Functions of SEBI

SEBI's functions are conventionally grouped under three heads — protective, regulatory, and developmental.

Protective functions (aimed directly at safeguarding investors):

• Prohibits insider trading — trading in a company's securities by persons who possess unpublished price-sensitive information by virtue of their position (directors, employees), which gives them an unfair advantage over ordinary investors.
• Prohibits fraudulent and unfair trade practices — such as spreading misleading rumours, price rigging (artificially inflating or depressing a security's price), and making false or misleading statements to induce the sale/purchase of securities.
• Promotes fair practices and a code of conduct for all market intermediaries.
• Undertakes steps for investor education — awareness programmes to help investors understand risks and make informed decisions.

Regulatory functions (aimed at the orderly conduct of the market):

• Registration of market intermediaries — stock brokers, sub-brokers, merchant bankers, portfolio managers, and registrars, without whose SEBI registration they cannot legally operate.
• Registration and regulation of mutual funds and collective investment schemes.
• Regulation of takeovers of companies — through the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, to ensure a fair, transparent process when the control of a listed company changes hands.
• Conducting inquiries and audits of stock exchanges and intermediaries, and calling for periodic returns from them.
• Levying fees and other charges for the services it renders.
• Performing a quasi-legislative role — SEBI has the power to draft and notify rules and regulations under the Act, which have the force of law once notified.

Development functions (aimed at expanding and modernising the market):

• Training of intermediaries associated with the securities market. …