Securities and Exchange Board of India is the most important thing in the Indian stock market, it regulates every small thing to big thing relating to the stocks. SEBI was founded on 12 April 1992. SEBI headquarter is situated at Bandra Kurla Complex, Mumbai. It aims to develop the capital market and seeks to protect the interests of investors by enforcing various rules and regulations. At present there are 17 stock exchanges functioning in India including NSE and BSE. The operation of all these stock exchanges is governed by the guidelines of SEBI.

History of Securities and Exchange Board of India
Before SEBI came into existence, the regulatory authority for capital issues was the regulatory authority; It derived its authority from the Capital Issues (Control) Act, 1947. In 1988, SEBI was set up as the regulator of capital markets in India. Without any statutory power SEBI was a non statutory body, after the passage of the SEBI Act by the Parliament in 1992, it was given autonomous and statutory powers.

Structure of Securities and Exchange Board of India
In the structure of SEBI
● There is one Chairman of SEBI who is nominated by the Central Government of India.
● Two officers of the Union Finance Ministry are also part of this structure.
● One member will be appointed from the RBI.
● Five other members are also nominated by the Government of India.

The framework of SEBI is just like a corporate. Around 20 departments work under SEBI. Some of these departments are corporate finance, economic and policy analysis, enforcement, human resources, debt and hybrid securities, investment management, legal affairs , commodity derivatives market regulation and much more. And if we thinking about the functions of it’s so it’s have several functions including
1. We all know that the fist function of it is to protect the interests of Indian investors in the securities market.
2. To regulate the trading operations of the securities market.
3. Educating investors about securities markets and their intermediaries.
4. To supervise the acquisition of the company and the acquisition of shares.
5. To keep the securities market efficient and updated at all times through proper R&D strategy.

It also has a power of Quasi- judicial “In cases of frauds and unethical practices pertaining to the securities market, it has a power to pass judgements in India. It also has some more power
1. SEBI got the power to regulate and approve by the laws of stock exchange.
2. SEBI got the right to inspect the books and records of financial intermediaries.
3. It can compel the companies to be listed on any stock exchange.
4. It can also handle the registration of Stock Brokers.

Now talking about the role of SEBI.
So, Investors and traders have to execute the trade following the rules while trading in the Indian stock market. This is to promote fairness. The role of SEBI is to carry out such functions which are in compliance with the principles of SEBI regulations and these functions include the following:
1. SEBI regulates the capital market through certain measures.
2. Here the interests of traders and investors are protected. So that fairness is promoted in the stock exchange.
3. SEBI also regulates how the security market and stock exchanges are functioning and functioning.
4. SEBI handles the registration activity of new brokers, financial advisors etc.

So why do we need SEBI?
Because of the illegal activities like inside trading, Front running, Scam, control the share price by the individual etc. We need it.
Now discuss about all four; so the Insider trading is something “ you have information about a particular company like a decision, some big person is going to invest in that company a big amount, or something which is a general public not aware etc. And you have that information and you use it for your personal profit known as a Insider trading” or in other words illegal practice of trading on a stock exchange for one’s own gain through access to confidential information known as Insider trading. Harshad Mehta is the biggest example of Insider trading in India. Most of his wealth is generated from the stock market.

Now Front running is something that “ you have a non public information Concern and have an expected large transaction that will affect the price of a security” or in other words Front-running mutual funds are the illegal use of advance information leaked to brokers by employees. At present the fund managers of Axis Mutual fund, Viresh Joshi, Deepak Agarwal have been accused of this front running because this is also an illegal activity.
Now we all know about the Scam. Scam is an intentionally deceptive scheme or a trick used to defraud someone, especially money. Scams in the stock market like Satyam computers. The Satyam computer scam was India’s biggest corporate fraud till 2010. The founders and directors of India based outsourcing company satyam computer services rigged accounts, inflated the share price, and stole large sums of money from the company. Most of this was invested in property.

Mutual Fund Regulations by SEBI-
Some of you did not know that Mutual fund is also come under the SEBI. There are certain rules for Mutual Funds as prescribed by SEBI.
1. A shareholder cannot directly or indirectly hold 10% or more shareholding in the asset management company of a mutual fund.
2. For a regional or thematic index, the weighting of any one stock in the index cannot exceed 35%; The maximum limit for other indices is 25%.
3. The trading frequency of an individual component of the index must be at least 80%.
4. The new funds will have to submit compliance status to SEBI before they are launched.
5. All liquid schemes should have a minimum of 20% in liquid assets like government securities (G-secs), repo on government securities, cash and treasury bills.
6. As recommended by SEBI, amortization is not the only method for valuation of debt and money market instruments. The mark-to-market method is also used.

Mutual Funds and SEBI-
SEBI approved then the asset management company managed their mutual fund. Trustees of the AMC monitor the performance of the mutual fund and make sure it works in compliance with SEBI regulations.
Mutual funds dealing exclusively with money markets must be registered with the RBI, All other mutual funds must be registered with SEBI.
AMFI is a self-regulation agency for mutual funds, AMFI is focused on developing the Indian Mutual Fund Industry in a professional and ethical manner.
Some of SEBI Guidelines on Mutual Fund Reclassification-
● SEBI has suggested 16 classification for debt funds, ten classification for equity funds, six classifications for hybrid, two for solution funds and two for index funds.
● SEBI has reclassified small-cap, mid-cap and large-cap on the basis of market cap relative ranking instead of absolute market cap cut-off.
● There can be only one fund per classification in all categories except index funds.

So we can say that SEBI is more than a Securities and Exchange Board of India. And it is an essential part not only for the Indian stock market but also for a mutual fund of India because without SEBI rule and regulation they can’t work properly.

Written by
Yash Jauhari