SEBI and its Functions-short notes for JAIIB

SEBI and its Functions for JAIIB Exam: Exams for JAIIB/DBF are conducted twice a year by the Indian Institute of Banking & Finance. Taking this exam is an excellent way for bank employees to advance their careers. An important element of the JAIIB exam is to ensure candidates have a solid understanding of the SEBI and its Functions. In this blog, learners can go through the short notes on one of the most important topics of SEBI and its Functions

What is SEBI?

The Securities and Exchange Board of India (SEBI) regulates and monitors the country’s securities market. This statutory regulatory body implements the rules and regulations, thus protecting the interests of the investors. It also promotes a transparent environment so that the investors can operate and invest with the knowledge that their interests are protected. The main objective of creating SEBI was to prevent malpractices in India’s securities market and to promote the development of capital markets. SEBI was established under the SEBI Act 1992 on 12th April 1992. Its headquarter is located at the Bandra- Kurla Complex in Mumbai. The board’s regional offices are located in New Delhi, Chennai, Kolkata, and Ahmedabad. It has its local offices located in cities including Bangalore, Jaipur, Chandigarh, Patna, Guwahati, and Kochi.  

Objectives of Securities and Exchange Board of India

The objectives of SEBI are given below: 

• Protection for the investors
• Prevention of malpractices
• Fair and proper functioning

Organizational Structure of SEBI

The Securities and Exchange Board of India has nine members, including a chairman appointed by the Govt. of India, two officers from the Union Finance Ministry, one member from the Central Bank (RBI), and the remaining five members appointed by the Union Govt. of India.

SEBI’s Charter

According to the charter, SEBI is responsible for three main groups:

• The issuers of securities,
• Investors, and
• Market intermediaries

Powers of SEBI

• SEBI sanctions and regulates the laws related to the functioning of the stock exchange.
• It has the power to examine the accounts and book of records of any stock exchange. 
• In case any malpractice is in force in any stock exchange, SEBI has the power to arrange a hearing and pass judgment.
• SEBI can permit new companies to be listed on stock exchanges, and it can also order companies to be delisted from the stock exchanges.
• If any company is found to be following unethical practices, SEBI has the authority to expel such companies or penalize them.  
• If convinced that the investors will be benefitted from the move, SEBI can permit them to float their shares in more than one stock exchange. 
• SEBI can draft and regulate legal rules if it finds it necessary to do so to protect the general public/ investors. 
• It also has the authority to regulate the registration of brokers and other intermediaries dealing with investors.

Functions of SEBI

SEBI has three functions to perform. The functions are:

• Regulatory Function
• Protective Function
• Development Function

Regulatory Functions

Regulatory functions are needed to keep a check on the functioning of different businesses in the securities market. The functions are mentioned below: 

• In order to maintain the proper and smooth functioning of corporate and other financial intermediaries, SEBI issues guidelines and a code of conduct to be followed.  
• It also assists in the takeover of companies.
• Conducts inquiries and audits.
• Registration of merchant bankers, brokers, and sub-brokers.
• Levying of fees
• Register and regulate credit rating agency

Protective Functions

the protective responsibilities of SEBI are performed to protect the interest of the investors and other financial participants. The functions include:

• Promote fair practices: 

To ensure this, SEBI established a code of conduct and regulations in the securities exchange market. 

• Check price rigging: 

The price rigging results in fluctuations in the value of securities. This results in a loss for investors. SEBI controls the price rigging, thus securing the interest of the investors.

• Prevent insider trading: 

It prevents insider trading. In this case, the buying and selling of securities are done by the directors themselves. SEBI prevents this so that the shares reach the investors.

• Prohibit fraudulent and unfair trade practices
• Create awareness and a transparent environment among investors

Development Functions

Under the development functions, SEBI performs/ encourages the following:

• Buying and selling mutual funds from AMC through a broker.
• Promotion of fair trading
• Reduction of malpractices and unfair trade.
• Encouraging self-regulating organizations
• Imparting training to the intermediaries
• Doing the research work. 

Conclusion: 

We hope that this article has been of help in providing all relevant details of SEBI and its functions. You can find more similar articles/ blogs on various topics related to your syllabus/ preparation available online at Oliveboard. Avail of these relevant and informative study materials and enhance your knowledge. 

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