Role of SEBI in capital market
SEBI is the Indian stock market watchdog. The full form of SEBI is the Security and Exchange Board of India which regulates, monitors, and oversees the function of the stock market. SEBI is a financial regulatory body that reports to the Ministry of Finance.
When was SEBI established?
In 1980, there was tremendous growth in the capital market due to the increasing participation of the public. The expanding investor population resulted in many malpractices by the companies, brokers, merchant bankers, etc.
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Role Of SEBI
SEBI was established to monitor and improve the Indian Capital market. In order to achieve this goal, it looks after the needs of the three most important financial participants involved in the Indian capital market. Those three parties are:
1). Issuers of securities: In any company that is listed on the stock exchange, the issuers are organizers that help raise funds from the financial market. The role of SEBI here is to ensure that IPO and FPO issuance is done fairly and without misrepresentation.
2). Protect Investor’s Interest: The role of SEBI is to protect investor’s interests and prevent unfair trade practices so that investor’s interests don’t get harmed.
Protecting the interests of traders and investors is important for the survival of the capital market because they are an integral part of the capital market.
3). Financial Intermediaries: SEBI act as the financial market intermediaries, ensuring that stock market trades take place smoothly and securely. Their purpose is to oversee the activities of financial intermediaries such as NBFCs, brokers, sub-brokers, and so on.
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