August 24, 2023

What is SEBI

What is SEBI? – Stock Market Guardian?

SEBI stands for Securities and Exchange Board of India. It was established on 12th April 1988, with its headquarters in Mumbai. SEBI is the stock market regulator that oversees everything in the Indian stock market.

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SEBI Full Form & Meaning

SEBI stands for Securities and Exchange Board of India. It was established on 12th April 1988, with its headquarters in Mumbai. SEBI is the stock market regulator that oversees everything in the Indian stock market. Initially, SEBI did not have enough powers, it was given more authority in 1992, via the SEBI Act of 1992.

Roles and Objectives of SEBI

The main role or objective of SEBI(Securities and Exchange Board of India) is to set the rules and regulations for the markets to function smoothly. SEBI keeps a track of all the entities in the market and makes sure they don’t dupe small investors. It also conducts audits and punishes defrauders.

All the brokers, financiers, finance companies, and all sorts of mediators have to be registered with SEBI to participate in the stock market. 

Functions of SEBI

  • The first and most important function of SEBI is to protect the investor from all sorts of frauds.
  • To check for market manipulation.
  • To ensure no insider trading happens.
  • To put a stop to misleading and false practices by firms.
  • To avoid market frauds and if they occur then punish the culprits.
  • To monitor the mergers and acquisitions of companies.
  • To take care of the IPO proceedings.

SEBI sees that the brokers and financial institutions are not involved in any sort of malpractices that can hurt the rights and privileges of the investors. From time to time, SEBI has banned firms from the stock market for malpractices. 

Karvy Scam is the biggest example for your reference. Karvy was defrauding the investors in several ways. SEBI got the wind of it and barred the company from offering services.

Not just this, SEBI can bar individual investors as well. Most recently, Future Group owner Kishore Biyani got banned from the capital market for a year. Click here to know.

Guidelines of SEBI

Sebi has set out various guidelines for portfolio managers, foreign portfolio investors, buy-back schemes, IPOs, Mutual Funds, and many more. Details to all these can be found on the SEBI website. However, most of the guidelines are of the companies getting listed and financial institutions.

Powers of SEBI

  • Since SEBI is the watchdog, it has teeth as well. It not only watches but also bites when required. Simply put, SEBI can take action against the culprits when required.
  • As stated earlier, Sebi is a guardian angel. It sets the rule for fair and honest trading in the market. It makes regulations of companies, brokers, brokerage firms, and investors for the smooth functioning of the market. This is the quasi-legislative power of SEBI.
  • If SEBI gets wind of any violation, it has the power to examine the books of any company and search for evidence it can find of wrongdoing. This is the quasi-executive power of SEBI.
  • If, after investigation, SEBI finds any culprits, SEBI can punish them by barring them from the market, imposing fines, or both. This is the quasi-judicial power of SEBI.
  • Only the Supreme Court of India and Securities Appellate Tribunal supersede SEBI. Both can overrule SEBI if required.

We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, and hence we bring you the important topics and areas that you should know:

What is Sensex?
What is NSE Full Form?
What is Nifty?
MCX Meaning
NSE vs BSE
Sensex vs Nifty
After Market Order
Tea Stocks

Quick Summary

  • SEBI – Securities and exchange board of India. It is a stock market regulator which oversees everything in the Indian stock market 
  • The main objective of SEBI is to set rules and regulations for the market to function smoothly. All the brokers, financiers, and finance companies have to be registered with SEBI.
  • Functions of SEBI: Protect investors from fraud, check market manipulation, ensure no insider trading happens, stop misleading and false practices by firms, take care of IPO proceedings, etc.
  • SEBI has various guidelines for portfolio managers, foreign portfolio investors, buy-back schemes, IPOs and many more which are listed on SEBI website.
  • Powers of SEBI:  It sets the rule for fair and honest trading in the market, it makes regulations for companies, brokers, brokerage firms, and investors for the smooth function of the market.
  • If there is any kind of violation, it has the power to examine the books of the company and search for evidence (quasi-executive power of SEBI). 
  • SEBI has the power to punish culprits by barring them from the market, imposing fines, or both (quasi-judicial power of SEBI).

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