Last Updated: Apr 18, 2024 Value Broking 9 Mins 2.5K
role of sebi

SEBI is the regulatory body in Indian securities where order maintenance will be a core responsibility. The other main function of the training is to secure investors’ rights and to keep away from not only unfair but also unlawful trading activities in securities. SEBI is an organisation that regulates market participants, among them, brokers, merchant banks, and other intermediaries.SEBI, founded on February 21,1992, is a self-regulatory body with statutory powers. With its headquarters at Mumbai – Maharashtra, SEBI holds the office of the regulator that protects the stock market, while guaranteeing the appropriate regulatory measures. To this effect, SEBI has regional offices spread across the Indian subcontinent, on whose strength SEBI functions as a key regulator in the country’s capital market, protecting its integrity, order, and development.

Role of SEBI in the Stock Exchange

Here are the roles of SEBI in the Stock Exchange: 

Regulatory Role: 

SEBI that governs as a regulator of the financial market and belongs to Securities and Exchange Board of India (SEBI) is the one to be fulfilled by this purpose. In short, it advocates for investors’ rights and gives room for fair and transparent transactions on the securities market. SEBI regulates various market players, issuers of securities included, and checks the players are conforming to the stipulated provisions phased in for them. 

Supervisory Role: 

SEBI is known for its strict dedication to keeping the securities market in India in complete control with observance of the regulations to the fullest. Continuous surveillance, monitoring and investigation of malpractices together with implementations of standards for market integrity are such enforcement measures used for ensuring market integrity. 

Developmental Role: 

SEBI performs a significant role which is market development. It even creates a favorable environment towards securities market growth by attracting innovations, international investment, investor education, upgrading market infrastructure and technology. 

Investor Protection Role: 

SEBI believes investor protection being of crucial importance and that company disclosures are of high accuracy and that insider trading is prevented as well as laws are enforced. It lay its emphasis on educating investors about the risks, provision of grievance redressal mechanism, and taking an action against the regulatory breaches. 

Enforcement Role: 

SEBI execures its power on regulating the entities by the methods of punishments such as fines, trials, and suspending registrations of the violators. This function investigates and answers any instances of insider trading and other fraudulent activities.

SEBI’s Functions and Responsibilities:

Market Development: 

Among the operations of SEBI, there are the ones, such as introducing new products and relevant measures, like equity derivatives, short-selling, and algorithmic trading, targeted to promote the development of India’s securities’ market. Moreover, to facilitate listings by the start-ups and small and medium enterprises, existing regulations are being relaxed that enhance market depth and appeal. 

Promoting Transparency and Disclosure: 

SEBI stipulates that the listed companies by the end shall give away the accuracy and timely information that is in order with listing agreements and that is capable of meeting the disclosure requirements. This regulation adequately scans investors with crucial information for the purposeful choices, thus contributing to the openness of the market. 

Enhancing Corporate Governance: 

SEBI, as a governing body, puts great emphasis on the establishment of the disciplined corporate management principles. It requires regulatory frameworks to be put in place with regard to independent director appointments, audit committees, and governance structures, ultimately strengthening transparency and corporate responsibility in the process, to the benefit of investors. 

Regulation of Mutual Funds: 

SEBI supervises the establishment of, as well as the registration and the functioning of mutual funds in compliance with the predetermined set of rules. It monitors the progress of workers’ performance all the time and changes it to purpose if there is no compliance.

Regulation of Credit Rating Agencies: 

The Central Securities Commission is responsible for the regulation of credit ratings agencies to improve their registration, operational procedures and behavior. The organization keeps watch on their progress through the actions taken by SEBI against non-compliance with regulations. 

Regulation of Insider Trading: 

The fair trading regime is controlled by SEBI imposing various rules regarding insider trading and monitoring against illegal trading based on confidential information. Ensuring fairness among all parties involved requires the strict punishment of those who breach the rules of the market. 

Promoting Investor Education:

Realizing the crucial role of investor empowerment, SEBI boosts awareness amongst the investors on the risks of the market, regulations and the channels of grievance redressal These activities build investor confidence and retail investor access to the securities market. 

Regulation of Stock Exchanges: 

SEBI holds stock exchanges accountable and guarantees that they comply with the guidelines related to their registration, operation, and conduct. SEBI examines how different entities conduct their business and ensure that there is market efficiency by instituting suitable actions.

Regulation of Foreign Investments:

Foreign investments in the securities market of India are regulated by SEBI through the procedure of registration, operations and conduct by addressing the conditions. Performance of foreign investors is monitored by SEBI. There is compliance with all the existing regulations, and SEBI also works to let the world know about transparent foreign investments.

Why SEBI? Necessity for a Regulatory Body

SEBI, formation of which was a result of a stable period in the Indian stock market, followed. In those days the market was full of fraudulence which was done unlawfully by means of illegal private placement of People’s shares transactions towards the insiders, non-compliance with important provisions of Companies Act. For this reason, SEBI was established to redress these issues and to make sure that the market is allowed to run smoothly while investors’ interests would be protected.

Structure of SEBI

  • SEBI came into existence due to the prevailing complex market situation of India’s stock exchange.
  • Among the population of the 70s-80s years, malfeasance existed in the form of financial offences.
  • These forms of information like that, seem to be typecast as not acting as administration officials, making stock trades in family or friendship circles or just not following the law of corporations.
  • Instant requirement to create effective regulations and involving a marketplace controlling committee carry out their function smoothly led to the finding of SEBI authority.
  • The main function of SEBI was to oversee the transparency that has to be maintained, safety of the working environment and for the benefits for the investors in the country.

SEBI Notifications

SEBI is frequently in compliance for the dissemination of the market notifications related to the changes, amendments, and new regulations. These announcements are also crucial in the waste management sector since they highlight the prevailing situation in the regulatory environment, disseminating the information to market entities and investors.

Listing Requirements for Listed Companies

SEBI provides an exhaustive list of corporate governance rules which a company must generally follow at the time of listing. These stipulations include specifications by the world-wide standards in reference to financial performance, the lowest percentage of public shareholding which must, in any form, be met the corporate governance requirements. Companies who want to operate on the exchange must adhere to these regulations; otherwise they must abandon the exchange.

SEBI Guidelines for Investors in the Stock Market

  • Dealing with Listed Companies: Investors are directed to the projects of those enterprises listed in Stock Exchanges and to be known by the public and having shares open for trading.
  • Compliance Documents: In their application besides holding shares from the concerned stock market, applicants are also required to possess mandatory records/documents like PAN (Permanent Account Number) or TIN(Taxpayer Identification Number) and Aadhaar (identification number).
  • Avoidance of Grey Market: You have to keep distance from this type of market where vendors use platforms operating on a peer-to-peer principle.
  • Active Demat Account: The compliance to using Demat for electronic transactions is a mandatory criteria for all traders for they keep the securities in place and safely.
  • Eligibility Age and KYC Requirements: Investors must have the age of 18 at least as well as their KYC ( know your customer) document and be real participants of the securities market.
  • Minimum Trading Capital: Investors need to be sure that the minimum capital they make available to buy stocks is not less than Rs 2 00 000 so that they can make orderly and good marketing transactions.

SEBI Notifications: Regulatory Oversight

Securities and Exchange Board of India ( SEBI ) is a SEBI Notification issuing body for the securities market of India. The SEBI is the mutilator of SEBI notifications for diverse purposes, among which is to control the Indian securities market.

SEBI notification is brought out for a variety of reasons and out of all those regulations, one of the most important ones is to administer the securities market of India properly. For SEBI, the decision-making agency, SEBI implements notifications and by-laws that borrows from SEBI’s regulations. TThe securities market of India is monitored/overseen by the corporate body, Securities and Exchange Board of India. An act named “Securities and Exchange Board of India (SEBI) Act, 1992” was actually the one which gave the freedom to the institution to be established in 1988.

It is imperative that SEBI guarantees that the Indian securities markets are not only reasonable but also transparent. All the companies that are listed will go through this circular and receive it from SEBI.


SEBI’s foundation turn out to be the most important in the formation of the pattern of the new Indian market. SEBI plays a vital role to make the market a wholesome, reliable and investor friendly place the investors can trust through its developing functions. The SEBI still stands foursquare in the Indian security market and is a key pillar of the entire market by safeguarding investor interests, preventing unemployment, and regulating market intermediaries.

Frequently Asked Questions (FAQs)

The responsibilities of SEBI include the regulation of such securities as stock, bond, derivatives, and funds of mutual clients in the Indian market providing a system that ensures compliance with regulations for dealing in a fair and transparent way.

SEBI draws a line for insider trading through the enforcement of stringent regulations, observatory of market activities for suspicious dealings, surveillance and investigations and finally deterrence through penalizing the unethical use of insider knowledge.

SEBI is looking into IPOs by doing thorough checking of disclosures, ensuring also the transparency, and protection of investors. It orders us to follow the rules, passing the prospectus cards, and looking after the post-listing activities which are regulated.

SEBI regulates Foreign Investments in India by laying down the rules which cover Registrations, Operation, and Support to Foreign investors. It also makes sure to comply, which supports the foreign investment transparency and compliance.