SEBI Act 1992

11/23/16

By Akash Saxena

SEBI ACT 1992

INTRODUCTION: in the
The securities and exchange board of India Act 1992 was amended
in the year 1995, 1999, and 2002, to meet the requirement of
changing needs of the securities market and responding to the
development in the securities market. The various malpractices and
unfair trade practices adopted by the companies, brokers, bankers,
and others involved in the securities market had led to erosion of
investors confidence. The govt and the stock exchanges had also
failed to protect the interest of investors because of the lack of
proper panel.
Realizing this, the SEBI was established by the govt in
April 1988 as a supervisory body under the administrative control of
finance ministry to regulate and promote securities market.

11/23/16

By Akash Saxena

Features of SEBI
1.
2.
3.
a)
b)
c)
d)
4.

The SEBI shall be a body of corporate perpetual succession and

common seal.
The head office is at Mumbai and the board had established its
offices at other places in India.
The board shall consist of the following members:
A chairman,
Two members from among the officials of the Ministers of the
Central govt dealing with finance and law,
One member from amongst the officials of RBI,
The two other members shall be appointed by the central govt.
The general superintendence, director and management of affairs
of the board shall vest in board of members.

COND.
5. The govt can prescribe terms of office and other conditions of the
chairman and other members of the board.
6. It is the primary duty of the board to protect the interest of the
investors in securities and to promote the orderly growth of the
security market.

OBJECTIVES:
1.
2.
3.
4.
5.

To safeguard the investment of the investors.

To regulate and develop capital and securities market.
To fix the minimum application amount of Rs. 2000.
To regulate the investment plan.
Regulation of the shares of the company.
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COND.
6. To fix the minimum capital limit for the sale of shares.
7. To regulate the working.
8. To check inside trading of the securities.
9. Fixing up the fees in stock exchange for the brokers.
10.Calling information from underwriters and make the enquiry.
11.To supervise the working of various organization dealing in
securities market.

POWERS OF SEBI
1. SEBI can investigate in any matter relating to stock exchange.
2. SEBI can ask for any document relating to the investigation of the
enquiry.
3. Suspension and cancellation of registration of any broker if found
at mistake.
4. SEBI can file any complaint without the prior permission of the
court.
5. Monetary fines can be imposed by SEBI

FUNCTIONS OF SEBI
1) Regulating the business in stock exchange and any other
securities market.
2) Registering and regulating the working of stock brokers, share
transfer agent, bankers who may be associated with securities
market in any manner.
3) Registering and regulating the working of collective investment
schemes.
4) Promoting and regulating self regulating the organization.
5) Prohibiting fraud and unfair practices relating to the security
market.
6) Calling for information, inspection and conducting audits.
7) Regulating acquisition of shares and take over of companies.

ORGANISATION OF STOCK EXCHANGE IN

INDIA
1. There are 23 stock exchanges functioning in India including Over
The Counter Exchange of India (OCTEI) and National Stock
Exchange (NSE).
2. Bombay Stock Exchange established in 1875 and is the oldest one
in Asia.
3. Since 8th August BSE is a public limited company.
4. With about 10,000 listed companies, India holds the unique
distinction of having the largest number of listed companies in the
world.
5. The policy of the govt is that there shall be only one stock
exchange in one area.
6. Each stock exchange is managed by an executive committee/
council of mgmt .
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MAJOR STOCK EXCHANGES OF

INDIA
BOMBAY STOCK EXCHANGE:
1. BSE is one of the oldest stock exchange of India & Asia.
2. It is also one of the biggest stock exchange of the world.
3. It is said to be the nerve of the Indian Economy, which reveals the
health of the economy.
4. BSE had a turnover of Rs. 68028 crs and a market capitalization of
Rs 9,12,842 crs in 1999-2000.
5. Its daily turnover had increased from Rs 11 crs in 1979-1980 to Rs
4587 crs in 2000-2001.
6. It was established in 1857 and at that time its membership fee was
Re 1.
7. It plays pivotal role in the development of the countrys capital
market.
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COND.
1. The vision of BSE is to Emerge as the premier Indian Stock
Exchange by establishing global benchmarks.
2. BSE management is managed professionally by Board of
Directors.
3. It comprises of eminent professionals, representatives of trading
members and managing directors.
4. The board exercises complete control and formulates larger policy
issues.
5. The day to day operations is managed by the managing director
and its management team.

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NATIONAL STOCK EXCHANGE

1. NSE was incorporated in Nov 1992 with an equity capital of Rs 25
crs.
2. NSE operates into different segments as Wholesale Debt Market,
capital market , derivatives market.
3. WDM is concerned with trading in Govt. Services, bonds etc.
4. Capital market is concerned with equity and corporate debt
instruments by both entities and individuals.
5. The main objective of NSE is to establish nation wide trading
facilities.
6. To facilitate equal access to investors across the country.
7. To provide fairness, efficiency and transparency to the securities.
8. To meet International Securities Market Standards.

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Stock Exchange Operations.

1. BULLS & BEARS:
A bull is a buyer in the stock market. He is optimistic about the
security prices. A bear is a seller of securities.
2. Order/Customer Driven & Quote/Dealer Driven Trading
System:
Trading in a stock exchange takes place on the basis of auction
system on a trading floor . In an order driven system customers
buys and sells orders and reach a central point where they are
matched. In a quote driven system dealers compete to give the
best price.
3. MARKET MAKER:
Market maker makes both bid and offer at the same time. The
quoted price which they would charge from a buyer is offer price
The quoted price which they would pay to a seller is bid price.
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