Securities and exchange board of India has the following three types of functions
- Protective
- Developmental
- Regulatory
Protective functions
1. SEBI checks fraudulent and unfair trade practices in the stock market such as price rigging by brokers or sub-brokers
2. SEBI prohibits insider trading by the directors, promoters as some other insiders who may be having some price-sensitive information.
3. SEBI educates the investors by organizing seminars etc.
4. SEBI promotes a code of conduct in the stock market.
Developmental function
1. SEBI arranges training programs for intermediaries operating in the stock market.
2. SEBI undertakes steps to develop the capital market, for example, it has accepted the system of using the stock exchange is for PSU.
Regulatory functions
1. SEBI frames rules and regulations for conducting business in stock exchanges another capital markets.
2. SEBI regulates the activities of stock brokers, merchant bankers, underwriters, portfolio managers, etc
3. SEBI regulates mutual funds.
4. SEBI regulates the take over of companies.
5. SEBI conducts audits of stock exchanges.