Are SEBI Employees Allowed to Trade in Stock Market?: The Securities Exchange Board of India (SEBI) is an autonomous government body regulating the trading and functioning of stock markets in India. This regulatory body comes under the Ministry of Finance. Many young graduates aim to get into SEBI as Grade A officers. In this blog, we are going to discuss regulations SEBI employees need to follow while working in the organization.
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SEBI was constituted as a regulatory body as per the Companies Act, of 1956, the Securities Contract (Regulation) Act, of 1956, and the Capital Issues (Control) Act, of 1947. The purpose of SEBI formation is to regularize market trading and securities listing. The government of India gave additional power to SEBI in 1995 as per the SEBI Amendment Act 1992.
The Preamble of SEBI states the objectives of the formation of this regulatory organization.
The formation and management of the Securities Exchange Board of India (SEBI) is handled by the Ministry of Finance. The board members are appointed in SEBI:
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SEBI India follows a corporate working structure in the regulation of share markets in India. The structure of SEBI comprises 20 departments which are supervised by the departmental heads (managers) in the organization. We have listed below the most critical departments in SEBI are:
Let us check out the powers given to the Securities Exchange Board of India (SEBI):
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The securities market in India has developed in the last few decades. Many people invest in stocks to get high returns. SEBI employees are not allowed to invest in the securities market. The employees are prohibited from investing in the share market as per the SEBI (Prohibition of Insider Trading) Regulation 2015. Under this law, any professional working as an MP, board of directors, or associated with the promotor group is prohibited from investing in the securities listed in the security exchange. The amendment in the law was last made in November 2022 with the prohibition of communication of insiders with outside people.
SEBI acts as a regulator in the securities market and provides equal footing to investors and traders. Given below are the reasons for not allowing SEBI Employees to trade in the securities market:
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From the above discussion in the blog post, we conclude that SEBI plays a crucial role in regulating the functioning of the securities market in India. SEBI employees are not allowed to trade in the securities market as an initiative to regularize the organization’s functioning and authenticity.
Employees on joining SEBI have to update the assets and liabilities information in 30 days as per Section 44 (2) of the Lokpal and Lokayuktas Act, 2013.
Every SEBI employee has to file assets and liabilities with the board before July 31st every year.
SEBI employee has to report the transactions of movable assets and securities that happened in his or her name or in the name of family members.
The finance/spouse can invest in securities but, upon marriage same rules apply.
These rules and regulations are applicable as per Regulation 65 of SEBI (Employees’ Service) Regulations, 2001.
The employees and their spouses are allowed in mutual funds and long-term savings for investment purposes.
SEBI can impose penalties if any employee violates the regulations.
Regulation 79 of the SEBI (Employees’ Service) Regulations, 2001 provides the minor and major penalties imposed on employees for violation of rules.
A list of minor penalties includes censure, withholding of promotion, and withholding of increments of pay.
Some of the major penalties are removal/termination from services and compulsory retirement.
A list of major penalties is discussed in Regulation 80 of the SEBI (Employees’ Service) Regulations, 2001.
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