SEBI stands for Securities and Exchange Board of India. It’s a statutory regulatory body establish by the Government of India in 1992.
It was establish for protecting the interests of investors investing in securities along with regulating the securities market. It also regulates how the stock market and mutual funds function.
Objectives of SEBI:
Investor Protection: This main objective of setting up SEBI is investor protection. It involves protecting the interests of investors by providing guidance and ensuring the safety of the investment made.
Prevention of fraudulent practices and unfair practices related to trading and regulation of exchange activities
Develop a code of conduct for financial intermediaries such as underwriters, brokers, etc. Maintain a proper balance between statutory regulations and self-regulation.
Functions of SEBI:
Protective functions
Prohibits insider trading: The purchase or sale of securities by individuals who have access to nonpublic information about a company. These persons include the company’s directors, employees and promoters. To prevent such unfair trading practices, the Securities and Exchange Board of India (SEBI) has banned companies from buying their own shares from the secondary market. The aim of this measure is to ensure a level playing field for all investors and preserve the integrity of the market.
Check price rigging: Price rigging is the manipulation of security prices to create artificial and abnormal price movements. This may include deliberately increasing or decreasing the market price of shares, resulting in unexpected losses for investors. it maintains strict vigilance to prevent such malpractices.
Promotion of Fair Practices: they promotes fair business practices and seeks to prohibit fraudulent activities related to securities trading.
Financial Education Provider: they educates investors by conducting online and offline sessions that provide information related to market statistics as well as money management.
Regulatory Function
SEBI has defined rules and regulations and created guidelines and a code of conduct to be follow by corporations as well as financial intermediaries.
Regulation of the company takeover process.
Carrying out investigations and audits of exchanges.
It regulates the activities of stockbrokers and traders.
Development Function
This function consists of initiative taken by SEBI to provide knowledge of trading and market function to investors. it focuses on training individuals and entities involved in the securities market to ensure their knowledge and understanding of market regulations and best practices.
Purpose of SEBI
SEBI (Securities and Exchange Board of India) is establish to facilitate resource mobilization and allocation by creating an enabling environment. It plays a key role in meeting the evolving requirements of various stakeholders.
Here is how SEBI caters to the needs of various groups: Issuers: It offers a favorable marketplace where issuers can raise funds for their businesses. This ensures an efficient and regulated capital mobilization process.
Investors: It prioritizes the protection of investors by ensuring a constant supply of accurate and up-to-date information. This promotes transparency and confidence in the market and protects the interests of investors.
Intermediaries: SEBI’s functions as a body to create a competitive market for brokers, investment advisors and merchant bankers. By creating and maintaining the right infrastructure, it enhances the efficiency and effectiveness of intermediaries’ operations.
