SEBI, being the regulatory body consisting of nine board members ensures the protection of India’s Securities Market by utilizing its quasi-judicial and quasi-legislative power for preventing the market from any fraudulent activity. 

In this article, it is incorporated the role and power of SEBI in successfully regulating the Capital Market and aiming towards the transparency in transactions, and procuring trust of the investors.


In general terms, market means a place or an area, where buyers and sellers assemble to participate in economic agreements with each other. So, a financial market, as by the name suggests is the market where parties indulge in transactions related to financial instruments.

Securities Market is one of the variant of Financial Market, another being money market. Securities market is basically a market which provides marketing in stocks, bonds and other securities, based on demand and supply. Such an environment is essential to ease the flow of surplus household savings to consummate the capital necessity of the markets.

The Securities Market is divided into two stages, the primary market and the secondary market. Primary markets, where new securities are issued by raising money from the public. Information about the economic status is received by the issuer, through the exchange, which helps in assistance of proper evaluation, return from investors and presumption of risk. These type of securities are listed on the exchange, so, they are marketable in nature. Secondary markets are markets, where the existing, listed securities are bought and sold by the investors.




SEBI stands for The Securities and Exchange Board of India and was established on 12th April 1992, according the provisions laid in the Securities and Exchange Board of India, 1992.SEBI is the main statutory authoritative body established by the Government of India to protect the interest of the investors, to manage the working of the Security markets in India and to monitor the Indian Capital.

The headquarters of SEBI is located in Mumbai, which other regional offices at Ahmadabad, Kolkata, Chennai and Delhi.


Eventually in 1970, the securities market became very pre-eminent, as people started trading swiftly. So, within the development of capital marketing, emergence of various malpractices began, like, violation of stock exchange rules, price rigging, insider trading and other such activities. So, to control these unfair practices, government decided to construct a body to regulate the working of the Securities Market in India to gain the trust of the investors, back into this market.

Main Purpose of SEBI-

  • To provide transparency in the investing environment.

  • Create and implement laws on stock exchanges, for a proper functioning.

  • Scrutinize balance sheets of recognized stock exchanges in India.

  • Examine various books and records of financial intermediaries.

  • Prevention of companies from getting listing on any stock exchange.

  • Administering registration of stockbrokers. 

  • Observe acquisition of shares and takeover of companies.

  • Advancement in the development of securities market.

  • Keen check on to prevent any kind of fraudulent or unfair practices.


SEBI enjoys three main powers-

Quasi-Judicial- SEBI is empowered to produce judgments related to fraudulent and other malpractices within the securities market, to safeguard the interest of the investors and maintain transparency in the transactions. This is how, SEBI enjoys its quasi-judicial power.

Quasi-Executive- SEBI is authorized to execute the laws related to securities markets and can also take action towards the accused involved in unfair and other malpractices, violating the interest of the investors. It can also examine documents and account books related to the breach of regulations.

Quasi-Legislative- SEBI is inherited with the right to frame rules and regulations, needed in the favor of the investors. This power is basically practiced to prevent the interest of the shareholders from any kind of negligence. 

Although, acquiring such powers, the decisions of the SEBI, yet have to go through the Securities Appellate Tribunal and the Supreme Court of India.


SEBI executes following three types of functions-

Protective Functions-

  • It inspects the price manipulation.

  • It forbids insider trading.

  • It prevents the investors from unfair and fraudulent trade practices.

  • It stimulates towards an impartial code of conduct in the securities market.

  • It endeavors to instruct the investors about the best options for investments. 

Regulatory Functions-

  • Frames rules and regulations, for proper functioning by the brokers, underwriters and other intermediaries.

  • Leads a company’s takeover.

  • Supervises and maintains the workings of merchant bankers, share transfer agents, 

  • Oversees the audits and inquires of stock exchanges.

Development Functions-

  • Smoothens the grounding of the intermediaries.

  • It objective is to foster the activities of the stock exchange by possessing adjustable and flexuous approach.


Being the regulatory body of the India’s Securities Market, it imposes a lot of responsibilities on it, from safeguarding the interest of the investors to the execution of regulations. So, it has decided to take some steps necessary for the proper functioning in the securities market.

  • By abolishing insider trading- It being the biggest loophole in the trading sector, for making immense profits, has been regulated in 1992 by SEBI for providing transparency in the transactions.

  • Control on FIIs- Prior registration, is now mandatory for the Foreign Institutional Investors to enter into Indian Capital Markets.

  • Determination of Premium and Share Prices- SEBI has issued liberty in the hands of all the listed Indian companies to determine their premium and share prices, depending upon the applicability for all, irrespective of any discrimination.

  • Eligibility Criteria of Under-Writers- A fixed minimum asset limit for under-writers by SEBI is twenty lakhs INR and above that, SEBI also has a right to cancel the registration of an under-writer, if found under the purchase of issuance of unregistered share.

  • The control on Mutual Funds- For being a company having mutual funds, it is mandatory to have net assets worth INR five crores, with minimum 40% contribution from the promoter. From 1993, the SEBI Mutual Funds Regulation was empowered to acquire all the mutual funds of private and government sector.


Hence, it can be concluded that contribution of SEBI in regulating the India’s Securities Market is remarkable as it shows assiduous towards enacting and implementing the regulations for preserving the interest and faith of the investors into this market by preventing all sorts of fraudulent activities in every way possible.

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