Why in news?
The tightened surveillance measures for stock markets, introduced on March 23 for a period of one month, have been extended until May 28.
In a statement on 21st April, the Securities and Exchange Board of India (SEBI) said the stock markets are expected to remain volatile in the near future on account of COVID-19 pandemic and hence, the measures had to be extended.
- As the stock markets (both domestic and global) are expected to be volatile in the near future owing to concerns relating to COVID-19 pandemic and the resultant fear of economic slowdown, keeping in view the objective of ensuring orderly trading and settlement, effective risk management, price discovery and maintenance of market integrity, it has been decided that the measures implemented since March 23, 2020 will continue to be in force till May 28, 2020
- On March 20, the capital markets regulator SEBI, announced an increase in margins in the cash segment while tightening the norms for position limits in the derivatives market as volatility continued to surge.
The Securities and Exchange Board of India (SEBI) is the regulator of the securities and commodity market in India owned by the Government of India.
SEBI was established in 1988 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992.
The SEBI is managed by its members, which consists of the following:
- The chairman is nominated by the Union Government of India.
- Two members, i.e., Officers from the Union Finance Ministry.
- One member from the Reserve Bank of India.
- The remaining five members are nominated by the Union Government of India, out of them at least three shall be whole-time members.
SEBI has to be responsive to the needs of three groups, which constitute the market:
- issuers of securities
- market intermediaries
SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive.
- It drafts regulations in its legislative capacity.
- It conducts investigation and enforcement action in its executive function.
- It passes rulings and orders in its judicial capacity.
Though this makes it very powerful, there is an appeal process to create accountability.
There is a Securities Appellate Tribunal which is a three-member tribunal.
A second appeal lies directly to the Supreme Court.
Powers of SEBI
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
- to approve by−laws of Securities exchanges.
- to require the Securities exchange to amend their by−laws.
- inspect the books of accounts and call for periodical returns from recognised Securities exchanges.
- inspect the books of accounts of financial intermediaries.
- compel certain companies to list their shares in one or more Securities exchanges.
- registration of Brokers and sub-brokers