OMTEX CLASSES: ROLE/OBJECTIVE/POWER OF SEBI IN MONITORING THE STOCK EXCHANGE

ROLE/OBJECTIVE/POWER OF SEBI IN MONITORING THE STOCK EXCHANGE

Meaning: -Stock exchange is a specific place where trading of the securities is arranged in an organised method. In simple words it is a place where shares, debentures and bonds (securities) are purchased and sold. The term securities include equity shares, preference shares, debentures, government bonds, etc. including mutual funds.

The government of India established the market watchdog i.e. Securities Exchange Board of India (SEBI) IN April 1988.

SEBI as securities Exchange Board of India became a statutory body under SEBI Act, 1992, and its Head Office located in Mumbai. At present SEBI have offices in Mumbai, Calcutta, New Delhi and Chennai. SEBI consists of the following members.

a.      A Chairman
b.      Two members from the Ministries of the Central Government. Dealing with Finance and Law
c.       Two other members to be appointed by the Central Government.

In order to regulate and promote capital market, SEBI performs following Role.

1.      Regulating the business in stock exchanges and may other securities market.
2.      Registering and regulating the working of stock brokers, share transfer agents, sub brokers, banker to an issue etc.
3.      Promoting and regulating self regulatory organisations.
4.      Prohibiting fraudulent and unfair trade practices relating to securities market.
5.      Registering and regulating the working of venture capital funds and collective investment schemes including mutual funds.
6.      Promoting Investors education and training of intermediaries of securities market.
7.      Prohibiting insider trading in securities.
8.      Conducting research and carrying out publications.
9.      Calling for information, form undertaking inspection, conducting inquiries and audits of stock exchanges and market intermediaries.

OBJECTIVES of SEBI  

The main objectives of SEBI are as under.
1.      To promote fair dealing by the issue of securities and to ensure a market place where (they) companies or institutions can raise funds at relatively low cost.
2.      To provide protection to the investors and protect their rights and interests so that there is a steady flow of savings into the market.
3.      To regulate and develop a code of conduct and fair practices by intermediaries like brokers etc. with a view to make them competitive and professional.

POWERS OF SEBI 

SEBI has given wide posers. Some of which are as follow –
1.      SEBI can ask stock exchange to maintain the prescribed documents and records.
2.      SEBI may ask stock exchange or any member to furnish information and explanation concerning its affairs.
3.      SEBI can approve and amend bye-laws of stock exchange.
4.      It may call periodical returns from stock exchange.
5.      SEBI can licence dealers in securities in some areas.

6.      It can ask a public company to list its shares.