In India, the stock market is regulated to protect investors and ensure fair trading. The organization responsible for this is SEBI – Securities and Exchange Board of India. Many beginners ask, “What is SEBI, and what role does it play in the stock market?” Let’s understand this in detail.
📌 What is SEBI?
SEBI (Securities and Exchange Board of India) is the regulatory authority for the Indian securities market.
Established in 1988 and given statutory powers in 1992.
Works under the Ministry of Finance, Government of India.
📌 Main Objectives of SEBI :-
1. Protect Investors – Safeguard the interests of retail investors.
2. Regulate the Market – Ensure transparency and prevent unfair practices.
3. Develop the Market – Promote healthy growth and innovation in Indian capital markets.
📌 Roles and Functions of SEBI in the Stock Market :-
1. Regulating Stock Exchanges :-
Monitors NSE, BSE, and other exchanges.
Ensures smooth and fair trading.
2. Protecting Investors’ Interests :-
Prevents insider trading and price manipulation.
Ensures companies disclose accurate financial information.
3. Overseeing Brokers and Mutual Funds :-
Licenses and monitors stockbrokers, portfolio managers, and mutual funds.
Ensures compliance with rules and guidelines.
4. Market Development :-
Introduces reforms like online trading, IPO guidelines, and circuit breakers.
Improves market infrastructure.
5. Taking Action Against Fraud :-
Investigates scams, unfair trading practices, and market manipulation.
Penalizes offenders and protects retail investors.
📊 Example of SEBI’s Role :-
If a company tries to mislead investors with fake results, SEBI has the power to investigate and take strict action.
SEBI ensures that stock markets remain fair and transparent.
Conclusion:
SEBI is the backbone of the Indian stock market. It protects investors, regulates brokers, monitors stock exchanges, and ensures fair trading practices. Without SEBI, the market would be unsafe and highly risky for retail investors.
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