Rugulators

Roles of Regulators in Stock Market

The best line to take-off on above mention topic is the part of preamble of SEBI, which state:-

“…..to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”

Security market is comprises of two parts 1) Primary Market, 2) Secondary Market. A regulator play active role in both the market in the line of Development of market, protecting interest of investor in market, regulating and registering intermediaries(stock-broker, underwriters, trustees etc.) who are associated with markets, registering and regulating the working of depositories; venture capital; mutual funds, act as a custodians of securities; foreign institutional investors; credit rating agencies(CRISIL) and other such intermediaries of security market, promoting and regulating self-regulatory organizations, prohibiting fraudulent and unfair trade practice; insider trading in securities, regulate substantial acquisition(like Tech Mahindra’s acquisition of Satyam) , call for information; inquiries; audits etc of the stock exchanges, mutual fund etc who are related to stock market. And if any regulating authority of any market while performing its action found or in the way of finding any irregularity or unfair thing happening can take regulatory action according to their rules and norms, for ex: U.S. Securities and Exchange Commission suspended the trading of Sataym in US securities market in favour of investor protection. These regulatory boards can prohibit any person/agency/organisation/security/company for unfair trade practices an can even sue them.

In layman language we can say that a regulator in any market is like a police in our society. Regulator is the watchdog to the working of stock market, the intermediaries and other different organizations, people etc who are related to working of stock market and can even set an enquiry if...