Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET5 Marks
Question
Explain in brief the functions of $SEBI.$
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Answer
Introduction:
In $1942$ on $30^{th}$ January, statutory body of $SEBI ($Security Exchange Board of India$)$ come into existence under security exchange board of India act $1942.$
Its head office is in India. Its regional offices are at Kolkata, Delhi and Chennai.
Objectives of $SEBI$ are as under:
To protect economic interest of investors.
To encourage the development of security market in India.
To regulate all security markets in India.
Function of $SEBI :$
To regulate the business in share market :
$SEBI$ control the business carried out in share market.
Thus, $SEBI$ regulates the operation of share market.
Protection of interest of the investors :
Chief function of $SEBI$ is to protect the interest of investors who have invested in securities.
It makes intermediaries follow prescribed norms, rules and regulations.
Registration and regulation of intermediaries :
$SEBI$ regulates and registers intermediaries working in share market such as merchant banker, share broker, subs broker registrar of security etc.
It organizes training for intermediaries too.
Registration and regulation of mutual fund :
$SEBI$ regulates and registers in mutual funds.
It monitors their working.
$SEBI$ has determined specific norms for them.
It monitors whether they are obeyed by mutual funds.
To prevent fraudulent trade :
$SEBI$ takes necessary measures to prevent fraud in security trading.
To cancel registration of brokers :
$SEBI$ cancels registration of the broker who does not follow the prescribed rules of $SEBI$ and fails to provide necessary information to $SEBI.$
To regulate merger and takeover of companies :
$SEBI$ monitors takeover and merger of the companies.
$SEBI$ has issued guidelines regarding merger and takeover.
It monitors the interest of investors.
So merger and take over does not take place at the risk of investors.
Guidelines related to public issues :
$SEBI$ issues separate guide lines for the company entering for the first time in capital market and for the company that does exist and comes in market for capital.
Self – regulation :
$SEBI$ is actively functioning for self-regulation obeyed by intermediaries.
It encourage intermediaries to form their unions.
To maintain efficiency of stock exchange :
$SEBI$ preserves efficiency and stability of the share market through various types of regulation, rules, and guidelines.
Inspection of books :
If required, $SEBI$ can inspect and inquire and audit the account of intermediaries.
Guidelines :
$SEBI$ time to time issues guidelines regarding share brokers, sub-brokers, merchant banker, trustee of debenture, buy back securities of the company etc.
To obtain annual ans periodical reports :
$SEBI$ obtains the reports of the activities of the share markets.
It obtains information in the form of ledger.
Research work :
$SEBI$ undertakes research work with a view to performing various functions effectively.
Conclusion :
Chief function of $SEBI$ is to monitor the activities of share markets, whether they are carried out as per specified rules and regulations or not.
It’s function is to cancel fraudulent brokers and to protect the interest of the investors.
Whenever required, $SEBI$ issues guidelines related to primary market and enforces strictly in its prescribed regulations.
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