Q.Explain SEBI as the regulator of the capital market. State its objectives and functions.

A capital market open to millions of ordinary investors needs a single, statutory watchdog, and SEBI is that body — its objectives explain WHY it exists, its functions explain WHAT it actually does.

The Securities and Exchange Board of India (SEBI) is the statutory regulatory authority for the securities (capital) market in India, originally set up in 1988 as a non-statutory body and given full statutory powers under the SEBI Act, 1992. It governs every stage of a security's life — from a company's public issue in the primary market, through its trading in the secondary market, to the conduct of every intermediary involved.

SEBI's objectives, set out in the preamble to the SEBI Act, 1992, are threefold: to protect the interests of investors in securities, to promote the development of the securities market, and to regulate the securities market — objectives deliberately balanced against one another, since protection pursued alone could over-restrict the market, while development pursued without protection or regulation could expose investors to malpractice. …

Students frequently confuse SEBI's role with the RBI's, since both are financial regulators — the distinguishing fact to state clearly is that SEBI regulates the SECURITIES/CAPITAL market, while the RBI regulates banking and the money market. Li …