Role of sebi in market management and corporate governance

Role of sebi in market management and corporate governance

1. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Role of SEBI in market management and
Corporate Governance
A.VALLI
ACOUNTS DEPARTMENT

2. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Introduction to Security Exchange
Board of India (SEBI)
•Securities and Exchange Board of India (SEBI) was formed after the
Indian Parliament passed the Securities and Exchange Board of India
Act, 1992 in response to the Financial Services Assessment Program.
•SEBI Actually established in the year 1988 and given statutory power in
1992.
•With the growth in the dealings of stock markets, lot of malpractices also
started in stock markets such as price rigging, ‘unofficial premium on new
issue, and delay in delivery of shares, violation of rules and regulations of
stock exchange and listing requirements. Due to these malpractices the
customers started losing confidence and faith in the stock exchange. So
government of India decided to set up an agency or regulatory body
known as Securities Exchange Board of India (SEBI).

3. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Purpose and Role of SEBI
The main purpose of SEBI is to keep a check on malpractices and protect
the interest of investors. It was set up to meet the needs of three groups.
1. Issuers:
For issuers it provides a market place in which they can raise
finance fairly and easily.
2. Investors:
For investors it provides protection and supply of accurate and
correct information.
3. Intermediaries:
For intermediaries it provides a competitive professional market.

4. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
The Organizational Structure of SEBI
 SEBI is working as a corporate sector.
 Its activities are divided into five departments. Each
department is headed by an executive director.
 The head office of SEBI is in Mumbai and it has branch
office in Kolkata, Chennai and Delhi.
 SEBI has formed two advisory committees to deal with
primary and secondary markets.
 These committees consist of market players, investors
associations and eminent persons.

5. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
•To advise SEBI to regulate intermediaries.
•To advise SEBI on issue of securities in primary
market.
•To advise SEBI on disclosure requirements of
companies.
•To advise for changes in legal framework and to make
stock exchange more transparent.
•To advise on matters related to regulation and
development of secondary stock exchange.
•These committees can only advise SEBI but they
cannot force SEBI to take action on their advice.
Objectives of the two
Committees

6. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Objectives of SEBI
 To regulate the activities of stock exchange.
 To protect the rights of investors and ensuring safety
to their investment.
To prevent fraudulent and malpractices by having
balance between self regulation of business and its
statutory regulations.
To regulate and develop a code of conduct for
intermediaries such as brokers, underwriters, etc.

7. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Functions of SEBI
The SEBI performs functions to meet its objectives. To
meet three objectives SEBI has three important
functions. These are:
i. Protective functions
ii. Developmental functions
iii. Regulatory functions.

8. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Governance
The Securities Exchange Board of India is essential to corporate
governance of India's securities market, as it serves as the
central body that ensures investors are protected and the
securities market is regulated. Corporate governance is the
manner in which companies or market systems operate,
including the rules, regulations, policies and standards for
accountability, transparency and general corporate integrity.
SEBI in regulating Indian Capital Market more deeply with
following points:
1. Power to make rules for controlling stock exchange :
SEBI has power to make new rules for controlling stock exchange in India.
For example, SEBI fixed the time of  trading 9 AM and 5 PM in stock
market. 
The Role of SEBI in Corporate
Governance & Capital Market

9. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Contn..
2. To provide license to dealers and brokers :
SEBI has power to provide license to dealers and brokers of capital
market. If SEBI sees that any financial product is of capital nature, then
SEBI can also control to that product and its dealers. One of main
example is ULIPs case. SEBI said, " It is just like mutual funds and all
banks and financial and insurance companies who want to issue it, must
take permission from SEBI."
3. To Stop fraud in Capital Market
SEBI has many powers for stopping fraud in capital market.
a.It can ban on the trading of those brokers who are involved in
fraudulent and unfair trade practices relating to stock market. 
b. It can impose the penalties on capital market intermediaries if they
involve in insider trading. 

10. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Contn..
4. To Control the Merge, Acquisition and Takeover the
companies :
Many big companies in India want to create monopoly in capital
market. So, these companies buy all other companies or deal
of merging. SEBI sees whether this merge or acquisition is for
development of business or to harm capital market. 
5. To audit the performance of stock market :
SEBI uses his powers to audit the performance of different
Indian stock exchange for bringing transparency in the working
of stock exchanges. 
6. To make new rules on carry - forward transactions  
Share trading transactions carry forward can not exceed 25% of
broker's total transactions.
90 day limit for carry forward. 

11. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Contn..
7. To create relationship with ICAI :
ICAI is the authority for making new auditors of companies. SEBI
creates good relationship with ICAI for bringing more transparency in
the auditing work of company accounts because audited financial
statements are mirror to see the real face of company and after this
investors can decide to invest or not to invest. Moreover, investors of
India can easily trust on audited financial reports. After Satyam Scam,
SEBI is investigating with ICAI, whether CAs are doing their duty by
ethical way or not. 
8. Introduction of derivative contracts on Volatility Index :
For reducing the risk of investors, SEBI has now been decided to
permit Stock Exchanges to introduce derivative contracts on Volatility
Index, subject to the condition that;

12. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Contn…
a.The underlying Volatility Index has a track record of at least one
year.
b.The Exchange has in place the appropriate risk management
framework for such derivative contracts.
9. To Require report of Portfolio Management Activities :
SEBI has also power to require report of portfolio management
to check the capital market performance. Recently, SEBI sent the
letter to all Registered Portfolio Managers of India for demanding
report.
10.  To educate the investors :
Time to time, SEBI arranges scheduled workshops to educate the
investors.

13. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com
Conclusion
As Indian Companies Compete globally for access to capital markets,
many are finding that the ability to benchmark against world class
organization is essential.
Corporate governance and economic development are intrinsically
linked, effective corporate governance system promote the
development of strong financial systems.

14. CHENNAI
3rd Floor, ‘Creative Enclave’,
148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 – 6552921
EMAIL
[email protected]
WEBSITE
www.altacit.com