Question

Of all the institutions that we have studied in this chapter, name the one that exercises the powers on each of the following matters.
-Considers the recommendation of a Committee on a law to regulate the stock exchange

Answer 1

Hint: The Securities and Exchange Board of India was established in 1988 as a non-statutory body but became an autonomous institution in 1992 as specified in the SEBI Act, 1992. It is responsible for regulating and inspecting the stock exchanges. On the basis of such observations, the SEBI presents an annual report and the governing board takes up matters of importance. The SEBI is required to review the market operations, structure and administrative control of the stock exchanges to ensure a fair and equitable market. The SEBI also examines whether the exchanges are following the guidelines and directions issued by it from time to time and passes orders for any discrepancies.

Complete Step by Step answer: The SEBI on the basis of its investigations can draft regulations and recommendations that are then submitted to the Parliament. The Parliament considers and discusses these recommendations and has the power to make laws to regulate the stock exchanges. The governing body of the SEBI is comprised of the Chairman nominated by the Parliament, two members from the Union Ministry of Finance, one member from the Reserve Bank of India and the remaining five members nominated by the Parliament. Independently, the SEBI is allowed to approve by−laws of Securities exchanges and require them to amend their by−laws according to its guidelines.

Note: The headquarters of SEBI is located in Mumbai and it also has regional branches in New Delhi, Kolkata, Chennai and Ahmedabad. By 2014, SEBI had expanded its number of local branches to Jaipur, Bangalore, Guwahati, Bhubaneswar, Patna, Kochi and Chandigarh.