Answer:

The Securities and Exchange Board of India (SEBI) was established in 1988 and became a statutory body in 1992 under the SEBI Act. SEBI regulates India’s securities market to protect investors, promote fair practices, and ensure the orderly development of the financial market. 

Historical Evolution of SEBI:

• Formation as a Non-Statutory Body (1988): SEBI was initially established in 1988 to address the growing complexities and malpractices in India’s securities market. Its early years focused on investor protection and market regulation without statutory powers.
  For example: SEBI’s initial actions included curbing unfair practices like insider trading, though it lacked the authority to enforce strict penalties at this stage.
• Statutory Powers Under SEBI Act (1992): In 1992, SEBI gained statutory powers under the SEBI Act, enabling it to regulate the securities market with greater authority, including the ability to formulate regulations, conduct investigations, and impose penalties.
  For example: The SEBI Act empowered SEBI to act decisively during the Harshad Mehta scam, marking its first significant test as a statutory regulator.
• Expansion of Regulatory Powers (2002-2004): The early 2000s saw an expansion of SEBI’s powers, particularly after the Ketan Parekh scam. SEBI’s regulatory framework was strengthened to prevent market manipulation and protect investor interests.
  For example: SEBI introduced measures like banning insider trading and establishing the Securities Appellate Tribunal (SAT) for handling appeals against its orders.
• Introduction of Reforms (2014-2017): SEBI introduced significant reforms to enhance transparency, efficiency, and investor protection. This period saw the introduction of stricter disclosure norms, algorithmic trading regulations, and improvements in market infrastructure.
  For example: The introduction of the T+2 settlement cycle in 2014 improved transaction speed, and SEBI’s crackdown on illegal investment schemes highlighted its evolving role.
• Digital and Technological Advancements (2017-Present): SEBI has increasingly embraced digital technologies to enhance market surveillance, streamline operations, and improve investor access to information, reflecting its adaptation to the changing financial landscape.
  For example: SEBI’s implementation of systems like Online Dispute Resolution and use of AI in market surveillance showcases its focus on leveraging technology for better market regulation.

Role of SEBI in Ensuring Market Integrity:

• Regulation of Market Practices: SEBI has played a crucial role in regulating market practices, ensuring transparency and fairness in securities trading. It has introduced strict norms for insider trading, market manipulation, and disclosure requirements.
  For example: SEBI’s actions against companies like Satyam and Sahara exemplify its commitment to upholding market integrity through stringent regulatory measures.
• Investor Protection Mechanisms: Protecting investors has been at the core of SEBI’s mandate. It has implemented various mechanisms like investor education, grievance redressal, and the establishment of Investor Protection Funds.
  For example: The launch of the SEBI Complaints Redress System (SCORES) has enabled investors to file complaints online, ensuring prompt resolution of issues and enhancing investor confidence.
• Development of Market Infrastructure: SEBI has been instrumental in developing and modernizing India’s market infrastructure, including exchanges, depositories, and clearinghouses, ensuring efficient and secure trading environments.
• Enforcement of Corporate Governance: SEBI has enforced strict corporate governance norms to ensure that companies listed on Indian exchanges adhere to high standards of ethics, transparency, and accountability.
  For example: SEBI’s guidelines on board composition, independent directors, and audit committee functions have strengthened corporate governance.
• Facilitating Capital Market Growth: By ensuring a stable and trustworthy market environment, SEBI has facilitated the growth of India’s capital markets, attracting domestic and international investors and supporting economic development.
  For example: SEBI’s reforms in Initial Public Offerings (IPOs) and Foreign Portfolio Investments (FPIs) have contributed to record inflows into India’s capital markets, enhancing liquidity and market depth.

SEBI’s evolution from a non-statutory body to a powerful regulator has been pivotal in shaping India’s financial markets. As it continues to address emerging challenges and embrace technological advancements, SEBI’s role will be crucial in ensuring the integrity and growth of India’s securities market, thereby contributing to the broader economic development of the nation.

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