SEBI: Indian Financial Market Regulator…!!

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SEBI- Indian Financial Market Regulator

The Indian economy has shown unprecedented growth in the last three decades. The capital market started emerging as the new sensation in India during the last three decades. However, with an increase in the popularity of the stock market, several malpractices also started rising like price rigging, noncompliance with the provisions of the companies Act, insider trading, a delay in making delivery of shares and many other issues. Sooner, the Indian Government realized the need for establishing an authority to reduce such issues and regulate the working of the Indian securities market. 

SEBI (Securities and Exchange Board of India) was established in the year 1988 as a non-statutory body for regulating the securities market in India and given due powers on 30th January 1992 through SEBI Act 1992 being passed by the Indian Parliament. Afterwards, it becomes an autonomous body to control the entire activity of the stock market of the country. The prime role of SEBI is to protect the interests of investors and traders in the Indian stock market. To achieve its objectives, SEBI takes care of three most important financial market participants:  

  • Financial Intermediaries: They act as a middle man between two parties in a financial transaction. It may be categorized into two parts such as institutional or non-institutional.  Banking institutions and NBFC can be categorized into organized sector. While Indigenous bankers are treated as non-institutional or unorganized sector. 
  • Issuer of securities: These are companies listed on the stock exchange which raises the funds through the issue of shares. It makes sure that the issue of IPO and FPO take place in a transparent way.  
  • Protection of trader and investor interest:  SEBI is responsible for ensuring that the trader or investor doesn’t become the victim of any stock market manipulation or fraud.

As Indian capital gets matured with time, so does the evaluation of SEBI. It has gone through major reforms to facilitate and protect the investor interest.   

  • Control over Issue of Capital: In the interest of issuers, SEBI issues Disclosure and Investor protection guideline. This allows issuers to comply with the eligibility criteria to issue securities at market determined rates. 
  • Screen based Trading: A major initiative taken by the SEBI to increase the presence of capital market among domestic markets through launching of fully automated Screen based Trading. So, whenever a member can punch computer quantities of securities and the prices at which he likes to transact, and the transaction is executed as soon as it finds a sale or buy order from a counter party. It enabled market participants to see the full market in real time, making the market transparent.  
  • Settlement Guarantee:  SEBI has introduced a variety of measures to address the risk in the market. One of the key steps in this direction was setting up of Trade and settlement guarantee funds to guarantee the settlement of trades irrespective of default by brokers. The exchanges/ clearing corporations monitors the position of the broker on real time basis. 

Recently SEBI through several trials and errors has managed to develop and streamline its equity and commodities market. It is also considering mandating, beginning with large corporate to meet about one fourth of their financial needs from the debt market. It now looks to develop and deepen its corporate bond proposal through wider consultations. Being the torchbearer of the capital markets, SEBI has maintained higher regulatory standards as well as demonstrating the depth and maturity of the Indian capital markets over the years. 


*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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