3 Fundamental functions of SEBI

Do you know the only thing that scared me while entering the stock market was what if someone makes a fool out of me? There are people who are involved in trading or running brokerage firm when I was not even born.

As a beginner, if someone takes benefit out of my innocence who is going to look into it and save me?

Do you feel you are safe in the market? You are new to this, what if someone frauds with you?

The best part of the stock market is that it is under the supervision of govt body.

If you look at Indian stock market, Securities Exchange Board of India (SEBI) is the salutary body affiliated by govt of India to watch each and every activity of the market and even ensure that every participant is secured from any type of fraud activities.

Let us dive into the background of the foundation of SEBI. After all what caused govt to take a step and put regulation in trading?

As time passed dealings in stock market subsequently showed a huge growth and with this, a lot of malpractices started which included price rigging, Unofficial premium charges on new issue and delay in delivery of shares, violation of rules and regulations of the stock exchange and listing requirements.

And as you know if there is no one to watch there is no one to save.

This unfair practices made traders/investors lose their interests and confidence in stock exchange. And then SEBI came into the picture, affiliated by Govt of India to regulate and help minimize all such activities.

So what actually SEBI do?

SEBI is responsible for 3 fundamental functions which they are known for 

  • Protective function: As a part of protective function SEBI checks for frauds like price rigging, prohibiting insider trading and-and any unfair trade practices. SEBI also educates and make everyone follow their code of conduct so that everyone is aware of the facts and threats that can happen.
  • Developmental function:  Development function include the development of stock market as a whole so that it can spread in much more wider range of people. This is done by adopting trading practices like trading online from the registered broker, promoting training to intermediaries of the securities market.
  • Regulatory function: SEBI regulates the business in stock exchange by bringing all brokers and bankers under one framework so that they follow a common code of conduct, perform audits and inquiries in exchange and control takeover of companies. 

These prime functions or you can say role which SEBI plays in regulating stock market involves concern for three group of people who constitutes the market. 

SEBI is responsible for 3 group of people which includes

  • The issuers of securities: Provide safe and secure platform so that they can raise capital easily and fairly
  • The investors: Investors and protected and secured from any malpractices and supply of accurate and correct information
  • The market intermediaries: They get a professional competitive environment without any preferential discrimination. 

So how do you feel now?

I know this article has made you relaxed and now you can enter the market without the hesitation of being a beginner.

So if you are diving in the ocean of stock market then SEBI is always there to guard you acting as your life jacket.

Regulatory body SEBI

Post Author: Sushant Putatunda

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