Question -
Answer -
SEBI or the Securities and Exchange Board of India was established in the year 1988 in order to achieve the growth of securities market in an orderly manner. It also provided investor protection.
The objectives of Securities and Exchange Board of India are as follows:
1. To regulate the stock exchange and securities market functioning. It looks to provide a secure place for raising funds by the issuer of securities.
2. It works on providing the investors with the guidelines which is related to investment. SEBI helps with reliable and adequate information about companies which helps companies in proper investment decisions.
3. To prevent malpractices that happen in securities trading. These malpractices included insider trading, non-adherence to companies act, violating rules and regulations etc. SEBI aims at preventing such malpractices so as to maintain investor trust.
4. To develop a code of conduct which involves all intermediaries such as merchant bankers, underwriters, brokers etc. SEBI provides a competitive and professional environment for all the intermediaries so that all transactions can be conducted by following fair practice.
SEBI performs the following functions:
i. Regulatory Functions
SEBI performs the regulatory functions by registration of agents, sub-brokers, brokers and other players in the market. It also manages registration of mutual fund schemes. The regulation of SEBI also involves working of the merchant bankers, underwriters, stock brokers and other market intermediaries. It conducts stock exchange audits on a regular basis.
ii. Development Functions
SEBI provides training and development of the mediums involved in securities market in order to achieve a healthy growth of the security market. It also conducts research on important areas of market and publishes that research information which is helpful for investors and market players in making proper investment decisions. It also enabled trading via IPO, internet trading which has resulted in growth of the market.
iii. Protective Function
SEBI prevents trade practices which are fraudulent and unfair. It also prevents spread of information which are manipulative and misleading that can have a negative impact on securities market. It also keeps a check on insider trading where business information is leaked by an individual of the company which can impact business decisions. SEBI also acts as promoter of fair trade and protects investor interest. It also prevents manipulation of securities.