Interesting Regulations In The Stock Market

Often, beginning investors overlook the governing bodies of the Stock Market in the rush to become successful investors. This is a big oversight, as without knowing the market and its regulations, investors may be confused at times. 

The Wonderful Stock Market

Changes in market conditions and regulations can cause huge shifts in the markets, changing investor sentiments that affect prices.

Without informing ourselves about these changes and regulations, our financial decisions will be affected. 

The Securities and Exchange Board Of India (SEBI), Reserve Bank Of India(RBI), and the Ministry of Finance (MoF) are the three regulatory bodies of the Indian stock market. 

This article will explain the governing bodies of the Indian stock markets, and what their individual roles are. 

The Securities and Exchange Board of India (SEBI)

• The SEBI is a regulatory body of the Indian stock market, under the jurisdiction of the Ministry of Finance
• SEBI was introduced in 1992, through the Securities and Exchange Board of India act. 
• The SEBI has 3 main functions. They need to regulate, develop and protect the Indian Stock Markets
  • Regulatory Functions:
    • The SEBI has a set of rules and regulations to keep bankers, brokers and other intermediaries involved in the stock market in check. 
    • They make sure these intermediaries are registered with the SEBI and authorized to conduct transactions in the stock market
    • SEBI regulates takeover of companies, 
    • The SEBI is also responsible for registering and maintaining mutual funds
    • The SEBI also audits the stock exchanges in India
  • Protective Functions:
    • The SEBI monitors and takes care of all fraudulent activities in the market. This includes price rigging, insider trading and much more
  • Development Functions:
    • They train the intermediaries in the stock market so that there is no misconduct or other issues
    • They also promote the idea of investing in the stock market to the general public.

Ministry Of Finance (MoF)

• Under the MoF, the Department of Economic affairs takes care of the stock market.
• Their role is to make rules in the stock market that keep the market running smoothly, and promotes growth in the Indian economy. T
• hey are also responsible for making rules to keep investors safe.
• The MoF works under these 3 laws.
  • Securities Contract Act 1956
  • Securities and Exchange Board Of India Act 1992
  • Depositories Act 1996

Reserve Bank Of India (RBI)

• The RBI is the government’s banker. In the stock market, they are responsible for all monetary transactions.
• They manage the payments and settlements in the stock market. They issue banknotes and also regulate the banking system. 
• These 3 governing bodies together make sure that the stock market runs smoothly.
• They have to manage funds, form capital, accelerate economic growth and provide other services related to the stock market.
• To conclude, knowing about the regulatory bodies is extremely important. Understanding their roles and how they can influence the Indian markets with their rules and regulations will give investors a deeper understanding of the market and how investor sentiment changes with the rules of the stock market.
• For further reading on the market regulations, visit the NSE site.