FUNCTIONS OF SEBI :
(1) To protect the interests of investors through proper education and guidance as
regards their investment in securities. For this, SEBI has made rules and regulation
to be followed by the financial intermediaries such as brokers, issuing companies,
etc. SEBI looks after the complaints received from investors for fair settlement. It also
issues notifications and booklets for the information, guidance and protection of small
investors.
(2) To regulate and control the business on stock exchanges and other security markets.
For this, SEBI keeps supervision on brokers. Registration of brokers and sub-brokers
is made compulsory and they are expected to follow certain rules and regulations.
This checks their unfair practices. Effective control is also maintained by SEBI on the
working of stock exchanges on healthy lines.
(3) To make registration and to regulate the functioning of intermediaries such as stock
brokers, sub-brokers, share transfer agents, merchant bankers and other
intermediaries operating on the securities market. In addition, to provide suitable
training to intermediaries. This function is useful for healthy atmosphere on the stock
exchanges and for the protection of small investors. SEBI desires to create a sense
of confidence among investors as regards the working of Indian stock exchanges.
(4) To register and regulate the working of mutual funds including UTI. SEBI has made
rules and regulations to be followed by mutual funds. The purpose is to maintain
effective supervision on their operations and avoid their unfair and anti-investor
activities.
(5) To promote self-regulatory organisations of intermediaries. SEBI is given wide
statutory powers. However, self regulation is better than external regulation. Here,
the function of SEBI is to encourage intermediaries to form their professional
associations and control undesirable activities of their members. It is for self
discipline and self regulation. However, SEBI is a powerful regulatory body and can
use its powers when required for protection of small investors.
(6) To regulate mergers, takeovers and acquisitions of companies in order to protect the
interest of investors. For this, SEBI has issued suitable guidelines so that such
mergers/takeovers will not be at the cost of small investors and that their interest is
protected.
(7) To conduct surveys regarding investment opportunities and to give suitable publicity
to the same. This academic function is useful for the guidance of investors. This will
enable investors to invest their funds in a safe and profitable manner.
(8) To prohibit fraudulent and unfair practices of intermediaries operating on securities
markets. SEBI is not for interfering in the normal working of these intermediaries. Its
function is to regulate and control their objectional practices which may harm the
investors and healthy growth of capital market.
(9) To issue guidelines to companies regarding capital issues. Separate guidelines are
prepared for first public issue of new companies, for public issue by existing listed
companies and for first public issue by existing private companies. This function has
special significance in regard to issuing companies and investors.
(10) To conduct inspection, inquiries and audits of stock exchanges, intermediaries and
self regulating organisations and to take suitable remedial measures wherever
necessary. This function is undertaken for orderly working of stock exchanges and
intermediaries.
(11) To restrict insider trading activity through suitable measures. This avoids undesirable
activities of brokers and securities scams.
(12) To perform such functions as may be assigned/delegated to it by the Central
Government from time to time.
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