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Unit 14: Financial Regulations

Under the SEBI Act Notes

Section 11(1) of the SEBI Act has empowered the SEBI in the following respects:
1. Regulation of stock exchange: The SEBI is empowered to regulate the business of stock
exchanges so as to prohibit fraudulent and unfair trade practices in securities market. For
this purpose, it can call for information, undertake inspection, conduct enquiries and
audits of the stock exchanges, intermediaries and self-regulatory organizations in the
securities market.
2. Regulation of Stockbrokers: The SEBI has been vested with power to register and regulate
the working of stockbrokers, sub-brokers, share transfer agents, bankers to an issue,
trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio
managers, investment advisors and such other intermediaries as may be associated with
securities market in any manner.
3. The SEBI is empowered to levy fees and other charges for carrying out the purposes of
Section 11 of the Act.

Under the SCR Act

The SCR Act has granted the following powers to the SEBI:
1. The SEBI can call for periodic returns from stock exchanges. It can prescribe maintenance
of certain documents by the exchanges. It can call for an explanation/information relating
to the affairs of the governing body of the exchange.
2. Regarding regulation of stock exchanges, the SEBI commands the following powers:

(a) Approval of bylaws of the exchange for regulation and control of contracts,
(b) Licensing of dealers in securities in certain areas,
(c) Compel a public company to list its shares,
(d) Procuring annual report by recognized stock exchanges,

(e) Issuing directives to the stock exchanges in general or a stock exchange in particular
to make rules or to amend rules,
(f) Superseding the governing body of a recognized stock exchange,

(g) Suspension of business of a recognized stock exchange,
(h) Prohibit contracts in certain cases,
(i) Grant of recognition to stock exchanges,
(j) Withdrawal of recognition of a stock exchange,

(k) Making or amending rules or articles of association of a stock exchange regarding
voting rights of members of a stock exchange at any meeting,
(l) Regulation and control of the business of dealing in spot delivery contracts,

(m) Hearing appeals submitted by companies against refusal of a stock exchange to list
their securities,
(n) Issue of a notification specifying any class of contracts as contracts to which the SCR
Act or any provision contained therein would not apply, and

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