Securities and Exchange Board of India

The Securities and Exchange Board of India (SEBI) is the principal regulatory authority for the securities and commodity markets in India. It operates under the jurisdiction of the Ministry of Finance of the Government of India. SEBI was established to protect the interests of investors and enhance the regulation and development of the securities market.

Establishment and Legal Framework

SEBI was initially established as a non-statutory body in 1988. It gained statutory powers with the enactment of the Securities and Exchange Board of India Act, 1992. This act endowed SEBI with the authority to regulate the securities market, promote its development, and protect the interests of investors.

Objectives

The primary objectives of SEBI are to:

Protect the interests of investors in securities.
Promote the development of securities markets.
Regulate the securities market and related matters.

SEBI's preamble highlights its role in ensuring that Indian securities markets operate in a fair and efficient manner, contributing to the development of the Indian economy.

Structure and Governance

SEBI's governance structure includes a chairman and several members. The chairman and members are appointed by the Government of India. The board is composed of members from different sectors, with a mix of government officials, finance professionals, and representatives from the securities market.

Key Functions

SEBI performs several key functions in regulating the securities market:

Regulatory Function: Frame rules and regulations for the securities market.
Development Function: Initiate measures to develop the securities market, such as training and research.
Protective Function: Protect investors by implementing and enforcing regulations against unfair trade practices.

Regulation and Policies

SEBI has introduced various regulations and policies to streamline and regulate different aspects of the securities market. Some notable regulations include:

SEBI (Mutual Funds) Regulations, 1996: Governs the operation of mutual funds.
SEBI (Alternative Investment Funds) Regulations, 2012: Regulates alternative investment funds.

Reforms and Amendments

SEBI has undergone numerous reforms and amendments to address evolving market dynamics and ensure effective governance. An example is the 1999 amendment which brought collective investment schemes under SEBI's purview, with exceptions for nidhis, chit funds, and cooperatives.

Challenges and Criticisms

Despite its regulatory framework, SEBI has faced criticism for not being able to fully prevent market manipulation and insider trading. Incidents such as the temporary ban on Jane Street Capital highlight challenges in enforcement.

Additionally, SEBI's handling of certain market events, like allegations of market manipulation by Hindenburg Research, has drawn scrutiny from political figures like Rahul Gandhi.

Notable Developments

In recent years, SEBI has made significant strides in regulating newer financial instruments and platforms, including the Multi Commodity Exchange, which was brought under its regulation in 2015.