(B) The Promotion For The Development of The Securities Market. (C) Work For The Regulation of The Securities Market

Securities & Exchange Board of India (SEBI) – Economics Study Material & Notes
The security market in an economy is that segment of a financial market which raises Long-term
Capitalthrough instruments like shares, securities, bonds, mutual funds, debentures. This market is
known as the security market of economy.
The security market in India comprises of a Security regulator (SEBI), stock exchanges, different share
indices, brokers, FIIs,etc.
The security market has two complementary markets – Primary and secondary markets.
Primary Markets: It is a market where those instruments are traded directly between the entity raising
capital and the instrument purchasing entity.
Secondary Markets: The market where those instruments of security market are traded among the
primary instrument holders. These transactions require an institutionalized floor for trading, this
platform is known as the stock exchanges.
The regulator of Indian stock market, is Securities and Exchange Board of India(SEBI). It is working since
1988 but was granted the statutory status in 1992 by the SEBI Act of 1992.
SEBI has its headquarters located in Mumbai with regional offices in Kolkata, Chennai, New Delhi and
Ahmedabad.
Objectives of SEBI:
The Securities and Exchange Board of India has been established under the Section 3 of the SEBI Act of
1992. This act provides for the establishment of SEBI full with statutory powers for working towards the
following :
(a) The protection of interests of the investors in securities market.
(b) The promotion for the development of the securities market.
(c) Work for the regulation of the securities market.
Composition of SEBI:
The Board of Securities & Exchange Board of India (SEBI) is comprised of 9 members, excluding the
Chairman. It is managed by its members, in the following manner:
 A Chairman is nominated by the Union Government.
 2 members of SEBI, are officers from the Union Ministry of Finance.
 1 member of SEBI, is from the Reserve Bank of India.
 There are 3 whole-time members, who are nominated by the Government of India.
 There are 2 Part-time members, who are also nominated by the Government of India.
Presently, the Chairman of SEBI is U.K. Sinha.
<< Read about Heads of International organisations here >>
The Functions of SEBI:
The regulatory jurisdiction of SEBI extends over corporates(in the issuance of capital and transfer of
securities), in addition to all the intermediaries and individuals associated with the securities market.
SEBI performs the following functions to meet its objectives. These functions involve protective
measures, Developmental activity and regulatory functions.
 Registering and stock exchanges, merchant banks, mutual funds, underwriers, registrars to the
issues, Brokers, Sub-brokers, transfer agents,etc.
 Levying various fees and other charges(as 1% of the issue amount of every company issuing
shares kept by it as a caution money in the concerned stock exchange where the company is
enlisted).
 Promoting the knowledge in investor education.
 It conducts audit and Inspections of stock exchanges and their various intermediaries.
 It in involved in performing other concerned functions as may be prescribed to it from time to

time.
 It Regulates the business in stock exchanges and other securities markets in the economy.It
prohibits Insider Trading by keeping a check when insiders of a company buy securities of that
company.
 It takes strict action against insider trading.An Insider is any individual who is connected with the
company like its directors or promoters, etc. These ‘insiders’ possess sensitive information
which has potential to affect the prices of the securities in the market. However, you would
point out that such information is not available to common people, while the insiders can take
advantage of this information to make profit. This is known as Insider Trading.
 It is involved in registering and regulating the working of players in stock exchanges like stock
brokers, sub-brokers, market makers, etc.
 It Promotes as well as regulates the self-regulatory organizations also.
 SEBI prohibites the fraudulent and unfair trade practices in the securities market.
 SEBI is also interested in calling for information, undertaking inspections, conducting audits and
inquiries of the stock exchanges, intermediaries, self – regulatory organizations, mutual funds
and other persons associated with the securities market in the country.
 It keeps a check on Price-rigging by fraud investors. Price rigging is basically manipulation of the
prices of securities for inflating or deflating the market price of securities. Such practices are
harmful for the performance of market at large.
W hope this short compilation is helpful in understanding the role and functions of the Securities
Exchange Board of India (SEBI). We have included this topic in our Economics study mateial & Notes
section to help you relate the functions of SEBI with other regulators like RBI, IRDA and NABARD. You
can read about them by following the links below. We keep updating and adding new material for quick
revision regularly, you can support us by visting exampariksha regularly.

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Securities & Exchange Board of India (SEBI) – Economics Study Material & Notes

platform is known as the stock exchanges.

(a) The protection of interests of the investors in securities market.

(b) The promotion for the development of the securities market.

(c) Work for the regulation of the securities market.

 A Chairman is nominated by the Union Government.

 2 members of SEBI, are officers from the Union Ministry of Finance.

 1 member of SEBI, is from the Reserve Bank of India.

Presently, the Chairman of SEBI is U.K. Sinha.

<< Read about Heads of International organisations here >>

The Functions of SEBI:

 Promoting the knowledge in investor education.

 It in involved in performing other concerned functions as may be prescribed to it from time to

 It Promotes as well as regulates the self-regulatory organizations also.

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