Securities and Exchange Board of India (SEBI)

What is SEBI? 

The Securities and Exchange Board of India (SEBI) is an independent regulatory authority responsible for overseeing and regulating the securities market in India. Established in 1992, it functions under the jurisdiction of the Ministry of Finance, Government of India. 

Key objective of SEBI 

• Protecting Investor Interests: SEBI strives to safeguard investors from fraudulent practices, market manipulation, and unfair trade practices. 
• Promoting Orderly Development: It aims to foster a well-regulated ecosystem with transparent mechanisms and fair rules for all participants. 
• Facilitating Growth: SEBI aims to create an environment that encourages the healthy growth of the securities market, attracts new investments, and facilitates capital formation.

Key function of SEBI

It’s straightforward that SEBI regulates and establishes market conduct guidelines to run a compliant trading system. In addition, SEBI has more functions that include: 

• Regulation of Issuers: SEBI regulates the issuance of capital by companies through public offerings and ensures compliance with listing requirements for stocks and bonds. 
• Investor Education: SEBI promotes investor awareness and literacy through educational programs and initiatives. 
• Grievance Redressal: It provides a mechanism for investors to address grievances against listed companies, intermediaries, or market practices. 

Key terms related to SEBI

• Initial Public Offering (IPO): The process by which a private company offers its shares to the public for the first time, regulated by SEBI. 
• Insider Trading: Illegal practice of trading on the stock exchange to one's advantage through having access to confidential information. 
• Market Intermediaries: Entities such as brokers, sub-brokers, and merchant bankers who play a role in facilitating transactions in the securities market. 
• Prospectus: A formal legal document required by and filed with SEBI that provides details about an investment offering to the public. 
• Mutual Fund Regulation: SEBI sets guidelines for the formation and operation of mutual funds, ensuring they operate in the best interests of investors.

How SEBI ensures market integrity 

The stock market is one of those ‘your money, your life’ entities that, god forbid, if it goes wrong, can cause overwhelming stress. So, in the world of investing, where security is paramount, SEBI upholds market integrity by enforcing regulations, auditing intermediaries, and tackling fraud. This rigorous oversight ensures that the Indian securities market remains a reliable and transparent platform for investors.

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