Topic- Investor Protection and Role of SEBI
RESEARCH SCHOLAR- Anand Singhj Chauhan
AKS Management College, Lucknow
The decade of the 1980’s witnessed a phenomenal growth and development. For the first time the Indian securities market, demon started its potential not only to mobilize the savings of the house-hold sector but also to allocate it with some degree of efficiency for industrial development. By the end of the decade, the securities market emerged into the main stream of the financial system of the country, signifying one of the major economic processes of the decade of the 1990s. There were notable changes in the capital structure of the companies across industries, new intermediaries and the institutions were established in the securities market and a new awareness and interest in investment opportunities in the securities market were created among investors. In spite of these developments and the quantitative expansion of the market, its quality lagged far behind and there was absence of adequate professionalism and fair competition among the various players in the market. The government therefore, felt the need for setting up an apex body for the first time, exclusively for investor protection and for the promotion of orderly and healthy growth of the securities market and constituted the Securities and Exchange Board of India on April 12, 1988. After the promulgation of the Securities and Exchange Board of India Ordinance on January 30, 1992. SEBI was established as a statutory body on February 21, 1992. SEBI Committees-
1. Technical Advisory Committee
2. Committee for review of structure of market infrastructure institutions 3. Members of the Advisory Committee for the SEBI Investor Protection and Education Fund 4. Takeover Regulations Advisory Committee
5. Primary Market Advisory Committee (PMAC)
6. Secondary Market Advisory Committee (SMAC)
7. Mutual Fund Advisory Committee
8. Corporate Bonds & Securitization Advisory Committee 9. Takeover Panel
10. SEBI Committee on Disclosures and Accounting Standards (SCODA) 11. High Powered Advisory Committee on consent orders and compounding of offences 12. Derivatives Market Review Committee
13. Committee on Infrastructure Funds
According to the committee report SEBI’s primary objectives are defined as: 1. To promote and provide investor protection,
2. To promote the healthy development of the capital market, and 3. To regulate the functioning of the security markets.
The market development is predicated on a sound regulatory framework. The role of a regulatory body for securities market in a country is determined by the stage of development of securities market in the country. In the Indian context, having regard to the emerging nature of the market, the regulatory body must necessarily have the twin role of development and regulation. SEBI’s efforts has always been to create an effective surveillance mechanism for the securities market, and encourage responsible and an accountable autonomy on the part of all players in the market, who should discipline themselves and observe the rules of the game. This would be possible, if the intermediaries set themselves up as effective self-regulatory framework advocated by SEBI, which like management by exception would result in regulation by exception. The SEBI act has empowered SEBI to regulate the business of stock exchange and all financial intermediaries associated with the securities market such as stock broker, managers, underwriter’s debentures, trustees, and share transfer agents, registrars to issue and bank to issue. The Mutual Funds are also regulated by SEBI. The act has also empowered SEBI to prohibit insider trading. Substantial acquisition of shares and take-over of companies are also regulated by SEBI. Since its becoming statutory body, SEBI has carried out wide ranging reforms in primary and secondary markets which seek to improve the...
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