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SEBI as a Market Regulator

The capital market of India underwent a rapid growth during the 1980s and the ever-expanding investor population and market capitalization were followed by a lot of malpractices such as price rigging, exaggerated premium, non-adherence of provisions etc. There were companies, brokers and investment consultants who were engaged in these malpractices. SEBI (Securities and Exchange Board of India) came into the picture in the same period to provide a reassurance that it is safe to transact in the security market. It was empowered adequately and was assigned the responsibility to:

  • Promote the interests of investors in securities
  • Promote the development of the securities market
  • Regulate the securities market

All the market intermediaries are registered and regulated by SEBI.

Functions & Powers of SEBI

The function of SEBI is to protect the interests of investors in securities and to promote the development of securities market and to regulate it. The three groups which constitute the market and to whom SEBI is responsive to are:

  1. Issuer of Securities
  2. Investors
  3. Market Intermediaries

The SEBI Board possess three main functions:

Quasi-judicial

Being a quasi-judicial body, SEBI can deliver judgments and order actions for all matters within the ambit of the securities market. This role of SEBI helps in keeping a check on mala fide investments, protected interests of investors and in ensuring fairness, transparency, and accountability in the securities market.

Quasi-legislative

Under Section 11 of the SEBI Act, 1992 SEBI is allowed to make rules/regulations/guidelines on issues it thinks is necessary for the protection of investors’ interests. Many regulations such as Insider Trading Regulations, Listing Obligation, and Disclosure Requirements etc. have been brought into the picture by SEBI to keep a check on malpractices.

Quasi-executive

SEBI has powers to administer its regulations and to take action against any entity violating them. It can also investigate books/document/accounts if it feels that there is a violation of any of its regulations.

Powers of SEBI

SEBI has been vested with the below powers:

  • SEBI can ask information from the stock exchanges and intermediaries regarding their business transactions for inspection, scrutiny and other purposes.
  • SEBI can impose monetary penalties/suspension on intermediaries and other participants if it found any violation.
  • SEBI is empowered to nominate three members on the governing body of every stock exchange.

We are sure this article will give you a fairly good picture of SEBI’s powers and functions alongside its role in market regulation. Do let us know in the comments section if there is any other topic you want us to cover. Wishing you all the best for your preparation!

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4 Comments

  1. Shubhi srivastava Reply

    Sir, plz cover capital market and foreign exchange plzzzzzz all the remaing topics and questions as well plz provide on ur mock in form of pdf

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