Explain the objectives and functions of the SEBI.

The SEBI was set up to achieve the following objectives:

(i) Regulation of Stock Exchanges: The first objective of SEBI is to regulate stock exchanges so that efficient services may be provided to all the parties operating there.

(ii) Protection to the Investors: The capital market is meaningless in the absence of the investors. Therefore, it is important to protect the interests of the investors. The protection of the interests of the investors means protecting them from the wrong information given by the companies in their prospectus, reducing the risk of delivery and payment, etc. Hence, the foremost objective of the SEBI is to provide security to the investors.

(iii) Checking the Insider Trading: Insider trading means the buying and selling of securities by those persons (Directors, Promoters, etc.) who have some secret information about the company and who wish to take advantage of this secret information. This hurts the interests of the general investors. It was very essential to check this tendency. Many steps have been taken to check inside trading through the medium of the SEBI.

(iv) Control over Brokers: It is important to keep an eye on the activities of the brokers and other middlemen in order to control the capital market. To have a control over them, it was necessary to establish the SEBI.
Functions:
The functions of SEBI can be divided into three parts:

I. Protective Functions: Following are the protective functions of SEBI:

(i) To check unfair trade practices (such as, to supply misleading statements to cheat the investors) in connection with security market.

(ii)To check insiders trading in securities. [Insider trading means the buying and selling of securities by those persons (Directors, Promoters, etc.) who have some secret information about the company and who wish to take the advantage of this secret information.)

(iii) To provide education relating to dealing in securities to the investors.

(iv) To promote code of conduct relating to security market.

II. Regulatory Functions: The following are the regulatory functions of the SEBI:

(i) To regulate the business being done in the share market.

(ii)To register brokers, sub-brokers, transfer agents, merchant banks, underwriters etc.

(iii) To register and regulate the credit rating agency.

(iv) To register and regulate the venture capital fund. (v) To carry out audit of share markets.

III. Developmental Functions: The following are the developmental functions of the SEBI:

(i) To impart training to the intermediaries. (Intermediaries include share brokers, Sub-brokers, Share Transfer Agents, Issue Registrars, Merchant Bankers, Portfolio Managers, etc.)

(ii) To encourage self-regulating organisations.

(iii) To carry on research work.

(iv) To publish different kinds of information for the convenience of all the parties operating in the capital market.