pictures, films and documentaries; and
(ii)any publicity through the print medium, radio, television
programmes or electronic media
d)“auditor” means a person qualified to audit the accounts of
companies under the Companies Act, 2013;
e)“Board” means the Securities and Exchange Board of India
established under section 3 of the Act;
f)"certificate" means the statement drawn up by the
Recovery Officer under section 28A of the Act or section 23JB
of the Securities Contracts (Regulations) Act, 1956 or section
19-IB of the Depositories Act, 1996and shall not include sale
certificate;
g)"defaulter" for these regulations, means a person who has
failed to comply with an order of the Board to refund monies
to the investors or an order of the Board for disgorgement within
the specified period and who is mentioned as a defaulter in the
certificate;
h)“e-auction” means the public auction conducted through
electronic mode
; i)“e-auction agency” means a company providing an e-auction
platform which is engaged by the Administrator to auction and
sell properties attached by the Recovery Officer;
j)“investor” means the person, whether identified or not, in
whose favour the refund of monies had been directed by the
Board;
k)"property" means and includes assets of any kind, whether
movable or immovable, tangible or intangible, corporeal or
incorporeal and includes securities, bank accounts, deposits, any
right or interest or legal documents or instruments evidencing
title to or interest in the property and where the property is
capable of conversion into some other form, then the property
in the converted form and also includes the proceeds from the
property.
n)“refund order” means a director of the Board, issued under
the Act or the Securities Contracts (Regulation) Act, 1956 of
the Depositories Act, 1996, to refund monies to the investors;