Monday, 6 February 2012

SEBI(Securities and Exchange Board of India )


      SEBI(Securities and Exchange Board of India ):
      ESTABLISHMENT OF SEBI
The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
       PREAMBLE
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as
"...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto"
SEBI FUNCTIONS-DEPARTMENT WISE: 

1. MARKET INTERMEDIARIES REGULATION AND SUPERVISION DEPARTMENT (MIRSD)


The Market Intermediaries Regulation and Supervision Department is responsible for the registration, supervision, compliance monitoring and inspections of all market intermediaries in respect of all segments of the markets viz. equity, equity derivatives, debt and debt related derivatives.  The Department also handles the work related to action against the intermediaries for regulatory violations (As regards action it is clarified that the current practice of issuing show cause notices, appointment of Enquiry/Adjudication officers and consequential action up to serving of Chairman’s order and maintenance of database will be with the respective Divisions). The following divisions will perform the functions of the department.


1.1              MIRSD-1 (A-M)

This division would look after work relating to registration, monitoring, supervision, inspection, investor grievances and policy related issues of Stock Brokers and Fees related matters including coordination of summary proceedings.


1.2               MIRSD-2 (N-Z)

This division would look after the work relating to Registration, monitoring, supervision, inspection, investor grievances and policy related issues of Stock Brokers and Sub-Brokers.


1.3               MIRSD-3

      This division would look after the work relating to Registration, monitoring, supervision, inspection, investor grievances and policy related issues of the following Primary market related intermediaries:


i.   Merchant Bankers


ii.  Registrars to Issue


iii.    Bankers to Issue


iv.    Underwriters.

1.4               MIRSD-4


This division would look after the work relating to Registration, monitoring, supervision, inspection, investor grievances and policy related issues of the following intermediaries:


i.   Debenture Trustees,
ii.  Credit Rating Agencies
iii.   Depository Participants


1.5               MIRSD-5

This division looks into the matters relating to the following intermediaries:


i.   Sub-brokers
ii.  Debenture Trustees
iii.     Bankers to Issue


2.                  MARKET REGULATION DEPARTMENT (MRD)

The Market Regulation Department is responsible for supervising the functioning and operations (except relating to derivatives) of securities exchanges, their subsidiaries, and market institutions such as Clearing and settlement organizations and Depositories.  (‘hereinafter collectively referred to as ‘Market SROs) The following Divisions will perform the functions of the Department:

2.1                         Division of Policy

The Division will handle the work related to policy and practice relating to Market SROs i.e., securities exchanges, clearing and settlement organizations and depositories; market policy, trading, clearance, settlement issues, risk management, and related areas; Reviewing rules and rule-change proposals of these Market SROs relating to market policy issues (except for listing matters standards in purview of Corporation Finance Department); Procedures for suspending trading of securities.

2.2                         Division of SRO Administration

The Division will handle the work related to Registration and recognition of the Market SROs; administration of these Market SROs; Demutualization or Corporatization of exchanges; reviewing rule change proposals relating to non-market policy issues; supervision of the market SROs to the extent of compliance with regulatory provisions through periodical reports and regulatory action.  (As regards action it is clarified that the current practice of issuing show cause notices, appointment of Enquiry/Adjudication officers and consequential action up to serving of Chairman’s order and maintenance of databse will be with the Division).

2.3                         Division of Market supervision

The Division will hand the work related to conducting compliance, examinations and inspections of Market SROs.

2.4                         Investor Complaints Cell

The cell would receive complaints relating to the market SROs from the Office of Investor Assistance and Education (OIAE) and take follow up action and report back to the OIAE.  If regulatory action is required, the Cell shall inform the Division of SRO Administration besides reporting to OIAE.

3.                  DERIVATIVES AND NEW PRODUCTS DEPARTMENT (DNPD)

3.1                         Division of Policy and Supervision

The Division is responsible for supervising the functioning and operations of derivatives exchanges and related market organizations.  In order to accomplish its tasks, this division would be responsible for the following:

·        Derivatives market policy issues.

·        Approval of new derivative products

·        Monitoring the functioning of derivatives exchanges including conducting inspections and compliance exams.

·        Prescribing and Monitoring risk management and settlement practices in derivatives exchanges

·        Developing the trading and settlement framework for new products.

·        Regulatory action were required.  As regards action it is clarified that the current practice of issuing show cause notices, appointment of

·        Enquiry/Adjudication officers and consequential  action up to serving of Chairman’s order and maintenance of database will be with the Division.

3.2                         Investors Complaint Cell
The cell would receive complaints relating to the derivatives exchanges and related organizations from the Office of Investor Assistance and Education (OIAE) and take follow up action and report back to the OIAE. If regulatory action is required, the Cell shall inform the Division of Policy and supervision besides reporting to OIAE.

4.                  CORPORATION FINANCE DEPARTMENT (CFD)

The Corporation Finance Department deals with matters relating to (i) Issuance and listing of securities, including initial and continuous listing requirements (ii) corporate governance and accounting/auditing standards (iii) corporate restructuring through Takeovers / buy backs (iv) Delisting etc.


The following divisions form part of this Corporation Finance Department:-
    •       Division of Issues and Listing (DIL)
    •    Division of Corporate Restructuring

The division of issues and listing handles works relating to the following:-
1.       Policy pertaining to (i) primary market (ii) disclosures (initial as well as continuous) (iii) listing  (iv) corporate governance (v) Employee Stock Option (vi) Preferential issues (vii) Qualified Institutional Placement (QIP) (viii) common electronic filing platforms viz. EDIFAR & CFDs  (ix) listing conditions and (x) vanishing companies in consultation with Ministry of Corporate Affairs (MCA) through the framework of Coordination and Monitoring Committee (CMC), set up by Government of India.

2.       Issue of observations on the draft offer documents of public and rights issues.


3.       Operational matters pertaining to accounting standards, compliance with corporate governance, guidance to Stock Exchanges on listing matters, vanishing companies in consultation with respective Registrar of Companies, allegations of non-compliance with listing agreement etc.

4.       The following Committees of SEBI:-

·       Primary Market Advisory Committee (PMAC)- to advise SEBI on policy issues pertaining to Primary Market.
·       SEBI Committee of Disclosures and Accounting (SCODA) - to advise SEBI on disclosures and accounting related issues.

5.       Regulatory action where required(As regards action it is clarified that the current practice of issuing show cause notices, appointment of Enquiry/Adjudication officers and consequential action upto serving of Chairman’s order and maintenance of database will be with the Division).”

4.2                         Division of Corporate Restructuring:

The Division will handle the work relating to:

·        Policy related to corporate restructuring
·        Substantial Acquisition and Takeovers
·        Buy back of securities
·        Delisting of Securities
·        Coordinating with the Takeover Panel
·        Regulatory action where required. (As regards action it is clarified that the current practice of issuing show cause notices, appointment of Enquiry/Adjudication officers and consequential action up to serving of Chairman’s order and maintenance of database will be with the Division).
·        Investor complaints relating to corporate restructuring.

5.                  INVESTMENT MANAGEMENT DEPARTMENT (IMD)

The Investment Management department is responsible for registering and regulating mutual funds, venture capital funds, foreign venture capital investors, collective investment schemes, including plantation schemes, Foreign Institutional Investors, Portfolio Managers and Custodians.  The following Divisions will perform the functions of the Department;

5.1   Division of Funds 1((Portfolio Managers, Venture Capital, Corporate Bonds, etc.) 2 (Mutual Funds) and 3 (Inspection of Mutual Funds):

The Divisions handle the following works related to their respective entities:

·        Registrations
·        Policy related issues
            ·        Inspections
·        Investor Complaints
.     Regulatory actions.

Investor Complaints Cell:

The cell would receive complaints relating to their respective entities from the OIAE and take follow up action and report back to OIAE. If regulatory action is required, the Cell shall keep the OIAE informed.

5.2                         Division of Foreign Institutional Investors and Custodian

The Division will handle all work related to:

·        FIIs
·        Custodians
·        Regulatory action wherever required.

Investor Complaints Cell:

The cell would receive complaints relating to FIIs and custodians from the OIAE and take follow up action and report back to OIAE. If regulatory action is required, the cell shall keep the OIAE informed.

5.3                         Division of Collective Investment Schemes:

This Division administers the SEBI (Collective Investment Schemes) Regulations 1999. It includes work relating to the following :

·        Existing CIS entities

·        Investigating complaints of purported CIS entities

·        Grant of provisional registration to existing CIS entities in terms of regulation 73 of the Regulation

·        Taking action against the entities for non compliance with the regulations like, prohibitory orders and launching prosecutions against errant entities and their promoters/ directors and key management personnel.

·        Providing evidences in courts pertaining to prosecution proceedings.

·        Registration of Collective Investment Management Companies - CIMC

The above activities are also conducted at the regional offices of SEBI, wherever the address of the CIS entity is located.

Investor Complaints Cell:

The cell shall address the complaints of investors relating to CIS or alleged CIS entities from the OIAE. The Division shall take action and report back to OIAE about the same. The Regional Offices of SEBI report the status of complaints to Head Office Division of CIS. In case of regulatory actions, the OIAE shall be informed about the same.

6.                  INTEGRATED SURVEILLANCE DEPARTMENT (ISD)

·        The intergrated Surveillance department is responsible for monitoring market activity through market systems, data from other departments and analytical software.  The department would be responsible for:

·        Developing, maintaining and operating an integrated market surveillance system including monitoring of all segments of the markets.

·        Methodologies for capturing information from media review, public complaints and tips, other agencies, exchanges, and direct solicitations; assignment of staff to handle functions; method of logging and cataloguing information; criteria for evaluating and distributing information; input into tracking and other systems.

·        Recognizing potentially illegal activities and referrals to Investigations, Enforcement or other departments

7.                  INVESTIGATIONS DEPARTMENT (IVD)

The Investigations department is responsible for:

·        Conducting investigations on potentially illegal market activities.

·        Providing referrals to the enforcement department.

·        Assisting the enforcement department in enforcing SEBI action against violators.

·        (As regards action, the current practice of issuing show cause notices, appointment of Enquiry/Adjudication officers and consequential action up to serving of Chairman’s order and maintenance of database will be with the Department).

8.                  ENFORCEMENT OF DEPARTMENT (EFD)

Enforcement Department is responsible for proceedings related to regulatory action and obtaining redress for violations of securities laws and regulations against all market participants, issuers and individuals and other entities that breach securities laws and regulations.  The following Divisions will perform the functions of the Department;

8.1                         Division of Regulatory Action
·        The division shall enforce action against market misdemeanors through SEBI administrative proceedings.  The role of the Division shall commence from the time the hearing before Chairman/Board is proposed.  The Division will assist the Chairman/Board in its proceedings, prepare the orders, handle all matters relating to SAT, appeals against SAT orders and Court cases relating to regulatory action.  The Division will also frame the procedures relating to the above matters.

8.2                         Division of Prosecutions

·        The division shall handle work related to filing prosecution proceedings through the courts and follow up to obtain conviction.  The Division will also frame procedures for cooperation with public prosecutors, other agencies and for making referrals to prosecutors and other government agencies

9.                  LEGAL AFFAIRS DEPARTMENT (LAD)

The Department of Legal Affairs would be responsible to provide legal counsel to the Board and to its other departments, and to handle non-enforcement litigation.  The following Divisions will handle the functions of the Department.

9.1                         Division of Policy:

The division would work to formulate SEBI’s legislative initiatives and review and comment upon proposed legislation that would affect the securities industry or SEBI’s authority or operation.  It would handle testimony and statutory drafting assistance.  The division would also be responsible for establishing a clear legal framework and basis for the various categories of SEBI pronouncements (e., regulations, guidelines, circulars, instructions, etc.,); the hierarchy of their force and effect; the procedure for their promulgation, amendment or repeal.

9.2                         Division of Regulatory Assistance

The division would support other SEBI departments in meeting their objectives by providing assistance and guidance wherever necessary in developing market rules and interpretations.

10.             ENQUIRIES AND ADJUDICATION DEPARTMENT (EAD)

The Enquiries and Adjudication Department would handle quasi judicial matters and provide timely hearings and initiate adjudication brought by the other Departments against alleged violators who are within SEBI’s disciplinary jurisdiction.  The department would directly report to Chairman.

11.             OFFICE OF INVESTOR ASSISTANCE AND EDUCATION (OIAE)

The Office will support SEBI’s operations by handling investor complaints centrally and be the focal point of SEBI’s investor education effort.  The Office would be the single point interface with investors and would receive complaints relating to all departments, forward to the concerned departments, follow up and respond to investors.  The office shall set up necessary systems and procedures to handle his function.

The Office will also receive complaints relating to issues, transfer of shares, dividends, compliance with listing conditions, corporate governance issues under the purview of the Corporation Finance department (Division of Issues and Listing)  and take follow up action.

12.             GENERAL SERVICES DEPARTMENT (GSD)

This department would support all of the internal operations of SEBI.  The Department will have the following divisions.



12.1                     Treasury and Accounts Division

The Division will handle work related to:

·        Development of SEBI’s internal budget and accounting systems
·        Presentation of reports and budgets to the SEBI Board
·        Maintaining internal accounting records, developing internal control systems for collections and disbursements and other financial controls
·        Managing SEBI’s investments

12.2                     Facilities Management Division

The division will be responsible for the establishment and maintenance of the physical facility housing the regulator and related needs.

12.3                     Official Language Division

The Division will handle the work related to compliance with Government’s official language policy and Translation of certain documents into the official language.

12.4                     Office of the Secretary to the Board

The Office of the Secretary shall coordinate Board meetings, record and maintain Board decisions.


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