Securities and Exchange Board of India (SEBI)

• SEBI (Securities and Exchange Board of India) is the regulator of the securities market in India.
• It was established by the Government of India in April 1988.
• Initially, SEBI functioned as an administrative (non-statutory) body.
• It became a statutory body in 1992 under the SEBI Act, 1992.
• The affairs of SEBI are managed by a Board of Directors.
• The head office of SEBI is located in Mumbai.

• SEBI regulates, supervises and promotes the securities market in India.
• It regulates stock exchanges, companies issuing securities and various market intermediaries.
• It protects the interests of investors in both new and second-hand securities.
• SEBI acts as the watchdog of the Indian securities market by ensuring fair and transparent market practices.

• SEBI regulates stock exchanges and securities markets to ensure their orderly and efficient functioning.
• It protects the rights and interests of investors and encourages savings to flow into the securities market.
• It prevents unfair trade practices, insider trading and other market malpractices.
• It develops and enforces a code of conduct for intermediaries such as brokers and merchant bankers.

A. Protective Functions

• SEBI prohibits fraudulent and unfair trade practices such as misleading statements, price rigging and market manipulation.
• It controls insider trading and imposes penalties.
• It protects investors' interests.
• It promotes fair trade practices and a code of conduct in the securities market.

B. Developmental Functions

• SEBI provides training to securities market intermediaries.
• It conducts research and publishes useful market information.
• It educates investors about the securities market.
• It promotes fair practices through guidelines.
• It encourages capital market development by allowing activities such as Internet trading and IPOs.

C. Regulatory Functions

• SEBI regulates stock exchanges through rules and regulations.
• It registers and regulates intermediaries, mutual funds and collective investment schemes.
• It regulates takeover bids and other market activities.
• It conducts inspections, enquiries and audits, and calls for information.
• It levies fees under the SEBI Act.
• It prohibits fraudulent trade practices and insider trading.

• A stock exchange is an organised market where listed securities are bought and sold during specified trading hours.
• It assists, regulates and controls the trading of securities.
• The two major stock exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

• Stock brokers are registered members of stock exchanges.
• Investors cannot buy or sell securities directly on a stock exchange.
• Stock brokers act as intermediaries between buyers and sellers of securities.

• Merchant bankers are financial institutions that help companies raise capital by issuing shares, debentures and other securities.
• They advise companies on the size of the issue, preparation of the prospectus, allotment of securities and publicity.
• Examples include IDBI, ICICI, IFCI and SBI Caps.

• Depositories maintain investors' securities in electronic (demat) form.
• The two major depositories in India are NSDL and CDSL.
• They provide their services through Depository Participants (DPs).

Demat Account Process

• The investor opens a demat account with a DP and submits the Dematerialisation Request Form (DRF) along with share certificates.
• The company verifies the request and informs the depository.
• The depository confirms the request to the DP, who credits the investor's demat account.
• The investor receives a statement after each transaction.

Benefits of the Depository System

• Eliminates the risk of loss, damage and bad delivery of share certificates.
• Reduces paperwork, delays, transfer deeds and stamp duty.
• Enables immediate transfer of ownership.
• Improves the liquidity of investments.

• A mutual fund is a trust that collects money from investors by issuing units and invests the money in securities.
• Mutual funds operate according to SEBI regulations.
• The Unit Trust of India (UTI) is the oldest mutual fund in India.

Types of Schemes

• Open-ended schemes allow investors to enter and exit at any time.
• Close-ended schemes have a fixed maturity period.
• Other schemes include Income Funds, Growth Funds and Balanced Funds.

Benefits

• Mutual funds help investors diversify investment risk.
• They provide liquidity and professional fund management.
• They offer convenience and certain tax benefits.
• They act as important financial intermediaries under SEBI's regulation.

• SEBI was established in 1988 and became a statutory body in 1992 under the SEBI Act, 1992.
• SEBI regulates, supervises and promotes the securities market while protecting investors' interests.
• The main objectives of SEBI are regulation, investor protection, prevention of malpractices and enforcement of a code of conduct.
• SEBI performs three major functions: Protective, Developmental and Regulatory.
• The major intermediaries regulated by SEBI are stock exchanges, stock brokers, merchant bankers, depositories, credit rating agencies and mutual funds.
• The two major depositories in India are NSDL and CDSL, while the major stock exchanges are BSE and NSE.
• The leading credit rating agencies are CRISIL and ICRA, and the oldest mutual fund in India is UTI.