INTRODUCTION OF STOCK EXCHANGE

Most trading in the Indian stock market occurs through its two exchanges –
the Bombay Stock Exchange and the National Stock Exchange. The BSE has
been in existence since 1875, but the NSE was founded in 1992 and started
trading in 1994. Both follow the same rules and mechanisms, and both list
most of India’s major firms.Trading takes place between 9:15 am and 3:30
pm, Monday through Friday, Indian Standard time. Trades are settled two
business days after they’re made. Trading at the exchanges takes place
through an open electronic limit order book in which the computer matches
orders. The process is order-driven, meaning the best limit orders are
automatically matched with market orders, so buyers and sellers remain
anonymous. All orders take place through brokers. Sensex and the S&P CNX
Nifty are India’s two main market indexes. Sensex, the oldest for equities,
includes 30 firms listed on the BSE that represent about 45% of the index’s
free float market capitalization. The Nifty has 50 shares listed on the NSE,
representing about 62% of its free-float market capitalization. The Securities &
Exchange Board of India regulates the country’s stock market. India started
allowing outside investments in the 1990s. Foreign investments are either
foreign direct investments or foreign portfolio investments. FDIs allow
investors to participate in the company’s day-to-day operations; FPIs do not.
India’s government determines FDI limits, and has set different ceilings over
the years.

STOCK EXCHANGE MARCKET IN INDIA

India has two major stock exchanges - National Stock Exchange of

India (NSE) and Bombay Stock Exchange of India (BSE). Most of the
share trading in the Indian equity market takes place on these two stock
exchanges. The BSE has been in existence since 1875. The NSE, on the
other hand, was founded in 1992 and started trading in 1994. However, both
exchanges follow the same trading mechanism, trading hours, settlement
process, etc. At the last count, the BSE had about 4,700 listed firms, whereas
the rival NSE had about 1,200. Out of all the listed firms on the BSE, only
about 500 firms constitute more than 90% of its market capitalization; the rest
of the crowd consists of highly illiquid shares
 SEBI (SECURITY AND EXSHANGE BOARD OF INDIA
The SEBI i.e. Securities and Exchange Board of India is the regulator for
all the security markets in India. It was established in 1988 and was
given statutory power on 12 April 1992 through the SEBI Act, 1992.
SEBI is managed by the following members of the board:

 The Chairman who is nominated by the Union Government of India.

 Two members from the Union Finance Ministry
 One member from the Reserve Bank of India
 The remaining 5 members are nominated by the Union Government of
India, out of them.

Following are the powers vested in SEBI:

 To regulate and approve by-laws of stock exchanges

 Inspect the books of accounts of recognized stock exchanges and call
for periodical returns
 Inspect the books of financial Intermediaries.
 Compel certain companies to get listed on one or more stock exchanges
 To handle the registration of brokers

Purpose and Role of SEBI:

The main objective is to create such an environment
which facilitates efficient mobilization and allocation
of resources through the securities market. This
environment consists of rules and regulations, policy
framework, practices and infrastructures to meet the
needs of three groups which mainly constitute the
market i.e. issuers of securities (companies), the
investors and the market intermediaries.

(i) To the Issuers:

SEBI aims to provide a market place to the issuers where
they can confidently look forward to raise the required
amount of funds in an easy and efficient manner.
(ii) To the Investors:
SEBI aims to protect the right and interest of the investors
by providing adequate, accurate and authentic information
on a regular basis.

(iii) To the Intermediaries:

In order to enable the intermediaries to provide better
service to the investors and the issuers, SEBI provides a
competitive, professionalised and expanding market to
them having adequate and efficient infrastructure.

Objectives of SEBI:

Following are the main objectives of SEBI:

1. Protection:
To guide, educate, and to protect the rights and interests
of the investors.

2. Competitive and Professional:

To make the intermediaries like merchant bankers,
brokers etc. competitive and professional by regulating
their activities and developing a code of conduct.

3. Prevention of Malpractices:
To prevent trading malpractices.
4. Balancing:
To establish a balance between statutory regulation and
self regulation by the securities industry.

5. Orderly Functioning:
To promote orderly functioning of stock exchange and
securities industry by regulating them.
Functions of SEBI

The functions of SEBI can be divided into three parts

viz:
(1) Regulatory function

(2) Development Function &

(3) Protective function.

1. Regulatory Functions:
Regulatory functions of SEBI are as follows:
(a) Registration of Brokers and Agents:
It registers brokers, sub-brokers, transfer agents,
merchant banks etc.

(b) Notifications of Rules and Regulations:

It notifies rules and regulations for the smooth functioning
of all intermediaries in the securities’ market.

(c) Levying of Fees:

It levies fees, penalties and other charges for contravening
its directions and orders.

(d) Regulator of Investment Schemes:

It registers and regulates collective investment schemes
and mutual funds.

(e) Prohibits Unfair Trade Practices:

SEBI prohibits fraudulent and unfair trade practices.

(f) Inspection and Enquiries:

It undertakes inspection and conducts enquiries & audit of
stock exchange

(g) Performing and Exercising Powers:

It performs & exercises such powers under Securities
Contracts (Regulation) Act 1956, as have been delegated
to it by the Government of India.

2. Development Functions:
Development functions of SEBI are as under:
(a) Training to intermediaries:
It promotes training of intermediaries of the securities.

(b) Promotion of fair trade:

It promotes fair trade practices by making underwriting
optional.

(c) Research:
It publishes information useful to all market participants
for conducting research.

3. Protective Functions:
Protective Functions of SEBI are as under:
(a) Prevents Insider Trading:
It does so by prohibiting insiders such as directors,
promoters etc. to make profit through trading of securities
using confidential price sensitive information.

(b) Prohibits Fraudulent and Unfair Trade Practices:

It prohibits fraudulent and unfair trade practices in the
security market, such as price rigging and sale or
purchase of securities through misleading statements.

(c) Promotes Fair Practices:

It promotes fair practices and code of conduct in the
securities market e.g. it looks after the interests of the
debenture holders in terms of any mid-term revision of
interest rates etc.

(d) Educates Investors:

It educates the investors through campaigns.

IMPORTANCE OF SEBI IN CAPITAL MARKET

Securities and Exchange Board of India (SEBI) is an

apex body, which maintains and regulates our Capital
Market. It was established in the year 1988 by the
Indian government. Later in the year 1992, it received
the statutory powers and the status of the fully
autonomous body.
It has framed a set of regulations, bye-laws and
surveillance systems so as to provide the end users
with safety and transparency while dealing in
securities. It has introduced many regulatory measures
and code of conduct for various intermediaries which
include Portfolio Managers, Brokers and Sub-Brokers,
Underwriters, Merchant Bankers and so on.
Role of SEBI:
1. Restricts Illegal Practices
It forbids illegal and fraudulent practices of the firm
which operate in the securities market.
2. Safeguard Investor’s Interest
It protects an investor’s interest in the Capital Market
through guidance and proper education. So if you have
any complaint about anything related to Capital
Market, you can simply visit sebi.gov.in to register
your complaint, in the manner shown below:
3. Regulate working of Exchanges
It regulates and keeps a check on the working of Stock
Exchanges and other aspects of the Securities Market.
4. Monitor the workings of Mutual Funds
It monitors and regulates the working of Mutual
Funds. It keeps a tight supervision on their business
operations and protects investors from any unfair
practices.
5. Monitor the functioning of Intermediaries
Keeps a tight check on the functioning of the
intermediaries like Merchant Bankers, StockBrokers
and other intermediaries present in the Capital
Market.
6. Regulate Takeovers and Acquisitions
They issue guidelines to regulate Takeovers, Mergers,
and Acquisitions of firms to protect investor’s interest.
7. Prohibition of Insider Activity
It prohibits insider activity and also restricts the
undesirable practice of brokers and other agents in the
Capital Market.
8. Conducting Audit
It conducts an audit, inspection and other suitable
measures to keep a check on the workings of Stock
Exchanges and other Intermediaries.
SEBI has played a really important role in regulating
the capital markets and in
the development of our overall economy.If you see the
market value of NSE-listed companies combined
together, it stands at Rs 92,09,386 crore as on January
2016 as compared to Rs 3,63,350 crore as on 1994-
1995.
Now, let’s see how SEBI has played an active role in
keeping a tight check on the scams and scandals in our
economy.
There was a gradual increase in the number of scams
held in our country since 1990’s and it was a common
phenomenon every year in those days. However, the
number of scams has also come down gradually in the
last few years.

Role of SEBI-
 It is the duty of the Board to protect the interests
of investors in securities and to promote the
development of and to regulate the securities
market, by such measures as it thinks fit.
 Regulating the business in stock exchanges and
any other securities markets.
 Registering and regulating the working of stock
brokers, sub-brokers, share transfer agents,
bankers to an issue, trustees of trust deeds,
registrars to an issue, merchant bankers,
underwriters, portfolio managers, investment
advisers and such other intermediaries who may
be associated with securities markets in any
manner.
 Registering and regulating the working of
venture capital funds and collective investment
schemes, including mutual funds.
 Promoting and regulating self-regulatory
organizations.
. Prohibiting fraudulent and unfair trade
practices to securities markets.
. Promoting investors’ education and training of
intermediaries of securities markets.
 Prohibiting insider trading in securities.
 Regulating substantial acquisition of shares
and takeover of companies.

CONCLUSION
SEBI is a very important body as far as Indian
economy is concerned. SEBI has been formulated in
the interest of investors, to protect their rights and to
promote development. Through this report, I have
tried to analyses and put forward the functions and
objectives of SEBI. SEBI educates the investors by providing
them valuable information regarding various securities and companies
so as to enable them to make wise investment decisions