The Securities and Exchange Board of India (SEBI) is a regulatory body under the government of India that regulates the securities market. Ans: It was established in 1988 but was given statutory status in 1992. Its head office is located in Mumbai.
Functions of SEBI are divided into three categories:
A. Regulatory Functions of SEBI:
a) To check unfair trade practices such as to supply misleading statement to the public, price rigging.
b) To check insider trading in securities. Insider trading means the buying and selling of the securities by those persons (Directors, promoters) who have some secret information of the company and wish to take advantage of it. It hurts the interest of the common man.
c) To provide education to the investors so as to protect them from being exploited by unfair means: or unhealthy activities of the intermediaries.
d) To promote code of conduct relating to the security market (for the companies, stock exchange and intermediaries)
e) To regulate takeover bids of companies.
B. Development functions of SEBI: These functions are performed by the SEBI to promote and develop activities in stock exchange and increase the business in stock exchange. Under developmental categories following functions are performed by SEBI:
(i) SEBI promotes training of intermediaries of the securities market.
(ii) SEBI tries to promote activities of stock exchange by adopting flexible and adoptable approach in following way:
(a) SEBI has permitted internet trading through registered stock brokers.
(b) SEBI has made underwriting optional to reduce the cost of issue.
(c) Even initial public offer of primary market is permitted through stock exchange.
C. Protective functions of SEBI
a) It checks price rigging.
b) It prohibits insider trading.
c) It prohibits fraudulent and unfair trade practices.
d) It educates investors.
