The regulatory frameworks of the Indian securities market are primarily overseen and regulated by the Securities and Exchange Board of India (SEBI). SEBI is the statutory regulatory body established under the Securities and Exchange Board of India Act, 1992, to protect the interests of investors and promote the development and regulation of the securities market in India. In this article, we will discuss the regulatory frameworks of the Indian securities market.
Top 5 Regulatory Frameworks of the Indian Securities Market
At present, the leading acceptable Acts governing the capital market or Indian securities market are:-
1. Securities Contracts Regulation Act, 1956
This Act provides direct and indirect control of virtually all aspects of securities trading and the running of the stock exchange and aims to prevent undesirable transactions in securities. It gives central government regulatory jurisdiction:-
- Stock exchange through a process of recognition and continued supervision.
- Contracts are securities.
- Listing of securities on the stock exchange.
As a condition of recognition, a stock exchange complies with conditions prescribed by the central government. The stock exchanges determine their listing regulation, which must conform to the minimum listing criteria set out in the rules.
2. SEBI Act, 1992
The Security and exchange board of India (SEB) Act 1992 was exacted to empower SEBI with statutory power for:
- Protecting the interests of investors in securities.
- Promoting and developing the securities market
3. Regulating the Securities Market
Its regulatory justification extends over corporations in issuing capital and transferring securities in addition to all intermediaries and persons associated with the securities market. It can conduct inquiries, audits, and exceptions of all concerned and adjudicate affiances under the Act. It has the power to register and regulate all market intermediaries and penalize them in case of violations of the provision of the Act.
4. Depositories Act, 1996
The Depositories Act 1966 provides for the establishment of depositories is securities to ensure free transferability of securities with speed, accuracy and security by:-
- Making securities of public limited companies freely transferable, subject to certain exceptions.
- Dematerializing the securities in the depository mode
- Maintaining over ship records in a book entry form
To streamline the settlement process, the Act envisages the transfer of ownership of securities electronically by book entry without making the securities move from person to person.
5. Prevention of Money Laundering Act, 2002
The primary objective of the Act is to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering; turn, money laundering is defined as whoever acquires, owns, possesses or transfers any proceeds of crime either directly or indirectly of conceals or aids in the concealment of the proceeds or gains of crime within India or outside India comments the offense of money- laundering. Besides providing punishment for the offense of money laundering, the Act also provides other measures to prevent money laundering.