Is Stock Market regulated by the Government?
Who governs this stock market?
In India, everything needs to be governed under the direct supervision of the Government. Then only most of us will have a secured feeling. It all started with LIC. The agents while selling the policy started saying that this policy is issued by LIC and it is a government company. This is still being done to get the trust of the people.
When it comes to equity, people ask the same question of “Is it regulated by Government ?”
Yes, it comes under Securities Exchange and Board of India shortly called as SEBI.
Securities Exchange Board of India was formed in 1988 and given statutory powers in 1992 by the SEBI Act. It is directly owned by the Government of India.
They govern the
1. Stock exchanges,
2. Listing of stocks,
3. The way the stocks are being operated,
4. Quarterly results of the companies,
5. Any discrepancy in company results,
6. Any unwanted news in public domain regarding listed company,
7. Complaints regarding the company etc
Responsibilities of SEBI ;
The basic function and responsibility of SEBI is “to protect the interest of investors in securities and to promote the development of and to regulate the securities market and for matters connected therewith or incidental thereto”. It is responsible for Issuers of securities, Investors and Market intermediaries.
SEBI at times take a strict stance on certain matters to regulate things. Therefore there is a separate Securities Appellate Tribunal ( SAT ) formed to create accountability for itself.
In one of the cases, International Auditors were barred from doing their job for the next 5 years. They had made the appeal with SAT and in the next few months, the order was dismissed. This has been done considering the plea of auditors.
How do they intervene?
From the moment the company wants to get listed in stock exchange, it comes under the purview of SEBI. They approve the IPO document and if there is any mismatch in the evaluation of the company they send it back to the company. From then on, each company has to submit quarterly results with SEBI.
All the news which may affect the stock will be monitored and every stock sold will be monitored for any insider trade. One recent news was, Infosys getting reported for ethical practices with SEBI and US regulators. They stepped in and ordered inquiry with Infosys. Infosys needs to give full cooperation till the issue gets resolved. This sort of external checking makes the Stock market a regulated and safe place.
SEBI also controls Mutual funds by forming a separate body under the name of “Associations of Mutual funds in India” called AMFI. All Mutual fund AMC’s reports to AMFI for issues pertaining to mutual fund NFO and other things.
How to complain with SEBI?
Another main aspect fo SEBI is protecting the interest of people. Every now and then there are lots of PONZI schemes which comes up to fool people. Investors get cheated looking at the attractive interest rates.
If you come to know about any scheme with dubious methods or if you get any doubts about that company, you can report it to SEBI. Any investment related things have to be approved by SEBI and you can directly ask the company for the same.
If you have any complaint against any intermediary registered with SEBI, please follow the below steps,
- Approach the organization for any resolution.
- Wait for the response
- If not satisfied, you can complaint with Sebi complaint Redressal system or SCORES
They take up any issue related to intermediaries registered with it and also other related issues.