Overview of SEBI

 Securities Exchange Board of India (SEBI) was established in 1988 to

regulate the functions of securities market.
 SEBI promotes orderly development in the stock market.
 SEBI was set up with the main idea to keep a check on malpractices
and protect the interest of investors.

Now, let us gain more insights into the objectives and functions of SEBI.

Objectives of SEBI

The objectives of SEBI are:

 To regulate activities in stock exchange and ensure safe investments

 To prevent fraudulent practices by striking a balance between business
and its statutory regulations

Functions of SEBI

The three main functions of SEBI are as follows:

1. Protective function
2. Developmental function

iii. Regulatory function

1. Protective functions are performed by SEBI to protect interest of

investors and provide safe investments. This entails:

 Checks on prices rigging: Price rigging refers to manipulating the

prices of securities.
 Prevents insider trading: Insider refers to directors, promoters of
the company. These people have sensitive information which they can
 use to make profit. SEBI keeps a stringent check whether insiders are
buying securities of the company.
 Prohibits fraudulent and unfair practices: SEBI does not allow
companies to make misleading statements.

2. Developmental functions are performed by the SEBI to develop

activities in stock exchange to increase the business in stock exchange.
Under this category, following functions are performed by SEBI:

 Promoting training of intermediaries of the securities market

 Promote activities of stock exchange by adopting flexible methods such
as internet trading
 Initial public offer of primary market is permitte