The Securities and Exchange Board of India (SEBI) is the apex regulatory body for the

securities market in India. Here's a detailed overview:

1. Establishment and Background:
●​ Formation: SEBI was initially established as a non-statutory body on April 12, 1988,
through an executive resolution of the Government of India.
●​ Statutory Status: It gained statutory powers on January 30, 1992, with the enactment of
the Securities and Exchange Board of India Act, 1992. This made SEBI an autonomous
and independent regulatory body.
●​ Headquarters: Mumbai, India. It also has regional offices in New Delhi, Chennai, Kolkata,
and Ahmedabad, along with other local regional offices.
●​ Ministry: SEBI functions under the administrative control of the Ministry of Finance,
Government of India.
2. Preamble and Core Objectives: The Preamble of the SEBI Act describes its basic functions
as:
●​ Protecting the interests of investors in securities: This is SEBI's foremost objective,
ensuring investors receive accurate information and are shielded from fraudulent
practices.
●​ Promoting the development of the securities market: Fostering growth and efficiency
in the market.
●​ Regulating the securities market: Ensuring fair, transparent, and orderly functioning of
the market.
●​ Addressing matters connected therewith or incidental thereto.
SEBI aims to meet the needs of three key groups in the securities market:
●​ Issuers: Providing a marketplace for them to raise funds fairly and easily.
●​ Investors: Offering protection, accurate information, and a safe investment environment.
●​ Intermediaries: Creating a competitive and well-regulated market for them.
3. Organizational Structure: The SEBI Board typically consists of nine members:
●​ Chairman: Nominated by the Union Government of India.
●​ Two officers: From the Union Ministry of Finance.
●​ One member: From the Reserve Bank of India (RBI).
●​ Five other members: Nominated by the Union Government of India, of whom at least
three are full-time members.
4. Powers of SEBI (Three-Fold Authority): SEBI possesses significant powers, often
described as having three powers rolled into one body:
●​ a) Quasi-Legislative:
○​ Rule-making: SEBI has the authority to frame rules and regulations to protect
investor interests and prevent malpractices. Examples include insider trading
regulations, listing obligations, and disclosure requirements.
○​ Guidelines and Circulars: It issues guidelines and circulars governing various
aspects of the securities market, including issuance, trading, and listing of
securities, and the conduct of market participants.
○​ These regulations are enforceable and binding on market participants.
●​ b) Quasi-Executive:
○​ Enforcement: SEBI is empowered to implement its regulations and judgments and
take legal action against violators.
○​ Investigation: It can inspect books of accounts and other documents, summon and
enforce attendance of individuals, and examine them under oath to investigate
violations.
 ○​ Intervention: SEBI monitors market activities and takes proactive interventions to
enforce compliance and maintain market integrity, including issuing directives and
imposing trading restrictions.
●​ c) Quasi-Judicial:
○​ Adjudication: SEBI has the authority to deliver judgments and pass orders related
to fraud and other unethical practices in the securities market.
○​ Penalties: It can impose penalties and sanctions on offenders.
○​ Accountability: While SEBI's powers are extensive, its decisions can be appealed
to the Securities Appellate Tribunal (SAT) and further to the Supreme Court of India,
ensuring a system of checks and balances.
5. Key Functions of SEBI: SEBI's functions can be broadly categorized into three types:
●​ a) Protective Functions:
○​ Prohibiting fraudulent and unfair trade practices (e.g., price rigging, misleading
statements).
○​ Preventing insider trading.
○​ Promoting fair practices and a code of conduct for intermediaries.
○​ Educating investors and creating awareness about the securities market.
○​ Prohibiting unfair and dishonest business practices.
●​ b) Regulatory Functions:
○​ Registering and regulating brokers, sub-brokers, share transfer agents, merchant
bankers, custodians, depositories, foreign portfolio investors, credit rating agencies,
and other intermediaries.
○​ Registering and regulating the working of collective investment schemes, including
mutual funds and venture capital funds.
○​ Regulating substantial acquisition of shares and takeovers of companies.
○​ Conducting inquiries and audits of stock exchanges and intermediaries.
○​ Levying fees and other charges for carrying out its functions.
○​ Specifying regulations for listing and delisting of securities.
●​ c) Developmental Functions:
○​ Promoting investor education and training of intermediaries.
○​ Conducting research and publishing information useful to all market participants.
○​ Promoting fair trading practices.
○​ Undertaking measures to reduce malpractices in the securities market.
○​ Encouraging self-regulatory organizations (SROs) in the market.
6. Importance and Impact: SEBI plays a crucial role in:
●​ Maintaining market integrity: Ensuring a fair and transparent environment for all
participants.
●​ Investor confidence: Protecting investors' interests, which is vital for attracting capital to
the market.
●​ Market development: Facilitating the growth and efficiency of the Indian securities
market.
●​ Risk management: Implementing measures to mitigate systemic risks and maintain
stability.
In essence, SEBI acts as a vigilant watchdog of the Indian capital market, striving to strike a
balance between regulation and market development to foster a robust and trustworthy financial
ecosystem.