MS 44 IGNOU MBA Solved Assignment Discuss the objectives and functions of Securities and Exchange

Discuss the objectives and functions of Securities and Exchange Board of India. 

Ans :-

       SEBI is the primary governing/regulatory body for the securities market in India. All transactions in the securities market in India are governed & regulated by SEBI. 

The main objectives of SEBI are:

(1) Regulation of Stock Exchanges:

    The first objective of SEBI is to regulate stock exchanges so that efficient services may

be provided to all the parties operating there.

(2) Protection to the Investors:

The capital market is meaningless in the absence of the investors. Therefore, it is important

to protect the interests of the investors.The protection of the interests of the investors means

protecting them from the wrong information given by the companies in their prospectus,

reducing the risk of delivery and payment, etc. Hence, the foremost objective of the SEBI is

to provide security to the investors.

(3) Checking the Insider Trading:

         Insider trading means the buying and selling of securities by those people’s directors

Promoters, etc. who have some secret information about the company and who wish to take

advantage of this secret information.This hurts the interests of the general investors. It was

very essential to check this tendency. Many steps have been taken to check inside trading

through the medium of the SEBI.

(4) Control over Brokers:

It is important to keep an eye on the activities of the brokers and other middlemen in order to control the capital market. To have a control over them, it was necessary to establish the SEBI.

Function :

         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. 

        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 dentification and risk management systems for clearing

houses of stock exchanges under its control.

          All 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.

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.

The SEBI Governs the following

1. New Issues (Initial Public Offering or IPO)
2. Listing agreement of companies with Stock Exchanges
3. Trading Mechanisms
4. Investor Protection
5. Corporate disclosure by listed companies etc.

The SEBI is headquartered in Mumbai, India and has regional offices in the 4 metros.

The reason for creation of SEBI is to take care of these three group of people.

1. The Issuers of Securities (The companies)
2. The Investors (Us)
3. The Market Intermediaries (The brokers, DEMAT providers etc)