Security and Exchange Board of India abbreviated as SEBI was established in 1988 as a non-statutory body to regulate Indian security market. Subsequently in the year 1992 more powers and authorities were entrusted to SEBI by Govt. of India for independent functioning as an autonomous body in order to regulate the security market.
Main objectives of SEBI in Indian security market:
• Development of functions in securities market in India.
• To protect the interest of investors with necessary guidance in securities market.
• Formulate rules and regulations for the securities market in India.
• Settlement of investors grievances in securities market.
Functions of SEBI to control stock market:
The main functions of Security and Exchange Board of India is to introduce some important regulatory measures, market registration norms with eligibility criteria, code of conduct for intermediaries such as issue bankers, merchant bankers, brokers, sub-brokers, registrars, portfolio managers, credit rating agencies and others connected to securities market.
In order to make the securities market safe and transparent to investors SEBI has also introduced some bye-laws, risk identification and risk management systems for clearing houses of stock exchanges under its control.
Al these above regulatory actions introduced by SEBI have facilitate the following functions in stock market:
• Helps to regulate capital market.
• Monitor and checks trading of all securities in stock market.
• Checks any types of malpractices in securities market.
• Educate investors in securities market proving necessary guide lines.
• Control and regulate stock brokers and sub-brokers in securities market to maintain transparencies in trading.
Another vital function of SEBI is to approve trading of stock indices in 2000 such as S&P, CNX Nifty and Sensex as a convenient and effective product in order to ensure the following functions in Indian securities:
• To monitor the stock market behavior.
• To benchmark portfolio performance.
• Used in derivative instruments such as index futures and options.
• Acts as passive fund management in Index funds.