What is SEBI?
SEBI is the regulator for the security Market in India. In 1988 the Securities and Exchange Board of India (SEBI) was established by the Government of India through an executive resolution.
Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market and was subsequently upgraded as a fully autonomous body on April 12, 1992 the Securities and Exchange Board Of India was constituted. It was constituted in accordance with the provisions of the Securities and Exchange Board Of India Act 1992.Chaired by C B Bhave, SEBI is headquartered in the popular business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennaiand Ahmedabad.
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as “….. to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto” Securities and Exchange Board of India (SEBI), Functions of SEBI has to be responsive to the needs of three groups, which constitute the market:
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- the issuers of securities
- the investors
- the market intermediaries.
SEBI has three functions rolled into one body quasi-legislative, quasi-judicial and quasi-executive.
It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeals process to create accountability.There is a Securities Appellate Tribunal which is a hree-member tribunal and is presently headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies directly to the Supreme Court.
To monitor and control the performance of stock exchange and derivative markets.Listing and monitoring the functioning of stock brokers, sub brokers, share transfer agents, bankers to an issue, trustees of trustdeeds, registrars to an issue, merchant bankers, underwriters, portfolio managers,investment advisers and others associated with securities markets by any means. Monitoring and Controlling the functioning of venture capital funds and mutualfunds.
Forbid unjust and dishonest trade practices in the security markets andforbid insider trading in the security market. Undertake periodic audits of stock exchanges, mutual funds, individuals and self regulatory organizations associated with the security market.
In order to interpose between issuers and investors, regulators recognize various classes of intermediaries in the capital market. Regulation through intermediaries has been found, perhaps more effective in certain spheres of activity. SEBI, over the period, ecognized many types of capital market intermediaries in India and operations during the year is reviewed in the following sections.
Invest in a scheme depending upon your investment objective and risk appetite. Note that Net Asset Value of a scheme is subject to change depending upon market conditions. Insist for a copy of the offer document/key information memorandum before investing. Note that past performance of a scheme is not indicative of future performance. Past performance of a scheme may or may not be sustained in future. Keep track of the Net Asset Value of a scheme, where you have invested, on a regular basis. Find out about the investment profile provided in portfolio disclosures which isavailable on half yearly basis.
Investing in Mutual Funds Don'ts:Do not invest in a scheme just because somebody is offering you a commission or other incentive, gifts etc. Do not get carried away by the name of the scheme/Mutual Fund. Do not fall prey to promises of unrealistic returns. Do not forget to take note of risks involved in the investment. Do not hesitate to approach concerned persons and then the appropriate authorities for any problem. Do not deal with any agent/broker dealer who is not registered with Association of Mutual Funds in India (AMFI). Avoid herd mentality while buying/selling into mutual fund schemes.
Do not leave out KYC details in your application forms. That will make the forms liable for rejection.Do not rush into making investments that do not match your risk taking appetite and investment goals. Investors should be wary of concentrating their mutual fund portfolio in one particular asset class and not diversifying acrossvarious types of scheme profiles. Dealing in Securities: Dealing in Securities Dos: Transact only through Stock Exchanges. Deal only through SEBI registered intermediaries. Complete all the required formalities of opening an account properly (Client registration, Client agreement forms etc).
Ask for and sign “Know Your Client Agreement”. Read and properly understand the risks associated with investing in securities / derivatives before undertaking transactions.Assess the risk – return profile of the investment as well as the liquidity and safety aspects before making your investment decision. Ask all relevant questions and clear your doubts with your broker before transacting. Invest based on sound reasoning after taking into account all publicly available information and on fundamentals. Give clear and unambiguous instructions to your broker / sub-broker / depository participant. Be vigilant in your transactions.
Given the benefits of trading on stock exchange it is advisable to avoid off-market transactions. Do not deal with unregistered intermediaries.Do not fall prey to promises of unrealistic returns. Do not invest on the basis of hearsay and rumors; verify before investment. Do not forget to take note of risks involved in the investment. Do not be misled by rumours circulating in the market. Do not be influenced into buying into fundamentally unsound companies (penny stocks) based on sudden spurts in trading volumes or prices or non authentic favorable looking articles / stories.
Do not follow the herd or play on momentum - it could turn against you. Do not be misled by so called hot tips. Do not try to time the market. Do not hesitate to approach the proper authorities for redressal of your doubts/grievances.
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What is SEBI?. (2018, Dec 08). Retrieved from https://phdessay.com/what-is-sebi/
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