SEBI, the Securities and Exchange Board of India, is the statutory regulator of India's securities market, set up under the SEBI Act, 1992. Its legal duty is to protect the interests of investors in securities and to promote and regulate the securities market, using the measures it considers fit.
SEBI began on 12 April 1988 as a non-statutory body, it gained statutory powers through the SEBI Act, which is deemed to have come into force on 30 January 1992. Before this, the Controller of Capital Issues regulated the market under the Capital Issues (Control) Act, 1947. In the Act, SEBI is defined as the Board established under Section 3.
What SEBI can do
The SEBI Board has 9 members: the Chairman, two members from among the officials of the Union ministries dealing with finance and company law, one member from the RBI, and five other members nominated by the Central Government. The Act makes SEBI a body corporate with its head office in Mumbai. The Chairman has general powers of superintendence and direction over the Board's affairs.
SEBI can make regulations and decide cases, and the Act gives it executive powers as well. Under Section 11B, SEBI can direct intermediaries or stock brokers to stop operating in a way that harms investors or the market. If a person made Rs 10 lakh from a transaction that breached the Act, SEBI can direct that the amount be given up.
The Chairman may order search and seizure, and the Board can seek call data records when investigating securities transactions. Appeals against its orders go to the Securities Appellate Tribunal (SAT).
SEBI vs a stock exchange
Investors buying shares deal with brokers and other intermediaries, and SEBI can act against these entities if they harm investors or the market. Its orders can be appealed to SAT.
BSE and NSE are the exchanges where shares trade, while SEBI is the regulator that sets and enforces rules for them.
SEBI does not run either exchange, and it does not trade in or guarantee returns on any investment.