Securities & Exchange Board of India: Definition & Function

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  • 0:03 SEBI
  • 1:01 Functions
  • 3:03 Lesson Summary
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Lesson Transcript
Instructor: Morgan Gannarelli
In this lesson, we'll discuss the functions of the Securities and Exchange Board of India. We'll also outline what the Securities and Exchange Board of India is responsible for.


The Securities and Exchange Board of India (SEBI) is similar to the United States Securities and Exchange Commission. They are the governing body for financial regulations in India. The SEBI is responsible for maintaining a stable investment and financial market for India. The board was established in 1988 but not given any regulating abilities until 1992 when the Securities and Exchange Board of India Act passed. The SEBI headquarters are in Mumbai, and the board is headed by eight members.

The SEBI is a corporate structure with five departments that each have a department head. It has two advisory committees that are responsible for primary and secondary markets. These two committees advise the Securities and Exchange Board of India on regulating intermediaries, issuing of securities in the primary market, disclosure requirements of companies, any changes in legal framework, and regulating and developing the secondary stock exchange. While the committees provide advice, they cannot enforce any changes.


The SEBI utilizes three functions to meet its objectives, protective, developmental, and regulatory. The primary functions have been defined in the SEBI Preamble that states the Securities and Exchange Board of India must 'protect the interest of investors in securities and to promote the development of, and to regulate the securities market and matters connected there with or incidental there to.' Due to malpractice in the stock market, the SEBI was formed to regulate and prevent any further fraudulent activities that are not in the best interest of the investors.

Here are a few examples of some of the SEBI's functions:

  • Regulating the business of stock exchanges and other securities exchange markets
  • Registering and regulating the work of stock brokers and other intermediaries that may have an association with securities markets
  • Prohibiting fraudulent and unfair trade activities within the securities market, and
  • Prohibiting insider trading inside the securities market

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