SEBI - Securities and Exchange Board of India

17 Jun, 2025

3 mins read

The Securities and Exchange Board of India (SEBI) is the regulatory body overseeing India’s securities markets. From monitoring stock exchanges to protecting investor interests, SEBI plays a crucial role in ensuring that India’s financial markets are fair, efficient, and transparent.

What is SEBI?

SEBI is a statutory regulatory body established by the Government of India to regulate and develop the securities market. It ensures that the interests of investors are protected, the market functions smoothly, and companies and intermediaries comply with regulations.

History of SEBI

SEBI was first set up in 1988 as a non-statutory body, but it gained full statutory powers through the SEBI Act, 1992, in the wake of the Harshad Mehta stock market scam. Since then, SEBI has evolved into a powerful regulator, equipped with legislative, judicial, and executive authority.

Objectives of SEBI

SEBI’s main objectives include:

Protecting investors from unfair practices
Promoting market development and healthy competition
Ensuring orderly functioning of stock and securities markets

It also works to educate investors, strengthen infrastructure, and support digital transformation in trading platforms.

Organisational Structure of SEBI

SEBI operates through a structured hierarchy:

Chairperson – Appointed by the Government of India
Board Members – Includes representatives from the Finance Ministry, RBI, and other experts
Departments – Specialised units such as market surveillance, legal, corporate finance, and investor protection

SEBI also has regional offices in key cities like Mumbai, Delhi, Chennai, and Kolkata.

Functions of SEBI

SEBI’s responsibilities fall under three broad categories:

1. Regulatory Functions

Registers and regulates intermediaries like brokers, mutual funds, and credit rating agencies
Sets rules for fair trading and prevents market manipulation

2. Developmental Functions

Promotes investor education and research
Encourages innovation and infrastructure development in the financial markets

3. Protective Functions

Prohibits fraudulent and unfair trade practices
Takes enforcement action against insider trading and violations

Structure of SEBI

SEBI is divided into various departments that oversee specific areas:

Department	Key Focus
Market Regulation	Exchanges, trading systems
Legal Affairs	Compliance, disputes, enforcement
Corporate Finance	IPOs, rights issues, company filings
Surveillance	Monitoring market movements and anomalies
Investor Assistance	Handling complaints via SCORES portal

Each department is led by an executive director and functions under SEBI’s board.

Powers of SEBI

SEBI enjoys broad powers to maintain control over the securities market:

Legislative Power – Can frame regulations and guidelines
Judicial Power – Can conduct hearings and pass judgments
Executive Power – Can investigate and impose penalties

These powers enable SEBI to take swift action to maintain market stability and investor confidence.

SEBI’s Role in the Stock Market

SEBI plays a vital role in the Indian financial ecosystem:

Ensures disclosure and transparency from listed companies
Prevents insider trading and manipulative practices
Regulates intermediaries like stock brokers, custodians, and depositories
Approves public issues, buybacks, and delistings
Protects small investors through complaint redressal and education

By overseeing every layer of market activity, SEBI builds investor trust and promotes fair participation.

Conclusion

SEBI is the watchdog of India’s financial markets. With its balanced approach to regulation, development, and protection, SEBI ensures that markets function smoothly and efficiently. Whether you're a new investor or an experienced trader, understanding SEBI’s role helps you make more informed and secure decisions in the Indian securities landscape.