What is the function of SEBI?

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Q: What is the function of SEBI?

A: SEBI regulates stock exchanges, brokers, and other market participants to ensure transparency and fairness. It formulates rules to protect investors, prevents insider trading and market manipulation, promotes investor education, and oversees mergers, acquisitions, and takeovers in listed companies.

SEBI’s Key Responsibilities

SEBI plays a multifaceted role in the smooth functioning of India’s financial markets:

  1. Regulation of Securities Market: Ensures orderly trading by framing rules for stock exchanges, listed companies, and intermediaries.
  2. Investor Protection: Introduces measures against insider trading, market manipulation, and other unfair practices.
  3. Registration & Supervision: Registers brokers, merchant bankers, mutual funds, and investment advisors, ensuring they follow strict standards.
  4. Surveillance & Enforcement: Monitors trading activities, detects irregularities, and takes corrective or punitive actions when necessary.
  5. Audits & Inspections: Regularly evaluates the compliance of companies and intermediaries with SEBI norms.
  6. Investor Education: Runs awareness campaigns and programs to improve financial literacy and empower investors.

Impact of SEBI on Indian Financial Markets

Since gaining statutory powers in 1992, SEBI has had a profound impact on India’s financial ecosystem:

  1. Market Stability: By banning insider trading and implementing risk management systems, SEBI has reduced fraud and volatility.
  2. Reforms & Innovation: Initiatives such as electronic book building for public offerings, regulations for mutual funds, and streamlining of buy-back processes have modernised market practices.
  3. Investor Confidence: Transparency and accountability have attracted both domestic and foreign investments.
  4. Adapting to Change: SEBI continues to evolve with technology by addressing challenges like algorithmic trading, digital onboarding, and cyber risks.

Do you know?

Do you know SEBI has the power to investigate and penalise entities involved in securities market violations?

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