The Securities and Exchange Board of India (SEBI) is the regulatory authority responsible for overseeing and regulating the securities market in India. It was established on April 12, 1992, as an autonomous body, and it operates under the jurisdiction of the Ministry of Finance, Government of India. SEBI’s primary objective is to protect the interests of investors and to promote the development and orderly functioning of the securities market in India.
Here are some key functions and responsibilities of SEBI:
Regulating the Securities Market:
SEBI regulates both the primary market (where companies issue new securities through Initial Public Offerings or IPOs) and the secondary market (where existing securities are bought and sold among investors). This includes stocks, bonds, mutual funds, and other financial instruments.
Setting Rules and Regulations:
SEBI formulates and enforces rules, regulations, and guidelines for various participants in the securities market. These include regulations related to disclosures, trading practices, insider trading, takeovers, and more.
Registering and Regulating Market Intermediaries:
SEBI registers and regulates various market intermediaries such as stockbrokers, sub-brokers, depository participants, merchant bankers, and mutual funds. These intermediaries play crucial roles in the functioning of the securities market.
Promoting Investor Education and Protection:
SEBI is actively involved in investor education programs to enhance financial literacy and awareness among investors. It also takes measures to protect the interests of investors by regulating activities like fraud and malpractice in the securities market.
Monitoring and Surveillance:
SEBI employs advanced technology and surveillance systems to monitor market activities, identify irregularities, and ensure compliance with regulations. This helps maintain market integrity and transparency.
Regulating Insider Trading:
SEBI regulates insider trading, which involves trading in securities based on non-public, material information about a company. It sets rules to prevent unfair advantages gained by individuals with access to such information.
Regulating Takeovers and Mergers:
SEBI regulates the process of takeovers and mergers in listed companies to ensure that shareholders are treated fairly and that the transactions are conducted in a transparent manner.
Regulating Collective Investment Schemes:
SEBI oversees collective investment schemes, which pool money from multiple investors to invest in various securities. This includes schemes like mutual funds.
Regulating Foreign Portfolio Investments:
SEBI sets regulations for foreign portfolio investments, which involve investments in Indian securities by foreign institutional investors (FIIs) and qualified foreign investors (QFIs).
Promoting Development of the Market:
SEBI takes initiatives to promote the development of the securities market, including introducing new products and trading platforms, and implementing measures to enhance liquidity and efficiency.
SEBI plays a crucial role in maintaining the integrity and stability of the Indian securities market. Its efforts are aimed at creating a fair, transparent, and investor-friendly environment, which in turn helps attract and retain domestic and international investors in the Indian market. By regulating various aspects of the securities market, SEBI contributes significantly to the growth and development of India’s financial sector.