The Securities and Exchange Board of India (SEBI) was officially appointed as the authority for regulating the financial markets in India on 12th April 1988. It was initially established as a non-statutory body, i.e. it had no control over anything but later in 1992, it was declared an autonomous body with statutory powers. SEBI plays an important role in regulating the securities market of India. Therefore it is important to know the purpose and objective of SEBI.
WHY WAS SEBI FORMED?
Many malpractices started taking place such as unofficial self-styled merchant bankers, unofficial private placements, rigging of prices, non-adherence of provisions of the Companies Act, violation of rules and regulations of stock exchanges, delay in delivery of shares, price rigging, etc.
Due to these malpractices, people started losing confidence in the stock market. The government felt a sudden need to set up an authority to regulate the working and reduce these malpractices. As a result, the Government came up with the establishment of SEBI.
SEBI acts as a watchdog for all the capital market participants and its main purpose is to provide such an environment for the financial market enthusiasts that facilitate the efficient and smooth working of the securities market. To make this happen, it ensures that the three main participants of the financial market are taken care of, i.e. issuers of securities, investors, and financial intermediaries.
FUNCTIONS OF SEBI
These functions are performed by SEBI to protect the interest of investors and other financial participants.
These functions are basically performed to keep a check on the functioning of the business in the financial market
OBJECTIVES OF SEBI
Protection to the investors
Prevention of malpractice
Fair and proper functioning
POWERS OF SEBI
SEBI has the power to regulate and approve any laws related to functions in the stock exchange
It has the powers to access the books of records and accounts for all the stock exchanges and it can arrange for periodical checks and returns into the workings of the stock exchanges.
It can also conduct hearings and pass judgments if there are any malpractices detected on the stock exchanges.
It has the power to completely regulate all aspects of insider trading and announce penalties and expulsions if a company is caught doing something unethical.
Writer - Antra Pandey
Editor - Priyam Kusundal
Graphics - Adrija Sen