SEBI: The Guardian Of Investors

If you are an investor or someone who’s been following the stock market, you must have heard the word SEBI many times. News sources especially in the recent past have been filled with articles that come with headlines such as - "SEBI regulations", "SEBI guidelines", "SEBI has barred this company", etc. In many such trading and investment related contexts the word appears.

The work of SEBI is too vast and complicated, and general investors don't care to get into such complexities. But as its work is directly related to your money and your investment, it is important that every smart investor should at least know what role this watchdog authority plays in his/her investment.

Why Was It Established?

Securities & Exchange Board Of India (SEBI) was established in 1998 to protect investors' interest in the securities market by way of risk management. However, it became prominent only after it was empowered with the regulatory authority due to the SEBI Act of 1992. Since then it has played a pivotal role in bringing stability in the market and also restoring the faith of investors which was heavily bruised post number of scams and malpractices which had shrouded equity investment in the early 90s. SEBI’s head office is located in Mumbai's Bandra-Kurla complex and it also has various regional offices in other parts of the country.

SEBI’s Role In Equity Investment

Protects The Interest Of The Investors- The first and foremost responsibility of this monitoring body is to look after the interest of the investors. To do that SEBI keeps regular checks on all the activities of all the stock market intermediaries i.e. listed companies, company management, stock exchanges (BSE, NSC), brokerage firms, etc. All the stakeholders have to adhere to the stern code of conduct that is designed by SEBI.

Monitor Asset Management Companies (Mutual Funds) - Mutual funds, be it equity, debt of liquid, has to comply with the SEBI guidelines. The mutual fund is the best route for the investors who want to participate in equity and debt markets without getting into the day to day market activities. The role of the board here is to keep a close watch on all the Asset Management Companies (AMC) which operate mutual funds and ensure that all the dealings are fair and in the interest of the investor.

Monitor Mergers, Demergers & Acquisitions - The corporate events like mergers, demergers, and acquisitions have the potential to have a major impact on the market. In such scenarios, things like insider trading and marketing rigging become imminent. To prevent such malpractices and to secure the interest of the investors, SEBI keeps a close eye on all parties involved in important corporate activities.

Regular Audits Of All Stock Market Intermediaries - To ensure transparency and fair business practices the board regularly conducts inspections and audits of all the intermediaries i.e. stock exchanges, companies, brokerage firms, registered advisory firms, etc. It is mandatory for all these intermediaries to comply with all the guidelines issued by SEBI, failing to do so can invite severe action.

Along With Protection, SEBI Also Spearheads Investor Awareness Drives

The prime objective of SEBI is to create safe havens for the investors. In keeping with that policy, SEBI also takes it upon itself to create awareness about investment. To create a safe investment ecosystem, it conducts various seminars and workshops across the country. Workshops are conducted in the rural as well as urban regions. SEBI also reaches out to the investors on the digital platforms via digital marketing tools.

Source: SEBI: Your Investment’s Personal Bodyguard

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