Stock market is a role of sebi in controlling the security markets provide liquidity of exchange which provides over the counter services for stock brokers and traders to trade stocks, bonds, and other securities. The following pictures give the glimpses of stock exchanges in India. First picture is of Bombay stock exchange, second is of National stock exchange and third picture shows trading taking place in one of the exchanges. SEBI regulates not only the securities market but the entire capital market.
The definitions lead us to following features of Stock Exchange: Functions of Stock Exchange. Stock exchanges provide ready market continuously where securities are easily bought and sold. Because of the liquidity that it provides, it is able to attract investors who have surplus funds even for shorter duration.
Stock exchanges are the great mobilizers of savings. Through its efforts the surplus savings of small role of sebi in controlling the security markets provide liquidity big individual investors, institutional investors are made available to the industrial and commercial undertakings. The forces of demand and supply determine the price of securities at stock exchanges. The prices at which the securities are traded are transmitted to the public. Investors can keep themselves updated of current prices.
Barometer of Business Conditions. Booms and depressions are quickly reflected by stock exchanges. They are helpful in Capital Formation in the economy. They induce people to save more.
As every movement regarding higher returns are known to all investors, they are inspired to invest in higher-yielding securities. Stock exchanges act as a leveler of prices of securities which are dealt by speculators. Speculators buy when they expect rise in prices. When the prices are high and they anticipate fall in prices, they sell more and this helps in further hike in prices.
Thus, this acts as a shock absorber. Investors make investments only after careful assessment of relative securities, before investing in any of them. This kind of feel they get from the behavior of securities in stock market.
They can pick or choose from role of sebi in controlling the security markets provide liquidity information available from stock market. There are strict regulations for securities before allowing them to be in the stock exchanges. Over-trading, illegitimate speculation are checked wherever required. Therefore, stock exchanges safeguard the interest of investors.
Full information of listed companies. Interesting facts about Bombay Stock Exchange. Role of Stock Exchange. There has been phenomenal increase in the number of enterprises coming up in our country especially after reforms. As the numbers of investors are growing, the role of stock-exchanges becomes all the more important.
Stock exchange is called the Citadel of Capital market. All the activities of individual and institutional investors are done through stock exchanges. It facilitates the transfer of flow of surplus savings to the profitable channels where they are needed.
Stock exchange is an important channel to make possible capital formation. It mobilizes savings from public to invest in corporate sector. Investment in safer securities and higher returns encourage them to save more, which helps in capital formation. The stock exchange is also an instrument for economic development.
The corporate sector depends upon the stock exchanges for raising funds from the public by issuing securities and receiving deposits.
The trading in stock exchange acts as pulse of economic condition of business in the economy. Stock exchange protects the interests of investors. They ensure fair dealing to investors by not letting the brokers cheat the investors.
The rules and regulations are in place to deal in case of disputes and complaints of injustice. Stock exchanges role of sebi in controlling the security markets provide liquidity useful information to investors which help them to make investment decision. It provides liquidity to investors as it allows continuous market for securities.
Daily quotations of scrip provide guide to investors. Securities can be sold or bought and can be used as collateral for loans. It also conducts investor role of sebi in controlling the security markets provide liquidity and training programme. The investors are saved from the risk of investing in unsound companies.
A company whose shares are dealt in a stock exchange enjoys good reputation in the capital market. This also increases their marketability. Investors get to know other securities and invest in them. This also increases their demand. New companies get the support from the stock exchange. From the fluctuations in their quotations, they come to know the intensity of their demand.
It facilitates capital formation and creates the environment for savings and investment. It makes available long term capital for large firms. This helps the economic growth of the country.
The flow of capital from the country and abroad gets canalized through stock exchanges. Investment from less profitable units are withdrawn and directed towards most profitable channels.
Government securities issued by RBI are also traded through stock exchanges. Government too depends on stock exchange for raising loans. SEBI was established on April 12, but it became powerful since only. The SEBI is a body of six members comprising the chairman, two members from Ministries of Central Government dealing with finance and law, two from professionals who have experience or special knowledge relating to securities market, and one from the RBI.
It is important to mention here that SEBI regulates the entire capital market covering primary and secondary market, financial institutions, venture capital, depositories, derivatives, mutual funds, mergers, takeovers and so on.
Securities and Exchange Board of India - Genesis. There were widespread reforms in the Indian Economy in the year It was necessary to protect the interests of retail and small investors, as there were many dubious companies without any real plans were trying to take role of sebi in controlling the security markets provide liquidity by raising money by issuing shares, which vanished without from market without leaving any trace.
These fly-by-night companies assumed alarming proportions and the grievances of retail investors increased significantly. The investors sought the Government GOI for addressing their problem. As there were no suitable penal provisions in place, GOI was helpless in solving the retail investors' grievances in such large volumes. Hence, the Government strengthened already established in Securities and Exchange Board of India SEBI as a supervisory body to regulate and promote security markets since the year The overall objectives are given in its preamble.
It also facilitates efficient mobilization and allocation of resources through securities markets and aims to stimulate healthy competition. SEBI keeps providing confidence to its investors through adequate, accurate and authentic information on continuous basis. It provides a market place to issuing companies in which they can raise funds confidently in an easy, fair and efficient manner.
It can frame or issue rules, regulations, directives, guidelines, norms in respect of both primary and secondary markets, intermediaries and certain financial institutions. IT has powers to regulate depositories and participants, custodians, debenture trustees, trust deeds, merchant bankers, mutual funds, portfolio managers, stock brokers, underwriters, bankers to issues, any such other intermediaries who may be associated with the securities market in any manner.
SEBI is empowered to prohibit fraudulent and unfair trade practices relating to securities market. It has the powers to promote investors education and training of intermediaries of securities market. It can prohibit insider training in securities. It regulates the stock markets and other securities markets: New Issues, Listing agreements, corporate disclosure by listed companies and mutual funds.
It discourages fraudulent and unfair trade practices and controls insider trading. At the same time it regulates substantial acquisition of shares and takeover of companies. There was need to develop and regulate the financial services sector in order to meet the financial needs of corporate sector and to develop confident environment where investors interest are protected as role of sebi in controlling the security markets provide liquidity been discussed earlier.
Since role of sebi in controlling the security markets provide liquidity enactment of the SEBI Act infinancial institution agencies and market intermediaries mentioned above are now being governed by the guidelines, rules and regulations notified by the SEBI from time to time. Though the name of this body suggests that its role is limited to securities market, it has assumed the status of an umbrella watch dog body over the entire financial services sector of the Indian economy.
SEBI has powers to ensure fair practices by all those engaged in the investment business like stock brokers, jobbers, unit trust managers, life insurance agents, pension fund managers, advertising and financial consultancy firms. SEBI, thus, is the managers of financial services. SEBI has played a key role in the smooth functioning and growth of capital market and protection of investors. It maintains registers of brokers and sub-brokers by stock exchanges.
It regulates and controls mutual funds and merchant bankers. Insider trading is checked. It has introduced stock-invest scheme to eliminate delayed refunds. It issues guidelines for disclosure and investor protection. Further it issues of guidelines for the governing boards of stock exchanges.
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