Financial Markets

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SEBI (The Securities Exchange Board of India)- The Securities Exchange Board of India was established in 1992 to protect the interest of investors and to regulate and control the trading of financial securities.

SEBI Plays a key role in ensuring the stability, regulation and development of the securities market. The functions of SEBI can further be classified into three categories:

1. Regulatory Functions.
2. Development Functions.
3. Protective Functions.

Objectives of SEBI:

1. Regulation of stock exchange: It regulates stock exchanges so that efficient services may be provided to all the parties operating there.
2. Protection to the Investors: SEBI protects interest of investors from wrong information given by the company and reducing the risk of delivery and payment etc.
3. Prevention of trading malpractices: SEBI prevents trading malpractices in order to achieve a balance between self-regulation by the securities industry and its statutory regulation.
4. Fair practice: One of the important objectives of SEBI is to regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers etc.

The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. This environment aims at meeting the needs of the three groups which basically constitute the market, viz, the issuers of securities (Companies), the investors and the market intermediaries.

The ever-expanding investors population and market capitalisation led to variety of malpractices on the part of companies, brokers, merchant bankers, etc. The government and the stock exchanges were rather helpless in redressing the investor's problems because of lack of proper penal provisions in the existing legislation, Therefore, India decided to set-up a separate regulatory body known as Securities and Exchange Board of India.