Debt Market SEBI

Name: Vidhi Patadia
Class: SYBFM
Roll No.: 41
Subject: Debt Market
Topic: SEBI
MEANING OF SEBI
 SEBI full form is Securities and Exchange Board of
India
 SEBI is a statutory regulatory body established by the
Government of India to regulate the securities market in
India and protect the interests of investors in securities.
 It also regulates the functioning of the stock market,
mutual funds, etc.
WHAT IS SEBI AND ITS FUNCTIONS?

The Securities and Exchange Board of India [SEBI] is a
statutory regulatory body established by the Government of
India in 1992 to regulate the securities market in India and
protect the interests of investors in securities.
SEBI has the power to regulate and perform functions such as
check the books of accounts of stock exchanges and call for
periodical returns, approve by-laws of stock exchanges,
inspect the books of financial intermediaries such as banks,
compel certain companies to get listed on one or more stock
exchanges, and handle the registration of brokers.
WHY IS SEBI FORMED?
SEBI was established to keep a check on unfair and

malpractices and protect the investors from such malpractices.
The organization was created to meet the requirements of the
following three groups:
 Issuers: SEBI works toward providing a marketplace to
the investors where they can efficiently and fairly raise
their funds
 Intermediaries: SEBI works towards providing a
professional and competitive market to the
intermediaries.
 Investors: SEBI protects and supplies accurate
information to investors.
OBJECTIVE OF SEBI
The fundamental objective of SEBI is to safeguard the interest
of all the parties involved in trading. It also regulates the
functioning of the stock market. SEBI’s objectives are:
 To monitor the activities of the stock exchange.
 To safeguard the rights of the investors
 To curb fraudulent practices by maintaining a balance
between statutory regulations and self-regulation.
 To define the code of conduct for the brokers,
underwriters, and other intermediaries.
POWERS OF SEBI
SEBI carries out the following tasks to meet its objectives:
Protective functions, Regulatory functions, and developmental
functions.
Functions that SEBI performs as a part of its Protective
functions are:
 It checks price manipulation.
 It bans Insider trading.
 It prohibits unfair and fraudulent trade practices.
 It promotes a fair code of conduct in the security market.
 It takes efforts to educate the investors regarding ways
to evaluate the investment options better.
As a part of its Regulatory functions, SEBI performs the
following role:
 It has designed a code of conduct, rules, and regulations
to regulate the brokers, underwriters, and other
intermediaries.
 SEBI also governs a company’s takeover.
 It regulates and registers the workings of share transfer
agents, stockbrokers, merchant bankers, trustees, and
others who are linked with the stock exchange.
 It regulates and registers the mutual funds as well.
 It conducts audits and inquiries of stock exchanges.
As a part of its Development functions, SEBI performs the
following role:
 It facilitates the training of the intermediaries.
 It aims at promoting activities of the stock exchange by
having an adoptable and flexible approach.
STRUCTURE OF SEBI
The Board of SEBI comprises of nine members. The Board is
an aggregate of the following:
1. One Chairman of the board – appointed by the Central

Government of India
2. One Board member – appointed by the Central Bank, that
is, the RBI
3. Two Board members – hailing from the Union Ministry
of Finance
4. Five Board members – elected by the Central
Government of India
The Chairman of SEBI, in addition to overseeing the Board,
also looks over the Communications, Vigilance, and
Internal Inspection Department.
There are four whole-time members in the organizational
structure. The whole-time members are allocated a number
of departments that they have to oversee. Each department
is individually headed by an executive director. The
executive directors report to specific whole-time members.
The organizational structure of SEBI consists of more than
25 departments, such as Foreign Portfolio Investors and
Custodians (FPI&C), Corporation Finance Department
(CFD), Information Technology Department (ITD),
Department of Economic and Policy Analysis (DEPA-I,II,
& III), Investment Management Department, Legal Affair
Department, Treasury and Accounts Divisions (T&A), and
National Institute of Securities Market (NISM)
SEBI ACT AND SEBI GUIDELINES

In 1988, SEBI was founded as a non-statutory organization
with the responsibility of monitoring stock market activity.
The SEBI Act of 1922 made SEBI a statutory body with
independent jurisdiction. The Act gave SEBI the power to
oversee and actively enforce regulations governing the capital
markets.
The SEBI Act 1922 covers the following areas:
 Composition and actions of the SEBI Board members
 Powers and Functions of the Board
 Fund sources of SEBI, as in grants made available by the
Union Government
 Rules on Penalties and legal pathways
 Defines the judicial authority of SEBI
 The extent of powers of the Union Government to
supersede SEBI
SEBI also has to adhere to a list of SEBI guidelines,
pertaining to areas such as:
 Employee Stock Option schemes.
 Disclosure and Investor Protection norms.
 Legal Proceedings.
 Anti-money laundering norms.
 Listing and delisting of securities.
 Opening of trading terminals overseas.
SEBI NEW MARGIN RULES

In September 2020, SEBI implemented new rules on margin
pledge. The rule is expected to bring transparency and prevent
misuse of clients’ securities by brokerage firms. The new
margin rules were directed to come into effect from June 1,
but were delayed due to pandemic pushing the
implementation date to September 1.
In this entire exercise of the peak margin system, SEBI’s

primary goal was to curb market speculation in order to
prevent losses for individual investors in volatile markets.
The new margin rules by SEBI mandate the following:
 The stock, being pledged, is to remain in the investor’s
de-mat account. As the stock is not changing accounts,
the benefits from corporate events accrue directly to the
investors
 Upfront collection of margins by brokers for any
purchase or sale of securities, penalizing any sort of
failure to do so. Clients could meet the margin
requirements by the end of the day, which is now
changed to the beginning of the day
 Power of Attorney (POA) cannot be assigned in the
favour of the brokers for pledging. As under the old
system, brokers could demand POA from the investors to
execute decisions on their behalf
 Margin pledge created separately for investors requiring
margin
 Buy Today Sell Tomorrow (BTST) not allowed anymore
for shares bought on margin. Investors are required to
honour the delivery of share (T+2 days is the usual
settlement period). Typically, investors would use
intraday realized profits to meet the margin requirements,
which is now amended by the new regulations. For a
BTST trade, it can be initiated only if the net available
margin is equal to or greater than 20 percent of the
transaction value.

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Debt Market SEBI

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Name: Vidhi Patadia

WHAT IS SEBI AND ITS FUNCTIONS?

WHY IS SEBI FORMED?

SEBI was established to keep a check on unfair and

1. One Chairman of the board – appointed by the Central

SEBI ACT AND SEBI GUIDELINES

SEBI NEW MARGIN RULES

In this entire exercise of the peak margin system, SEBI’s

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