Securities and Exchange Board of India (SEBI) plays a crucial role in regulating the securities market in India. One of its key responsibilities is overseeing and regulating various intermediaries operating in the market. In this blog post, we will explore how SEBI regulates securities market intermediaries to ensure fair practices, investor protection, and the smooth functioning of the market.
Registration and Eligibility
SEBI mandates that securities market intermediaries obtain registration before conducting any activities in the market. The registration process involves fulfilling specific eligibility criteria, such as capital adequacy requirements, professional competence, and fit and proper criteria. SEBI thoroughly examines the background, track record, and financial stability of the intermediaries before granting registration.
By enforcing registration and eligibility norms, SEBI ensures that only credible and qualified entities operate as intermediaries, safeguarding the interests of investors and maintaining the integrity of the market.
Code of Conduct
SEBI has established a comprehensive code of conduct for securities market intermediaries. The code emphasizes principles such as integrity, professionalism, fairness, and transparency. Intermediaries are expected to maintain high ethical standards, act in the best interests of their clients, and avoid conflicts of interest.
SEBI’s code of conduct ensures that intermediaries provide reliable and unbiased advice, disclose all material information to clients, and maintain transparency in their operations. This fosters trust among investors and promotes a level playing field in the market.
Risk Management and Compliance
SEBI places great importance on risk management and compliance by securities market intermediaries. Intermediaries are required to establish robust risk management systems, including internal control mechanisms, monitoring tools, and systems for managing risks associated with their activities.
SEBI also imposes compliance requirements on intermediaries, including reporting obligations, record-keeping, and periodic inspections. Intermediaries are expected to adhere to the regulatory framework, promptly address any instances of non-compliance, and maintain adequate internal controls to mitigate risks.
Investor Protection and Disclosure
SEBI places significant emphasis on investor protection and disclosure requirements for securities market intermediaries. Intermediaries are required to act in the best interests of their clients, ensure fair treatment, and provide accurate and timely information.
Intermediaries must disclose all material information to clients, including risks involved, fees, charges, and potential conflicts of interest. SEBI’s regulations ensure that investors have access to transparent and reliable information, enabling them to make informed investment decisions.
Oversight and Supervision
SEBI maintains a robust oversight and supervisory framework to monitor the activities of securities market intermediaries. It conducts regular inspections, audits, and surveillance to ensure compliance with regulatory requirements.
SEBI’s oversight and supervision help detect any irregularities or malpractices and take appropriate actions, including imposing penalties or initiating legal proceedings against non-compliant intermediaries. This ensures accountability and maintains the integrity of the market.
by Astrobulls Research Pvt Ltd.