Securities Market: SEBI, Stock Exchanges, and Investor Protection

Introduction

The securities market is a vital component of India's financial system, facilitating capital formation by connecting investors with issuers. It comprises primary markets (new issues) and secondary markets (trading of existing securities). The Securities and Exchange Board of India (SEBI) is the apex regulator, while stock exchanges like BSE and NSE provide trading platforms.

Structure of Indian Securities Market

Primary Market (IPO/FPO)

• Companies raise capital by issuing securities to the public
• IPO (Initial Public Offering): First-time public issue
• FPO (Follow-on Public Offering): Additional issue by listed company
• Rights Issue: To existing shareholders
• Private Placement: To select institutional investors

Secondary Market

• Trading of already-issued securities
• Equity: Ownership stakes in companies
• Debt: Government securities, corporate bonds
• Derivatives: Futures, options, swaps

Key Participants

• Issuers: Companies, government, financial institutions
• Investors: Retail, institutional (FIIs, DIIs), HNIs
• Intermediaries: Brokers, depositories, clearing houses, merchant bankers
• Regulators: SEBI, RBI (for government securities), IRDAI (for insurance-linked securities)

Securities and Exchange Board of India (SEBI)

Establishment and Evolution

• 1988: Established as a non-statutory body
• 1992: Made statutory by...