Introduction
You surely know that stocks are traded in the stock market, but have you ever thought about how everything operates so systematically? Is there someone regulating it? Does this market follow any rules and regulations? Yes, absolutely. The stock market operates under the rules and regulations of SEBI because SEBI is the regulating authority of the Indian securities market.
Full Form and Establishment of SEBI
The full form of SEBI is the Securities and Exchange Board of India. It is the regulating authority for the Indian securities market, established under the SEBI Act of 1992 on April 12, 1992, to promote transparency in the Indian investment market.
Responsibilities of SEBI
Just as the Reserve Bank of India (RBI) monitors banks in India, SEBI is responsible for monitoring and controlling the securities market. Now, let’s explore more about SEBI.
Definition of Securities Market
What is the securities market? It is essential to understand how the share market, stock market, and securities market are related and how they differ. The share market only involves trading shares, while the stock market includes trading of shares along with bonds, mutual funds, and derivatives.
Difference Between Stock Market and Securities Market
The stock market has a broader scope. Similarly, compared to the stock market, the securities market has an even broader scope because it consists of two parts: the primary market and the secondary market. The primary market is associated with IPOs (Initial Public Offerings), and the secondary market is known as the stock market.
History of SEBI
SEBI’s headquarters is in Mumbai, and there are regional offices in cities like New Delhi, Ahmedabad, Kolkata, and Chennai. Why was there a need to establish these regional offices? Before SEBI’s foundation, various government institutions regulated the securities market, leading to inconsistencies and inefficiencies.
Functions and Powers of SEBI
SEBI plays the role of protector for securities investors and traders in the Indian securities market, acting as a financial mediator. Here are some of SEBI’s major functions:
- Protecting the interests of Indian investors in the securities market.
- Promoting the development of the securities market.
- Regulating business operations in the securities market.
- Providing a platform for bankers, stock brokers, investment advisors, and portfolio managers.
- Educating investors about the securities market.
- Preventing any fraud and unfair trading practices in this market.
Monitoring by SEBI
SEBI has certain powers, such as being able to make judgments regarding fraud and unethical practices in the securities market.
Organizational Structure of SEBI
SEBI follows a corporate structure, which includes a board of directors, senior management, department heads, and over 20 departments.
Conclusion
You have learned how SEBI acts as a powerful authority that monitors, controls, and guides the Indian securities market.
