Question

State any three objectives of Securities and Exchange Board of India (SEBI).

Hint:

SEBI Objectives:
1. Protect Investors.
2. Prevent Malpractices.
3. Regulate Intermediaries.

Answer 1

Concept:

• SEBI was established in 1988 (given statutory status in 1992) to regulate the functions of the securities market.

• It acts as a watchdog to protect the interests of investors and promote the development of the market.
Step 1: Protection of Investors

• The primary objective of SEBI is to protect the rights and interests of investors, particularly individual investors.

• It ensures that investors receive adequate and accurate information about companies.

• It provides a grievance redressal mechanism to handle investor complaints.

Step 2: Prevention of Malpractices

• SEBI aims to prevent trading malpractices such as insider trading, price rigging, and making misleading statements.

• By monitoring large transactions and corporate disclosures, it ensures that no person gets an unfair advantage in the market.

Step 3: Regulation of Intermediaries

• SEBI regulates the activities of intermediaries like stock brokers, sub-brokers, merchant bankers, and underwriters.

• It frames a code of conduct for these intermediaries to ensure they operate professionally and ethically.

• It registers and monitors mutual funds and collective investment schemes.