Who are the Indian Stock Market Regulators?

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Stock Market Regulators

Before we talk about regulation and Stock Market Regulators, let’s talk about Stock Market itself. To give a detailed idea to beginner traders or investors, let’s say you went to a departmental store and are looking to buy some grocery. Before you do that, you take an idea on:

  • What you are looking to buy?
  • What is your overall budget?
  • What is the best price you are okay to pay for specific items?
  • When do you need what item?

There might be few more questions that will run through your mind and those vary from person to person. But more or less, there are some of the burning questions at the top of the mind of a user.

The stock market is no different than what has been mentioned above.

In this you, as a trader or investor, analyze:

  • Which stocks or listed companies you might be interested in?
  • What are the specific price points of these stocks that you deem as fit for you?
  • What is the quantity you are looking to hold?
  • What is your intention of this buy – long-term investment or quick profit?

However, in this scenario, you do not need to visit any physical location. All the transactions happen online through the exchange using your trading account. This trading account is run by a stockbroker that you need to choose before entering the stock market in the first place.

Then, in the stock market, there are Stock Market Participants. 

There are different types of such participants, including:

  • Retail traders and investors
  • NRIs (Indian origin people, who are required to open an NRI/NRE account)
  • Domestic institutions (LIC – Life Insurance Corp. of India for example)
  • Asset Management companies (AMCs) who invest in the stock market through their mutual fund principals (example – Blackrock, Fidelity investments etc.)
  • Foreign Institutional Investors (FIIs)

SEBI

Anyway, coming back to the point of Stock Market Regulators in India – well it is SEBI (Securities and Exchange Board of India). They have to look at some of the toughest responsibilities to make sure that there is nothing fancy happening in the stock market. However, their major role is to safeguard the smaller fish from the sharks of the Industry. That, in other words, implies to make sure that the bigger corporates and money houses do not play around for their profits, thereby ruining potentially profitable opportunities for smaller companies or retail traders/investors.

Some of the other top duties of SEBI include:

  • Setting up rules and regulations for different stakeholders in the stock market including stock brokers, stock market participants (retail traders, investors, institutional investors), banks, Depositories participants etc.
  • Performing background checks and issuing licenses to stockbrokers and financial houses
  • Auditing these financial brokers and houses on a regular basis to make sure that the facts and numbers being reported are factually correct
  • Fixing and Punishing culprits who perform irregularities in the system, play unfair and harm the overall stock market eco-system

It takes quite a toll to keep all the regularities in place and even if one specific entity gets involved in anything illegal, it not only brings loss to other participants but hits the reputation of the stock market as a whole.

Well, these are some of the responsibilities only and there a lot more that SEBI performs around the sphere to make sure that the stock market stays as a level playing field for any type of participant.

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