SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

SEBI, securities and exchange board of india. It explains itself as an administrative body to promote orderly and healthy growth of securities market and for investor protection.

It was setup on 12 april 1988 by indian government. It was to function under the control of ministry of finance of indian government.

There was a specific reason for establishing SEBI, in 1980’s our country’s capital market witnessed tremenduos growth which means population of investors was increasing particularly participation of public was increased. This results in a large variety of badpractices on the behalf of firm, brokers, merchants, bankers etc. many unofficial brokers also tried to cheat people. These malpractices decreased the investors confidence. Thus, indian government decided to setup a regulatory body known as SEBI.

 

PURPOSE AND ROLE:-

The basic purpose of SEBI is to create an enviroment to facilitate efficient mobilisation and allocation of resources through securities market.

The enviroment includes rules and regulations, practices and policy framework. This enviroment try to meet the needs of three groups-

1) To the issuers, it aims to provide a market in which they can confidently raise finance in an fair manner.

2) To the investors, it should provide protection to their rights and interests by accurate info and disclosing info regularly.

3) To the intermediaries, it offers a professional and expanding market with efficient infrastructure so they can give better services to investors and issuers.

 

OBJECTIVES:-

1) To regulate securities and stock exchange industry to promote orderly functiuoning.

2) To protect the rights of investors, particularly individual investors and to guide and educate them.

3) It prevents malpractices performed in trading and try to achieve a balance between self regulation by the securities industry and its statutory regulatiuon.

 

FUNCTIONS:- The functions of SEBI are classified as-

A. Regulatory Functions-

1) It registers brokers and sub brokers and other players in market.

2) It registers collective investment schemes and mutual funds.

 

B. Development Functions-

1) Train the intermediaries of the market to make them aware about their rights.

2) It regularly conducts research and publish info useful to all participants.

3) Undertaking measures to develop capital markets.

 

C. Protective Functions-

1) Controls insider trading and imposing penalties on those involved.

2) Undertaking steps for investor protection.

3) Promotes fair practices and code of conduct in market to have a disciplined market.

 

Apart from this SEBI has two advisory committees–

1) Primary market advisory committee,

2) Secondary market advisory committee.

These committeees advise SEBI about matters relating to investors protection and helps to develop market.

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