Securities and Exchange Board of India and the Regulation of the Indian Securities Market

Financial markets have an important relationship with economic development. Regulation has been acknowledged to enable the orderly functioning of the securities market. The Securities and Exchange Board of India (SEBI) is the regulator charged with the orderly functioning of the securities market in India, protect the interests of investors and ensure development of the securities market. Since the establishment of SEBI in 1992, the Indian securities market has grown enormously in terms of volumes, new products and financial services. The literature examining the role of SEBI in this growth and development is limited and somewhat dated. This paper supplements the existing literature by updating the developments in the securities markets over the years. It complements the extant literature by enhancing the framework for examining the adequacy of the institutional arrangements under SEBI and then by examining whether the statutory arrangements at SEBI’s disposal are adequate ensure a well functioning securities market. This paper would be an important first step for a more systematic evaluation of the contribution of SEBI to the working of the Indian securities market. This paper is a substantial revision and updated version of an earlier paper on this subject.