First and foremost, we should try to understand what is SEBI? SEBI is a statutory body that not only regulates but also monitors the capital as well as the securities market of India. It also protects the interests of the investors and also sees whether the guidelines have been followed or not. SEBI established on 12th April, 1992.
Functions & Objectives of SEBI-
- One of the primary objectives and functions of SEBI is to protect the interest of the investors in the Indian Securities Market.
- Another important objective of SEBI is that it is a dedicated platform for all the investment advisers, bankers, stockbrokers, portfolio managers, merchant bankers, registrars, and all others associated with this trade.
- Sebi regulates the operations of participants, portfolio managers from abroad, custodians of securities, credit rating agencies, and depositories.
- The most important objectives of SEBI are that it strictly prevents unfair trade practices and all fraudulent activities related to this market.
- SEBI also ensures that the investors are well educated about the securities market.
- It also monitors acquisitions of the shares as well as the takeover of the companies.
- One of the most important SEBI Objectives and functions is that it also conducts various studies and developments just to ensure that the securities market operates in the best efficient way.
Authorities & Powers of SEBI-
SEBI enjoys three main powers:
- Quasi-Judicial: One of the important aims of SEBI is to prohibit unfair trade practices in the field of securities market. For that reason, they have the authority to give judgments relating to fraudulent activities and unfair trade practices prevailing in this market.
- Quasi-Executive: SEBI enjoys the power to implement the regulations as well as the judgments made along with taking legal actions against the violators.
- Quasi-Legislative: SEBI reserves the rights for framing rules and regulations so that to protect the interest of investors.
Exchange-Traded Fund or ETF is a kind of Index Funds that are also listed and traded through exchanges just like stock. An Exchange Traded Fund may contain all types of investments specifically commodities, stocks, or bonds.
Why should you invest in ETF? A few reasons why you should invest in the ETF is that they do have a lower management fee. Secondly, they are also considered to be more favorable about taxes, and buying and selling of ETF is a tax avoidable event. Nowadays, ETFs have also become very popular since it allows the investors to quickly own a set of securities, for example, stocks, at a much cheaper price.
Few Examples of the types of ETFs-
- Bond ETFs that includes Government Bonds, State & Local Bonds as well as Corporate Bonds.
- Industry ETFs tracking a particular industry such as technology or banking.
- Commodities ETFs always invests in commodities and it also includes crude oils and gold.
Thus, SEBI has played a very vital role in protecting the interests of the investors in this particular trade in our country. It has also tried to prevent unfair trade practices in the securities market along with laying down various guidelines and updating them with time to curb all such fraudulent activities.