Introduction:-

SEBI is managed by six members one chairman (nominated by Central Government), two
members (officers of central ministries), one member (from RBI) and remaining two
members nominated by Central Government.
The Securities and Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act, 1992.The
Preamble of the Securities and Exchange Board of India describes the basic functions of the
Securities and Exchange Board of India as
"...to protect the interests of investors in securities and to promote the development of, and
to regulate the securities market and for matters connected therewith or incidental thereto"
These Guidelines have been issued by the Securities and Exchange Board of India under
Section 11 of the Securities and Exchange Board of India Act, 1992.
(a) These Guidelines may be called the Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines, 2000.
(b) These Guidelines shall come into force from the date specified by the Board.

Functions & ResponsibilitiesSEBI has to be responsive to the needs of three groups, which constitute the market:

The issuers of securities

The investors

The market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasiexecutive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeals process to create
accountability. There is a Securities Appellate Tribunal which is a three-member tribunal
and is presently headed by a former Chief Justice of a High court -Mr. Justice N.K.Sodhi. A
second appeal lies directly to the Supreme Court.SEBI has enjoyed success as a regulator
by pushing systemic reforms aggressively and successively.

Powers
For the discharge of its functions efficiently, SEBI has been invested with the necessary
powers which are:
1. To approve bylaws of stock exchanges.
2. To require the stock exchange to amend their bylaws.
3. Inspect the books of accounts and call for periodical returns from recognised stock
exchanges.
4. Inspect the books of accounts of a financial intermediary.
5. Compel certain companies to list their shares in one or more stock exchanges.
6. Levy fees and other charges on the intermediaries for performing its functions.
7. Grant licence to any person for the purpose of dealing in certain areas.

8. Delegate powers exercisable by it.

9. Prosecute and judge directly the violation of certain provisions of the companies Act.

1. REGULATION OF STOCK EXCHANGES AND SUBSIDIARIES

I. Inspection of Stock Exchanges: On-site supervision through inspection of stock
exchanges is considered an effective regulatory tool. Under the policy of risk-based
supervision which has been adopted from the year under review, stock exchanges having a
significant turnover were taken up for onsite inspection. These were The Bombay Stock
Exchange ( BSE), Calcutta Stock Exchange (CSE), National Stock Exchange (NSE), Inter
Connected Stock Exchange( ISE), Ludhiana Stock Exchange (LSE), Hyderabad Stock
Exchange (HS E ) and Ahmedabad Stock Exchange (ASE).
II. Inspection of Subsidiaries of Stock Exchanges
A. Six subsidiaries of stock exchanges were inspected during the financial year 2002-03 viz
ASE Ca p i t a l Ma r k e t s L t d ( ACML Subsidiary of ASE), ISE Securities &
Services Ltd (ISS - Subsidiary of ISE), LSE Securities Ltd (LSESL - Subsidiary of LSE) ,
HSE Securities Ltd (HSESL - Subsidiary of HSE), SKSE Securities Ltd (SKSESL Subsidiary of Saurashtra Kutch Stock Exchange) and VSE Securities Ltd (VSL- Subsidiary
of Vadodara Stock Exchange). A special inspection of MPSE Securities Ltd (MPSESL
Subsidiary of MPSE) was carried out. Follow up action included discussion with the parent
exchanges of the subsidiaries. Letters of displeasure were issued to the parent stock
exchanges of those subsidiaries for which findings were serious as well as those which
failed to comply with suggestions/observations of inspection reports.
III. Restructuring of Management of Subsidiaries: The inspection of the subsidiaries of
stock exchanges revealed deficiencies in their functioning and risk management systems
The management structure of the subsidiaries needed to undergo change in order to enable
them to be able to provide a safe and transparent market and effectively discharge their
responsibilities towards investor protection. A Circular dated February 11, 2003 has,
therefore, been issued to stock exchanges directing them to carry out the changes in
management structure of their subsidiaries.
IV. Illegal Trading in Securities
It had come to the notice of the SEBI that certain persons were engaging in trading in
securities outside the purview of the stock exchanges (illegal trading in securities). Such
trading particularly in Gujarat has come to be known as DABBA trading. There were also
reports in the media regarding illegal use of terminals provided to the brokers by the
National Stock Exchange in Kolkata and other places. Media had also reported Kerb trading
in the cities of Kanpur, Kolkata, Mathura, Ahmedabad, Rajkot and Mumbai.

2.Registration And Regulation Of The Working Of Intermediaries:In order to interpose between issuers and investors, regulators recognize various classes of
intermediaries in the capital market. Regulation through intermediaries has been found,
perhaps more effective in certain spheres of activity. SEBI, over the period, recognized
many types of capital market intermediaries in India and operations during the year is
reviewed in the following sections.
I. Primary Market
Intermediaries such as merchant bankers, underwriters, debenture trustees, bankers to an
issue, registrars to an issue and share transfer agents and portfolio manager are the
intermediaries that function in the inter alia in the primary markets.

II. Secondary Market

Brokers are one of the most important links between the investors and the market. Their
association with the stock exchanges and investors dates back to as early as nineteenth
century.
A. Broker Registration details of registered brokers exchange wise, and their composition,
and ownership pattern. There are 3835 corporate brokers in India as on March 31, 2003
and they constituted about 40 per cent of total brokers. Percentage of corporate brokers is
found to be at the highest at NSE, OTCEI and BSE at 89 per cent, 76 and 67 per cent
respectively and together constitute over fifty percent of the corporate brokers in all
exchanges. NSE and BSE together have over one-third of corporate brokers
between
them. On the smaller exchanges such as Guwahati and Jaipur percentage of corporate
brokers is negligible. The composition of membership has been shifting to the corporate
entities over the years.

MULTIPLE MEMBERSHIP:
Entities are allowed to obtain membership at more than one stock exchange.
The multiple memberships ranges between two to six. It may be seen that
854 entities. have membership at two exchanges while 3 entities have
membership at 6 exchanges. About ten per cent of the total brokers have
multiple memberships.
Sub-Broker Registration
Sub-brokers are intermediaries between the broker and the investor. SEBI
Requirements include registration of sub-brokers through the stock
exchanges at which the broker is a member.
III. Registration of FIIs
IV. Registration of Custodian of Securities
The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for
the securities market in India. It was formed officially by the Government of India in 1992 withSEBI Act
1992[2] being passed by the Indian Parliament. SEBI is headquartered in the popular business district
of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional
offices in New Delhi, Kolkata, Chennai and Ahmedabad.
Controller of Capital Issues was the regulatory authority before SEBI came into existence [3]; it derived
authority from the Capital Issues (Control) Act, 1947.
INTRODUCTION == Organization structure == Upendra Kumar Sinha is the new chairman of SEBI.
His term started on February 18 2011. he is appointed for a period of five years. [4] .
The Board comprises[5]
List of former Chairmen[6]:

Functions and responsibilities

SEBI has to be responsive to the needs of three groups, which constitute the market:

the issuers of securities

the investors

the market intermediaries.

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It
drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its
executive function and it passes rulings and orders in its judicial capacity. Though this makes it very
powerful, there is an appeals process to create accountability. There is a Securities Appellate Tribunal
which is a three-member tribunal and is presently headed by a former Chief Justice of a High court Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court.
SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and successively
(e.g. the quick movement towards making the markets electronic and paperless rolling settlement on
T+2 basis). SEBI has been active in setting up the regulations as required under law.
SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and
the Satyam fiasco. It had increased the extent and quantity of disclosures to be made by Indian
corporate promoters. More recently, in light of the global meltdown, it liberalised the takeover code to
facilitate investments by removing regulatory strictures. In one such move, SEBI has increased the
application limit for retail investors to Rs 2 lakh, from Rs 1 lakh at present.

Powers
SEBI has the right to search and seizure where just cause can be given. In matters of security trading,
SEBI has the power to restrict and allow trading in a given scrip without any external (i.e. judicial or
executive) intervention.

RoleofSEBIinIndianCapitalMarket

SEBI is regulator to control Indian capital market. Since its establishment in 1992, it is doing hard
work for protecting the interests of Indian investors. SEBI gets education from past cheating with
naive investors of India. Now, SEBI is more strict with those who commit frauds in capital market.
The role of security exchange board of India (SEBI) in regulating Indian capital market is very
important because government of India can only open or take decision to open 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 on any stock exchange
to trade in shares and stocks.
Now, we explain role of SEBI in regulating Indian Capital Market more deeply with following points:
1. Power to make rules for controlling stock exchange :
SEBI has power to make new rules for controlling stock exchange in India. For example, SEBI fixed
the time of trading 9 AM and 5 PM in stock market.
2. To provide license to dealers and brokers:
SEBI has power to provide license to dealers and brokers of capital market. If SEBI sees that any
financial product is of capital nature, then SEBI can also control to that product and its dealers.
One of main example is ULIPs case. SEBI said, It is just like fund sand 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 capital market.

It can ban on the trading of those brokers who are involved in fraudulent and unfair trade practices
relating to stock market.

It can impose the penalties on capital market intermediaries if they involve in insider trading.
4. To Control the Merge, Acquisition and Takeover the companies:
Many big companies in India want to create monopoly in capital market. So, these companies buy

all other companies or deal of merging. SEBI sees whether this merge or acquisition is for
development of business or to harm capital market.
5. To audit the performance of stock market :
SEBI uses his powers to audit the performance of different Indian stock exchange 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 broker's total transactions.
90 day limit for carry forward.
7. To create relationship with ICAI:
ICAI is the authority for making new auditors of companies. SEBI creates good relationship with
ICAI for bringing more transparency in the auditing work of company accounts because audited
financial statements are mirror to see the real face of company and after this investors can decide
to invest or not to invest. Moreover, investors of India can easily trust on audited financial reports.
After Satyam Scam, SEBI is investigating with ICAI, whether CAs are doing their duty by ethical
way 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 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 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
9. To Require report of Portfolio Management Activities:
SEBI has also power to require report of portfolio management to check the capital market
performance. Recently, SEBI sent the letter to all Registered Portfolio Managers of India for
demanding report.
10. To educate the investors:
Time to time, SEBI arranges scheduled workshops to educate the investors. On 22 may 2010 SEBI
imposed workshop. If you are investor, you can get education through SEBI leaders by getting
update information on this page.

A capital market is a market for securities (debt or equity), where business enterprises (companies)
and governments can raise long-term funds. It is defined as a market in which money is provided for
periods longer than a year[1], as the raising of short-term funds takes place on other markets (e.g.,
the money market). The capital market includes the stock market (equity securities) and the bond
market (debt). Financial regulators, such as the UK's Financial Services Authority (FSA) or the U.S.
Securities and Exchange Commission (SEC), oversee the capital markets in their designated
jurisdictions to ensure that investors are protected against fraud, among other duties.

Capital markets may be classified as primary markets and secondary markets. In primary markets,
new stock or bond issues are sold to investors via a mechanism known as underwriting. In the
secondary markets, existing securities are sold and bought among investors or traders, usually on
a securities exchange, over-the-counter, or elsewhere.

Conclusion

Over the years , SEBI and government have come up with a series of regulatory
measures to give boost to new issue market. A lot of merchant bankers don't follow the
code of conduct and as a result are debarred, however these cases have reduced. As
per the 1997 amendment to the SEBI Rules and Regulations, 1992 only corporate
bodies will be allowed to function as merchant bankers.
These measures and also the new policy where SEBI has made the safety net
compulsory ( Refer article - Justdial IPO). SEBI had put out draft norms for safety net
after its study showed that 62% of the 117 companies listed between 2008 and 2011 fell
below IPO price within the 1st six months of listing. SEBI would be the 1st regulator
around the world, to making such a proposal mandatory. However it met with strong
criticism from investment bankers.
Suggestions for SEBI
SEBI has been established to protect the interest of investors in securities and to promote the development
of, and to regulate the securities market. Since its inception SEBI has introduced far reaching reforms in
the regulatory framework for the Securities Market. With a view to further enhance transparency, efficiency
and competitiveness of the market and to bring back the confidence of investors, SEBI has desired a feed
back from the members of the Institute on various issues in the Capital Market. Members may send their
suggestions in the following areas or any other area, relevant to the development and growth of the market:
1. Primary Market
2. Secondary Market
3. Depositories
4. Debt Market
5. Mutual Funds
6. Derivatives
7. Takeover Code
8. Investor Education and Awareness

Objectives of SEBI:
The overall objectives of SEBI are to protect the interest of investors and to promote the
development of stock exchange and to regulate the activities of stock market. The objectives of
SEBI are:
1. To regulate the activities of stock exchange.
2. To protect the rights of investors and ensuring safety to their investment.
3. To prevent fraudulent and malpractices by having balance between self regulation of business
and its statutory regulations.
4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters,
etc.
Importance of SEBI:

With the growth in the dealings of stock markets, lot of malpractices also started in stock markets
such as price rigging, unofficial premium on new issue, and delay in delivery of shares, violation
of rules and regulations of stock exchange and listing requirements. Due to these malpractices
the customers started losing confidence and faith in the stock exchange. So government of India
decided to set up an agency or regulatory body known as Securities Exchange Board of India
(SEBI).
Purpose and Role of SEBI:
SEBI was set up with the main purpose of keeping a check on malpractices and protect the
interest of investors. It was set up to meet the needs of three groups.
1. Issuers:
For issuers it provides a market place in which they can raise finance fairly and easily.
2. Investors:
For investors it provides protection and supply of accurate and correct information.
3. Intermediaries:
For intermediaries it provides a competitive professional market.

Reference :
www.google.com
1.

Jump up^ "Market highlights for first half-year 2010" (PDF). World Federation of
Exchanges. Retrieved June 1, 2013.

2.

Jump up^ Lemke and Lins, Soft Dollars and Other Trading Activities, 2:3 (Thomson
West, 2013-2014 ed.).

3.

Jump up^ Lemke and Lins, Soft Dollars and Other Trading Activities, 2:25 - 2:30
(Thomson West, 2013-2014 ed.).