As Sebi celebrates its 25 years of existence, chairman UK Sinha says this has been an eventful journey for the capital markets regulator and it has created market infrastructures that are better than those in many other countries, including some most developed economies.
"As far as the past 25 years are concerned, Sebi's journey has been quite challenging. At the same time, this journey has also been something that we at Sebi, the market entities and the entire country should be proud of.
"It has been indeed an eventful journey despite all the challenges put across to us," the Securities and Exchange Board of India (Sebi) chief Upendra Kumar Sinha said in an interview.
"We have been able to tackle all those challenges in an effective manner and the evolution process has been great in all these years," he said.
Sinha is the eighth chairman of Sebi since its inception as an independent regulator in 1988, when the central government headed by then prime minister Rajiv Gandhi decided to give a boost to the stock market activities as part of its economic liberalisation drive.
Prior to Sebi coming into existence, the capital markets were regulated by the Capital Issues (Control) Act of 1947.
"There have been massive changes in the way the market functions and the trading happens. From the use of latest technology to widening of the markets and market activities, a host of eventful changes have taken place.
"We have created market infrastructures which are world class and where trading today takes place in a much more transparent manner, which is much better than the way market functions in many other parts of the world including some really developed markets," Sinha said.
The Sebi chief further said that the markets were earlier concentrated in a few hands and to a few entities in terms of intermediaries as well as the investors.
"There has been a quantum jump on this front. A host of new investment avenues and market entities, starting from mutual funds to venture capital funds have come to the fore, widening the markets in a big way.
"There have been huge changes in the way primary markets function and are regulated. Amid all this growth and widening of the markets, safeguarding the investors' interest has remained paramount and significant changes have been made on that front as well," he said.
Sebi will celebrate its 25-years of existence at a function in Mumbai on Friday and those scheduled to be present on the occasion include Prime Minister Manmohan Singh, finance minister P Chidambaram, the entire top brass of the regulatory authority and many other eminent people from India and abroad.
Sebi was set up in 1988 with a mandate to develop the capital markets and infuse investor confidence by keeping a check on possible manipulations.
However, it did not have any statutory powers at that time and its role was limited to collection of investor-related information from various market participants, advising the government on issues related to stock markets and regulation of a few market entities.
The government gave Sebi statutory powers in 1992 through the Securities and Exchange Board of India (Sebi) Act. These powers included mandate to check insider trading and regulate takeovers and other substantial share acquisitions.
The Act also gave Sebi a mandate to protect the interests of investors, promote the development of markets and regulate them as well. This also happened to be the time when the Indian market was rocked by its biggest ever scandal of that time in form of Harshad Mehta scam.
Later in 1995, the Securities Law (amendment) Act enhanced Sebi's jurisdiction and its autonomy and gave it powers to take punitive action. Entities like FIIs, rating agencies, venture capital funds and depositories were also brought under its jurisdiction.
Sebi was also given powers to levy monetary penalties, while SAT was set up to give a platform to the aggrieved parties to appeal against Sebi orders.
The next major amendment to the Sebi Act was made in 2002, the year that saw another major scam in form of stock market activities of Ketan Parekh.
These amendments gave Sebi powers to seek information and records from banks and many other authorities, as also the powers for inspection of the books of accounts of listed companies.
It also got the authority to take actions like suspension of trading, debarment of persons and companies from the markets.
A few years later, changes were made in the way stock exchanges were owned and run, by converting them into corporate entities from their earlier avatar of 'mutual' entities that were owned, controlled and managed by brokers and trading members.
After the 2002 amendment, Sebi also got powers to pass interim orders, to investigate and to conduct enquiries and then pass a final order, it was allowed to pass cease and desist orders and impose higher monetary penalties of up to Rs. 25 crore.