SEBI – The Securities and Exchange Board of India.
It may not sound like one of the most interesting topics out there, but we assure you — it is an extremely important one.
The Securities and Exchange Board of India, or SEBI, is a regulatory body that was set up “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto” (SEBI). It was established in 1992 by the Government of India. Simply put — it is an important institution to know about if you are an investor in India.
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Objectives of SEBI
There are four key objectives of SEBI. These include –
Protecting Investors — One of the key objectives of SEBI is to safeguard the interests of investors. Whether you are investing in the stock market directly or in mutual funds, SEBI is responsible for creating a safe and secure environment for all your investments, which is why you can invest without any worries!
Preventing Malpractices — When it comes down to your hard-earned money, there is just no room for errors or malpractices of any kind! The SEBI agrees with this notion and prevents malpractices through its regulations for the stock market. It makes sure that no mistakes are permissible when it comes to handling your investment portfolio.
Maintaining a Code of Conduct — All intermediaries (like the Deciml App) involved in the process of facilitating investments are expected to follow the code of conduct issued by SEBI. It is important to remember that your investment brokers are to be registered with SEBI — just like Deciml is — to ensure that all your transactions are above board, and there is no scope for dealing with fraudulent brokers or mediators.
Ensuring Efficient Functioning — The capital markets are a delicate ecosystem and they require diligent maintenance — which is where SEBI steps in. It makes sure that the statutory regulations (those imposed by the government) and self-regulations (those imposed by private financial institutions) are aligned with each other. SEBI achieves the smooth functioning of such institutions by closely monitoring the entities involved in our country’s securities sector.
So, the four main objectives of SEBI can be summarized as Protecting, Preventing, Maintaining, and Ensuring. And why do you need to know this? Well, we at Deciml think it is important for young investors to know the governing bodies that are responsible for handling their money and safeguarding their attempts to save money and invest regularly. So, read on!
Functions of SEBI
Objectives are words, but functions are actions. So, what functions does SEBI actively carry out to meet its objectives?
Protective Functions — The first function of the SEBI is protecting investors in the country. How does SEBI do it? In numerous ways! Right from restricting insider trading, to monitoring rigged pricing, to prohibiting the unfair trade of securities, to helping investors better understand what the liability risks are in their investments — SEBI is the Superman of the Metropolis called the capital market!
Regulatory Functions — This function is all about setting rules. SEBI makes sure that brokers and intermediaries have strict guidelines that they have to mandatorily follow (like Deciml does!), to minimize the risk that fraudulent brokers might pose to investors. It also monitors the workings of mutual funds by keeping an eye on how the business operations of entities that offer mutual fund investments to their customers run. Even stockbrokers, merchant bankers, and other members of the stock exchange are monitored closely by SEBI. But, just having regulations in place is not enough, and to that end, SEBI also conducts routine audits to ensure that its regulations are being adhered to by all those involved in securities transactions.
Development Function — These are the steps that SEBI takes to strengthen security markets. This function can span from employing new technology to training investment brokers to carrying out first-hand market research. It also includes licensing brokers and promoting self-regulatory groups by focusing on fair trade. Without the development function of SEBI, the securities market would remain stagnant and you definitely don’t want that to happen!
In conclusion, SEBI is a one-stop for all things securities-related. It is an organization that was created to demarcate rules, implement investment guidelines, and routinely check on how investments are being carried out by you.
You take a lot of time and effort to build your financial portfolio. SEBI makes sure your efforts are secured and not in vain — and that is something we are totally on board with!