ASSIGNMENT
FINANCIAL MANAGEMENT
(AAF311)
Submitted to: Submitted by:
Ms. Mitali Gupta Sanskriti Jain
B.Com (h) AAF, Sem III
IISU/2023/ADM/35722
SESSION: 2024-25
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SECURITIES AND EXCHANGE BOARD OF
INDIA
(SEBI)
INTRODUCTION
SEBI stands for the Securities and Exchange Board of India. It is a statutory regulatory body established
by the Government of India in 1992 to protect the interests of investors investing in securities, along
with regulating the securities market.
The Securities and Exchange Board of India (SEB) serves as the principal regulator of the securities
market in India, tasked with fostering investor confidence, maintaining market Integrity, and promoting
the orderly growth and development of the capital markets. Its proactive regulatory approach and
emphasis on investor protection are essential for ensuring the efficient and transparent functioning of
India’s financial ecosystem.
SEBI's regulatory authority extends to various segments of the financial market, including stock
exchanges. Mutual funds, portfolio managers, investment advisers, and other intermediaries.
It plays a pivotal role in monitoring and regulating market activities, ensuring compliance with
regulations, and taking corrective measures in case of any violations.
HISTORY OF SEBI
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The establishment of SEBI marked a significant milestone in the history of the securities market, as it
aimed to bring about comprehensive reforms in the capital market and ensure clarity and investor
protection.
Before the formation of SEBI, the regulation of the securities market in India was primarily overseen by
the Controller of Capital Issues (CCI). However, with the changing dynamics of the financial landscape
and the need for a more independent and specialized regulatory body, SEBI was created.
SEBI was granted autonomous powers through the SEBI Act of 1992, allowing it to regulate and
supervise the securities market in a comprehensive manner. It has undergone several reforms and
enhancements over the years to adapt to the evolving financial landscape. It has introduced various
regulations and guidelines to promote good governance, prevent market manipulation, and enhance
investor confidence.
OBJECTIVES OF SEBI
1. Investor protection: SEBI's foremost objective is to safeguard the interests of investors in the
securities market. It seeks to ensure that investors receive accurate and timely information about the
securities they invest in and are protected from fraudulent and unfair trade practices.
2. Regulation and development of the securities market: SEBI is entrusted with the responsibility of
regulating and developing the securities market. It formulates regulations and guidelines that govern
various market participants, such as stock exchanges, brokers, and listed companies, to promote fair and
transparent practices.
3. Prevention of insider trading: SEBI works towards preventing insider trading, a practice where
individuals with access to non-public information use it to gain an unfair advantage. SEBI's regulations
on insider trading aim to maintain a level playing field for all market participants.
4. Promotion of fair practices and code of conduct: SEBI promotes fair practices and a high standard
of integrity in the securities market. It enforces a code of conduct for all market participants, fostering an
environment where market activities are conducted ethically and transparently.
5. Prohibition of fraudulent and unfair trade practices: SEBI is empowered to act against fraudulent
and unfair trade practices in the securities market. It investigates and takes corrective measures to
maintain market integrity and protect investors from market manipulations.
6. Development of a secondary market: SEBI plays a crucial role in the development of the secondary
market by introducing reforms and initiatives to enhance liquidity. Transparency and efficiency in
trading. It works towards creating an environment conducive to the growth of the capital market.
FUNCTIONS OF SEBI
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1. PROTECTIVE FUNCTION: The protective function implies the role that SEBI plays in
protecting the investor interest and also that of other financial participants. The protective
function includes the following activities.
Prohibits insider trading: Insider trading is the act of buying or selling of the securities
by the insiders of a company, which includes the directors, employees and promoters. To
prevent such trading SEBI has barred the companies to purchase their own shares from
the secondary market.
Check price rigging: Price rigging is the act of causing unnatural fluctuations in the
price of securities by either increasing or decreasing the market price of the stocks that
leads to unexpected losses for the investors. SEBI maintains strict watch in order to
prevent such malpractices.
Promoting fair practices: SEBI promotes fair trade practice and works towards
prohibiting fraudulent activities related to trading of securities.
Financial education provider: SEBI educates the investors by conducting online and
offline sessions that provide information related to market insights and also on money
management.
2. REGULATORY FUNCTION: Regulatory functions involve establishment of rules and
regulations for the financial intermediaries along with corporates that helps in efficient
management of the market. The following are some of the regulatory functions:
SEBI has defined the rules and regulations and formed guidelines and code of conduct
that should be followed by the corporates as well as the financial intermediaries.
Regulating the process of taking over of a company.
Conducting inquiries and audit of stock exchanges.
Regulates the working of stock brokers, merchant brokers.
3. DEVELOPMENTAL FUNCTION: Developmental function refers to the steps taken by
SEBI in order to provide the investors with a knowledge of the trading and market function. The
following activities are included as part of developmental function:
Training of intermediaries who are a part of the security market.
Introduction of trading through electronic means or through the internet by the help of
registered stock brokers.
By making the underwriting an optional system in order to reduce cost of issue.
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POWERS OF SEBI
SEBI wields a spectrum of powers that allow it to function effectively as a regulatory authority. These
powers can be categorized into three broad classifications: quasi-judicial, quasi- executive, and quasi-
legislative.
1. QUASI-JUDICIAL POWERS:
Adjudication authority:
SEBI possesses quasi-judicial powers, allowing it to adjudicate on matters related to securities
law violations.
It has the authority to conduct hearings, examine evidence, and pass orders, ensuring a fair and
impartial resolution of disputes within the securities market.
Settlement proceedings:
SEBI has the power to facilitate settlement proceedings between parties involved in disputes.
Through consent orders, SEBI can bring about resolution and enforce compliance without
resorting to prolonged legal processes.
2. QUASI-EXECUTIVE POWERS:
Enforcement and implementation:
SEBI is vested with quasi-executive powers, enabling it to enforce compliance with securities
laws and regulations.
The regulatory body can take actions such as imposing fines, penalties, and other measures to
ensure market participants adhere to prescribed standards.
Conducting investigations:
SEBI has the authority to conduct investigations into potential violations of securities laws.
This quasi-executive power allows SEBI to gather information, inspect records, and take
corrective measures to maintain market integrity.
3. QUASI-LEGISLATIVE POWERS:
Rule-making authority:
SEBI possesses quasi-legislative powers, allowing it to formulate and promulgate rules and
regulations for the securities market.
This authority enables SEBI to adapt to changing market dynamics and enact measures that
foster fair, transparent, and efficient market practices.
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Policy formulation:
SEBI has the power to formulate policies that guide the development and regulation of the
securities market.
This quasi-legislative role positions SEBI as a dynamic institution capable of responding to
emerging challenges and opportunities in the financial landscape.
