Q.Explain the objectives and functions of SEBI.

SEBI was established in 1988 and made statutory by the SEBI Act, 1992. Its objectives are to protect investors, develop the securities market and regulate it to curb malpractices. Its functions are protective, regulatory and developmental.

Introduction

The Securities and Exchange Board of India (SEBI) was constituted in 1988 and given statutory status by the SEBI Act, 1992. It is the apex regulator of the Indian securities market (stock exchanges and the capital market). This is a frequently repeated AP Intermediate 2nd-year Commerce previous-year question, and AP's commerce syllabus here aligns with the NCERT/CBSE treatment of financial regulation.

Objectives of SEBI

1. To protect the rights and interests of investors in securities.
2. To regulate the working of stock exchanges and the securities market so that they function smoothly.
3. To prevent malpractices such as insider trading, price rigging and fraudulent and unfair trade practices.
4. To develop the securities market and promote fair dealings by issuers of securities.
5. To regulate and register intermediaries such as brokers, sub-brokers, merchant bankers and mutual funds.

Functions of SEBI

A. Protective Functions (to protect investors):

• Prohibiting insider trading.
• Checking price rigging and fraudulent and unfair trade practices.
• Undertaking investor education and awareness programmes.
• Promoting a fair code of conduct in the securities market.

B. Regulatory Functions (to regulate the market):

• Registering and regulating stock brokers, sub-brokers, merchant bankers, underwriters and other intermediaries.
• Registering and regulating mutual funds and collective investment schemes.
• Regulating takeovers and acquisitions of companies.
• Conducting inquiries and audits of stock exchanges and intermediaries.
• Framing rules, by-laws and a code of conduct for the market.

C. Development Functions (to develop the market): …