An introduction to the Indian stock market regulator

3 mins read
by Angel One

Did it ever cross your mind who monitors the stock market? As a well-informed trader or investor, you should know who governs the stock market in India. This will help you in case you ever need to address a grievance, check the authenticity of any market intermediary or institution, etc. Let’s get to know the Indian Stock Market Regulator a little better – Say hello to SEBI (The Securities and Exchange Board of India)!

The need to regulate the Indian stock market

Below are some of the points that highlight the importance of having a market regulator:

  • To safeguard the interest of investors against frauds/scams

  • To regulate the ever-growing stock market

  • To bring discipline and transparency in the market

About SEBI: The regulator

SEBI was established on 12-April-1988 and empowered with statutory powers on 30-Jan-1992. It is the sole regulatory body that monitors and regulates the securities market in India. The main objective of SEBI is to protect investor’s interests and to ensure the fair functioning of the stock market.

What does SEBI do?

The primary functions of SEBI are:

  1. Protective Functions

    1. Protects the interests of investors and traders in the share market

    2. Prohibits insider trading and other unfair trade practices

    3. Ensures that all exchanges and intermediaries are functioning efficiently

  1. Regulatory Functions

    1. Regulates and monitors the stock exchanges and financial intermediaries, eg: depository participants, credit rating agencies, clearing corporations, etc.

    2. Provides a platform to register and authenticate various capital market participants, e.g: sub-brokers, RTA, mutual funds and asset management companies, merchant bankers, trustees, etc.

    3. Authorizes and regulates mergers and acquisitions of listed companies

    4. Reviews and authorizes the request for IPO, FPO, Rights Issues, and Delisting

  1. Judiciary Functions

    1. Addresses investors grievances arising from the issue process and investor dealings with brokers as well as sub-brokers and mutual funds

    2. Delivers judgment on unfair trade practices and other unethical operations in the Indian securities market

    3. Implements the regulations and judgments passed and takes legal action against the violators

Powers of SEBI

SEBI has been vested with the below-mentioned powers.

  • To approve and amend by-laws of the stock exchange

  • To inspect the book of accounts from recognized stock exchanges and financial intermediaries

  • To levy fees as well as other charges on the intermediaries

  • To grant a license for dealing in any particular areas

  • To judge the violation of certain provisions of the Companies Act

Who all are governed by SEBI?

Below are some of the entities that form a part of the stock market and are regulated and governed by SEBI:

  • Investors and traders

  • All stock exchanges – eg: NSE, BSE, MCX, etc.

  • Depositories – eg: NSDL, CDSL

  • Depository participants – eg: Angel One, etc.

  • Clearing corporations – eg: ICCL, NSCCL, etc.

  • Asset Management Companies (Mutual Funds)

  • Portfolio Managers/Institutions (PMS)

  • Credit Rating Agencies

  • Investment Advisors

  • Stockbrokers

  • Authorized Person (Sub-broker)

  • Custodians

  • Merchant bankers


Isn’t it reassuring to know that we have a regulator like SEBI who strives to safeguard and protect the integrity of the market? Now that you are aware of the role and powers of the regulator, you should be more confident to invest wisely in the stock market. However, it is also our responsibility to stay well-informed about various regulations and updates that the regulator publishes from time to time. You can visit the SEBI Circular section for details.