Securities Exchange Board of India SEBI was set up in to regulate the functions of securities market. SEBI promotes orderly and healthy development in the stock market but initially SEBI was not able to exercise complete control over the stock market transactions. It was left as a watch dog to observe the activities but was found ineffective in regulating and controlling them.

As a result in May , SEBI was granted legal status. SEBI is a body corporate having a separate legal existence and perpetual succession. Due to these malpractices the customers started losing confidence and faith in the stock exchange. So government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India SEBI.

SEBI was set up with the main purpose of keeping a check on malpractices and protect the interest of investors.

It was set up to meet the needs of three groups. The overall objectives of SEBI are to protect the interest of investors and to promote the development of stock exchange and to regulate the activities of stock market.

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The objectives of SEBI are:. To prevent fraudulent and malpractices by having balance between self regulation of business and its statutory regulations.

Role of SEBI in Capital Market: Developments and Challenges | Corporate Law Reporter

To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc. The SEBI performs functions to meet its objectives.

To meet three objectives SEBI has three important functions. These functions are performed by SEBI to protect the interest of investor and provide safety of investment. Price rigging refers to manipulating the prices of securities with the main objective of inflating or depressing the market price of securities. SEBI prohibits such practice because this can defraud and cheat the investors.

What is the role of SEBI? – Stock Market Analysis

Insider is any person connected with the company such as directors, promoters etc. These insiders have sensitive information which affects the prices of the securities.

This information is not available to people at large but the insiders get this privileged information by working inside the company and if they use this information to make profit, then it is known as insider trading, e. This is known as insider trading. SEBI keeps a strict check when insiders are buying securities of the company and takes strict action on insider trading.

SEBI does not allow the companies to make misleading statements which are likely to induce the sale or purchase of securities by any other person. These functions are performed by the SEBI to promote and develop activities in stock exchange and increase the business in stock exchange.

Under developmental categories following functions are performed by SEBI:.

These functions are performed by SEBI to regulate the business in stock exchange. To regulate the activities of stock exchange following functions are performed:.

Its activities are divided into five departments. Each department is headed by an executive director.