In the evolving landscape of finance, regulatory bodies like the Securities and Exchange Board of India (SEBI) play a critical role in maintaining stability, protecting investors, and ensuring fair and transparent markets. Not just for India, SEBI has been of great significance in the world of finance with its remarkable journey since its inception in 1988.
This year, World Investor Week – 2023 is being celebrated in India and SEBI is the national coordinator for the same. WIW is a global investor awareness campaign initiated by the International Organization of Securities Commissions (IOSCO), an international body that “brings together the world’s securities regulators and is recognized as the global standard setter for the securities sector”. It is celebrated every year, across the world, by the securities market regulators.
As the regulatory body celebrates the World Investor Week, we take a deep dive into its evolution.
Establishment of SEBI
SEBI’s origins can be traced back to the late 1980s when the Indian stock market was grappling with various challenges such as insider trading, price manipulation, and inadequate investor protection. In response to these issues, the Government of India established SEBI on April 12, 1988, as a non-statutory regulatory body tasked with overseeing and regulating the securities market.
It was later in the year 1992 that SEBI was established as a statutory body and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) came into force on January 30, 1992.
Over the years, SEBI has undergone significant transformations, evolving into a multifaceted institution that continually adapts to the changing dynamics of the financial world. Some key milestones in its evolution include:
Market Reforms: In its early years, SEBI focused on streamlining stock exchange operations, introducing electronic trading, and implementing measures to improve transparency and fairness.
Investor Protection: Recognizing the importance of safeguarding investors’ interests, SEBI introduced regulations to combat insider trading, fraudulent activities, and market manipulation.
Global Integration: As India’s financial markets expanded, SEBI took steps to align its regulations with international standards, making the Indian market more attractive to foreign investors.
Digital Transformation: In recent years, SEBI has embraced technology, promoting online trading, electronic KYC, and digitization of regulatory processes, making the Indian securities market more efficient and accessible.
SEBI’s role in today’s rapidly changing financial world
As the financial world continues to evolve, SEBI’s role and scope of work is also changing. Government of India recently announced the addition of two new whole time members to its Board that already comprises two whole time members, four part-time members and is chaired by Madhuri Puri Buch.
To assure faster trade settlement, the regulatory body is also planning to launch one-hour trade settlement by March 2024. Under this SEBI was to bring the trade related settlements from the current cycle of T+1 days (within 24 hours of the actual transactions) to one hour.
“On the way to instantaneous settlement, we believe that the one-hour trade settlement is much quicker to implement than instantaneous. So, if the instantaneous is going to take another 6-7 months, we will implement one-hour trade settlement before that,” SEBI’s Chairperson Madhabi Puri Buch told reporters on the sidelines of the Global Fintech Fest, according to a report by Indian Express.
According to a report by Business Today, the watchdog for India’s capital market is all set to introduce several key initiatives in the current fiscal year. Eligibility criteria for selecting stocks for derivatives, mutual fund lite regulations, and more, are a slew of initiatives which can be announced if the statement made on the annual report for 2022-23 are to be relied upon.
“SEBI would continue harnessing the power of consultation and cutting-edge technologies to bolster the accessibility, resilience, and security of the securities market for investor protection going forward,” the annual report of SEBI stated.