Securities and Exchange Board of India

SEBI is the nodal agency which protects the interests of an investor in the India market. Otherwise regulation of the capital markets is primarily the responsibility of the Securities and Exchange Board of India (SEBI), which is located in Bombay. Some of the major functions of SEBI are:

" SEBI is expected to regulate the business in stock exchanges and any other securities markets.

" Registering and regulating the working of collective investment schemes, including mutual funds is a responsibility of SEBI.

" SEBI is responsible for prohibiting fraudulent and unfair trade practices relating to securities markets.

" Prohibiting insider trading in securities, with the imposition of monetary penalties, on erring market intermediaries.

" Regulating substantial acquisition of shares and takeover of companies.

" Calling for information from, carrying out inspection, conducting inquiries and audits of the stock exchanges and intermediaries and self regulatory organizations in the securities market. Keeping this in mind, SEBI has issued a new set of comprehensive guidelines governing issue of shares and other financial instruments, and has laid down detailed norms for stock-brokers and sub-brokers, merchant bankers, portfolio managers and mutual funds.

" To promote investor's education and training of intermediaries of securities markets.

Carry Forward Deals were made acceptable on the recommendations of the Patel Committee report, SEBI submitted on 27 July 1995. Some of the important features of the revised carry forward transactions as outlined by SEBI are:

" Carry forward deals are permitted only on stock exchanges which have screen based trading system.

" Transactions which are carried forward cannot exceed 25% of a broker's total transactions on any one day.

" 90-day limit for carry forward and squaring off allowed only till the 75th day (or the end of the fifth settlement).

" Daily margins to rise progressively from 20% in the first settlement to 50% in the fifth.

On 26 January1995, the government promulgated an ordinance amending the SEBI Act, 1992, and the Securities Contracts (Regulation) Act, 1956. In accordance with the amendment, delivering judgment will be created within SEBI and any appeal against this adjudicating authority will have to be made to the Securities Appellate Tribunal, which is to be separately constituted. The appeals related to SEBI will be heard only at the High Courts. The main aspects of the amendment to the Securities Contract (Regulation) Act, 1956, are:

" The ban on the system of options in trading has been lifted.

" Additional trading floors on the stock exchanges can be established only with prior permission from SEBI.

" Any company seeking listing on stock exchanges would have to conform with the listing agreements of stock exchanges, and the failure to comply with these, or their violation, is punishable under law.

" The time limit by which stock exchanges could amend their bye-laws, has been reduced to two months.

Fraudulent and Unfair Trade Practices
Keeping in mind the role of SEBI as the principal agency looking after the investor's interests , it is vested with powers to take action against the practices relating to securities market manipulation and misleading statements to induce sale/purchase of securities.

Inspection and Enforcement
SEBI acts as a civil court in respect to discovery and production of books, documents, records, accounts, summoning and enforcing attendance of company/person and examining them under oath. SEBI can levy fines for violations related to failure to submit information to the body or to redress investor grievances. Violations by mutual funds/stock brokers and violations related to insider trading, takeovers etc also fall under the jurisdiction of SEBI.