What is SEBI?
Securities and Exchange Board of India (SEBI) is the regulator for activities in the Indian capital market. Established in 1988, it was granted statutory powers through an act of Parliament passed in 1992. SEBI works to promote a well-developed and regulated securities market that facilitates efficient mobilization and allocation of resources between savers and users. It works to ensure investor protection by making laws and setting guidelines on how securities can be issued and traded.
Objectives of SEBI
- SEBI's main objective is to regulate the activities of the stock market and ensure that all dealings in the Indian capital markets are conducted fairly and transparently.
- It is responsible for protecting the interests of investors in securities, promoting the development of the securities market, and monitoring its functions.
- SEBI also formulates rules and regulations that govern the functioning of stock exchanges and other intermediaries to ensure orderly markets and prevent any kind of fraudulent activities.
- It aims to protect investors from unfair practices, such as insider trading, front running, manipulation of stock prices, etc., by putting in place appropriate measures like stringent disclosure norms.
- It regulates takeover bids, prevention of frauds related to public issues, substantial acquisition of shares & takeovers, etc., which helps improve corporate governance standards.
- SEBI also provides investor education initiatives that can help to increase financial literacy among investors and raise awareness about investment options available in capital markets. Furthermore, it also advises companies regarding their disclosure standards & corporate governance requirements.
Functions of SEBI
- Regulatory Function
- Development Function
- Protective Function
The civil and administrative functions of SEBI include developing regulations for all participants in the securities market, monitoring compliance with those laws by all stakeholders, promoting investor education by setting up legal awareness programs throughout India, prohibiting insider trading or fraudulent activities that can harm investors’ interests, instituting proceedings against violators and imposing penalties, etc.
Some of the key functions of SEBI include:
- Issuing regulations and guidelines for the securities market: SEBI issues rules and guidelines that govern the conduct of market participants, such as brokers, issuers, and investors. These regulations cover a wide range of topics, such as disclosure requirements, insider trading, and market manipulation.
- Registering and regulating market participants: SEBI registers and regulates market participants, such as stock exchanges, brokers, and investment advisers. This ensures that these entities operate in a fair, transparent, and orderly manner, and that investors are protected from fraudulent or unethical practices.
- Monitoring and enforcing compliance: SEBI monitors the activities of market participants to ensure that they comply with the rules and regulations issued by the regulator. If a market participant is found to be in violation of these rules, SEBI can take enforcement action, such as imposing fines or suspending the entity's operations.