Context
The Union Cabinet has recently approved the proposal for signing a bilateral Memorandum of Understanding (MoU) between Securities and Exchange Board of India (SEBI) and Financial Regulatory Commission, Mongolia (FRC).
About MoU
- The proposed bilateral MoU would, in addition to contributing towards strengthening the information sharing framework leading to effective enforcement of securities laws, also help in establishing a technical assistance programme.
- The IOSCO MMoU does not have under its scope the provision for technical assistance.
- The technical assistance programme would benefit the Authorities by way of consultations on matters relating to capital markets, capacity building activities and training programmes for the staff.
About Securities and Exchange Board of India-SEBI
- SEBI is the regulatory body for securities and commodity markets in India.
- It was established under the Securities and Exchange Board of India Act, 1992.
- It amis to protects the interest of the investors and to regulate and promote development of securities markets in India.
- Structure of SEBI
- Chairman- nominated by the Union Government of India.
- Two officers from the Union Finance Ministry.
- One member was appointed from the Reserve Bank of India.
- Five other members nominated by the Union Government of India.
- Purpose of SEBI
- The organization was created to meet the requirements of the following three groups:
- Issuers: SEBI works toward providing a marketplace to the investors where they can efficiently and fairly raise their funds.
- Intermediaries: SEBI works towards providing a professional and competitive market to the intermediaries.
- Investors: SEBI protects and supplies accurate information to investors.
- Quasi-Judicial: SEBI can conduct hearings and pass ruling judgements in cases of unethical and fraudulent trade practices.
- Quasi-Legislative: SEBI can draft rules and regulations for the protection of the interests of the investor.
- Quasi-Executive: SEBI is authorized to file a case against anyone who violates its rules and regulation.
- It is empowered to inspect account books and other documents as well if it finds traces of any suspicious activity.
About Financial Regulatory Commission (FRC)
- FRC is a parliamentary authority mandated to supervise and regulate the non-bank sector.
- It includes the insurance and securities markets, and participants of the microfinance sector.
- FRC, like SEBI, is a co-signatory to International Organization of Securities Commissions’ Multilateral MoU (IOSCO MMoU).
- Role of FRC-
- Providing stable and sound financial markets.
- Exercise power over non-bank financial institutions, insurance companies and intermediaries, securities firms, and savings and credit cooperatives.
- Ensure the rights of individual financial market clients (securities holders, domestic and foreign investors, and insurance policyholders)
- Providing protection against financial malpractices.
