SEBI stands for Securities and Exchange Board of India. It is an apex body for overall development and regulation of the securities market. It was set up in April 12, 1944. To start with, SEBI was set up as a Non- statutory body. Later on it becomes a statutory body under the Securities and Exchange Board on India Act 1992. The Act entrusted SEBI with comprehensive power over practically all the aspect of capital; operations.
Role and functions of SEBI:
- To protect the interests of investors through proper education and guidance as regards their investment in securities. For this, SEBI has made rules and regulation to be followed by the financial intermediaries such as brokers etc.
- To regulate and control the business on stock exchange and other securities markets. For this, SEBI made registration of brokers and sub-brokers compulsory and they are expected to follow certain rules and regulations.
To make registration and to regulate the functioning of intermediaries such as stock brokers, sub-brokers, share transfer agents, merchant brokers and other intermediaries operating on the securities market. In addition, to provide suitable training to intermediaries.
To register and regulate the working of mutual funds including UTI. The purpose is to maintain effective supervision on their operations and avoid their unfair and anti-investor activities.
To promote self-regulation organization of intermediaries to form their professional association and control undesirable activities of their members.
To regulate mergers, takeovers and acquisitions of companies in order to protect the interest of investors.
To issue guidelines to companies regarding capital issue.
To conduct inspection, enquiries and audits of stock exchanges, intermediaries and selfregulating organization and to take suitable remedial measures whenever necessary.
SEBI looks after the complaints received from investors for fair settlement. It also issue booklets for the guidance and protection of small investors.
To restrict insider trading activity through suitable measures. This function is useful for avoiding undesirable activities of brokers and securities scams.
The main objective of SEBI is protection of the interest of investors, promotion of the development of stock exchange, and regulation the activities of stock market.
The objectives of SEBI are as follows:
- Regulation of the activities of stock market. Protection of the rights of investors and ensuring safety of their investment.
- Prevention of fraudulent and malpractices by having a balance between self-regulation of business and its statutory regulations.
- Regulation and development of a code of conduct for the intermediaries like underwriters, brokers, etc.