SEBI Meaning, Role, Objective, Structure and Functions

SEBI Meaning, Role, Objective, Structure and Functions

SEBI stands for Securities and Exchange Board of India. This is the authority that is appointed for regulating the financial securities in India. SEBI plays an important role in regulating the security market in India. At the initial time, SEBI was not allowed to watch the stock market. Let us see the journey of the SEBI as the regulator in the financial market. So, in this article on “SEBI Meaning, Role, Objective, Structure and Functions”.

In this, we will get to know about the brief regarding the SEBI role in India, the objective for its establishment, structure and the functions of SEBI. We will take one by one topic to understand it easily. Let’s continue with the topic ahead,

Why was SEBI formed?

Capital markets were at the emerging stage during the 1970’s and the start of 1980s as the new individuals are getting inspired in India. At the start, this started with some of the malpractices that took place like the unofficial self-styled bankers, unofficial private placements, many Act, violation of rules and regulations of the stock exchange, delay in the delivery of the shares etc. Due to this wrong malpractices took place, people started to lose their confidence in the stock market.

Then the government thought that there is a need to establish authority in the regulation of the working and to reduce this malpractice. As a result, the Government started the establishment of the Securities and Exchange Board of India. The above was the reason why the government established the body to look after the financial market in hope that the people will not lose their confidence in the market. Now, that we have seen the formation of the Securities and Exchange Board of India.

SEBI Official Website –

Roles of SEBI

The main aim of the SEBI is to give such an environment for the financial market that will bring enthusiasm in the smooth working of the securities market. The three main participants of the financial market need to be taken care of, and the list is:

  1. Issuers of Security
  2. Investor
  3. Financial Intermediaries

These are different participants of the financial and security market that need to work at each of the participants need to do their work efficiently and smoothly.

Objective of SEBI

The important objective of SEBI is to protect the interest of the investors and to promote the development of the stock exchange and regulate the activities of the stock market. Let us see the furthermore objectives of SEBI:

  1. To regulate and to make the rules for all the activities made in the stock market.
  2. The other objective is to protect the right of the investors and make sure that the investments are made by them should be safe and secure in perspective to their investment.
  3. To make the regulation and develop the code of conduct for the intermediaries that includes brokers, underwriters, etc.
  4. To remove and to prevent all the wrong malpractices and the fraudulent by making the balance between the self-regulation of the business and to maintain statutory regulations.

Functions of SEBI

The SEBI performs some functions in order to meet its objectives and they are:

1. Protective Functions

In the protective functions, the SEBI tries to protect the interest of the investor and provide them the safety towards their investment. Below are the points that are initiated in the protective functions by the SEBI:

  • It prohibits Insider Trading.
  • It checks the price rigging.
  • It also prohibits fraudulent and unfair trade practices.
  • SEBI always promotes the code of conduct in the security market and fair practices.
  • SEBI also takes the steps to make the investor educate about the market so that they made themselves able to evaluate the securities of the various companies and select the most profitable for them.

2. Developmental Functions

These developmental functions are performed by the SEBI to promote and develop the activities in the stock exchange and to increase the business in the stock exchange. For this the main pointers that the developmental functions are working on are:

  • SEBI gives and promotes the training of the intermediaries of the security market.
  • SEBI makes the steps to adopt the flexible approach for increment in the activities of the stock market.

3. Regulatory Functions

In the regulatory functions, the SEBI tries to regulate the business in the stock exchange. To regulate the activities of the stock market the regulatory functions includes,

  • SEBI has framed rules and regulations and a code of conduct to regulate the intermediaries.
  • These intermediaries have been brought by the regulatory purview and the private placement that has been more restrictive eventually.
  • SEBI regulates the working of Mutual Funds.
  • SEBI regulates the takeover of companies.
  • SEBI also conducts inquires and audits of the stock exchange.

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