SEBI

Role and functions of SEBI

1. Protection of investors interest:
Sebi has framed rules and regulations to protect the interest of the investors.
Sebi guidelines require the listed companies to publish quarterly, half-yearly,
yearly results of their financial performance. Such information helps the
investors whether to hold on to their investment or to dispose their holdings.
2. Guidelines on capital issue:
Sebi has framed necessary guidelines in connection with capital issues.
These guidelines are applicable to:
a) First public issue of new companies
b) First public issue by existing privately and closely held companies
c) Public issue by existing listed companies
3. Regulate working of Mutual Funds:
Sebi has laid down rules and regulations that are to be followed by all
Mutual Funds in India. Sebi may cancel the registration of mutual funds if it
fails to comply with its regulations.
4. Regulates Merchant Banking services:
Sebi has laid down regulation in respect of merchant banking activities in
India. The regulations are in respect of registration, code of conduct to be
followed, submission of half-yearly results etc. If these rules and regulations
are not followed Sebi may cancel the registration of merchant banking
services.
5. Regulates Stock Brokers activities:
Sebi has laid down regulations in respect of brokers and sub-brokers. No
broker or sub-broker can buy, sell or deal in securities without being a
registered member of Sebi. Such registration enables Sebi to regulate stock
brokers activities.
6. Portfolio Management:
Sebi has enacted regulations to regulate the working of portfolio managers.
It has laid down that no person or institution can operate as a portfolio

managers, they have to follow relevant regulations laid down by Sebi. Sebi
may cancel the registration of portfolio managers if they to comply with its
regulations.
7. Restriction on Insider trading:
Sebi restricts insider trading. Sebis regulation states that no insider
connected with the management and the employees shall either on his behalf
or on behalf of any other person deals in securities listed on any stock
exchange on the basis of any unpublished price sensitive information.
8. Regulates Takeovers and mergers:
Sebi has issued a set of guidelines to protect the interest of the investors
incase of takeovers and mergers. Sebi guidelines are to be followed by
corporations at the time of takeovers and mergers and if these guidelines are
not followed then such mergers and takeovers will be invalid.
9. Research & Publicity:
Sebi also conducts surveys in respect of investment opportunities. In 91,
Sebi along with BSE and others conducted a survey called the Survey of
Indian Shareholders. Sebi also publishes two monthly bulletins called Sebi
Market Review and Sebi Newsletters to educate the investors.
10. De-materialization of Shares:
Demat of shares has been introduced in respect of all the shares traded on
the secondary market as well as those issued to the public in the primary
market. Even bonds and debentures are traded in demat form. The advantage
of Demat trade is paperless trading and the time, money and effort
regarding the transfer of shares is minimized through electronic transfer of
shares.
The settlement cycle for all securities is shortened to reduce the scope of
undue speculation in the stock market which is possible through electronic
transfer of shares and money.