Regulator: The Rule-Maker
Every stock exchange is controlled by a regulator whose primary objective is to protect all the parties involved including the investors, brokers, custodians, etc. The ‘Securities Exchange Board of India’ regulates the Indian capital and securities market.
SEBI is a statutory body, meaning it is allowed to create laws on matters relevant to the markets. Its ‘Chairman’ is nominated directly by the Government of India, and several other board members come from the Finance Ministry and Reserve Bank of India.
SEBI’s duties include improving the markets, regulating businesses, and monitoring any unfair trade practices like insider trading. It can also impose corrective action against violators and control mutual fund houses, brokers, custodians, and depositories.
Wait, Depositories? What is that?