Generally, in a hurry to become a participant in the stock markets, we forget to know the roots governing the stock market.

Generally, in a hurry to become a participant in the stock markets, we forget to know the roots governing the stock market. We often overlook the rules, regulations, and regulatory bodies that are in charge of the Indian capital markets.

The Sebi, ministry of finance, and the Reserve Bank of India are the 3 regulatory authorities governing Indian capital markets.

Ministry of Finance

The Department of Economic Affairs (DEA) manages the Capital markets segment. This is done under the guidance of the Ministry of Finance. It formulates the rules for the efficient growth of the stock market, which includes derivatives, debt, and equity. It also formulates the rules and regulations for safeguarding the interest of the investors. It regulates the Indian capital markets through the following laws:-

1. Depositories Act 1996
2. Securities Contract (Regulation) Act of 1956
3. SEBI Act 1992

Reserve Bank of India (RBI)

The RBI Actof 1934 dictates the rules and the policies framed by the Reserve bank of India. The functions of RBI with respect to this are as follows:-

1. Implementation of monetary and credit policies
2. Issuance of currency notes
3. Banking system regulator
4. Government’s Banker
5. Managing payment and settlement system
6. Foreign exchange under the FEMA 19999
7. Developing financial markets

Securities & Exchange Board of India (SEBI)

The SEBI Act 1992, regulates the functioning of SEBI. Sebi is the main body that governs the Indian stock exchanges. The main functions of Sebi are as follows:-

1. It checks price fixing by some parties with vested interests.
2. It prevents the illegal practise of trading on the stock exchange to one’s own advantage through having access to confidential information.
3. It stops unfair trade practises.
4. It is also responsible for training of agents and financial planners.
5. It promotes the activities of stock exchange
6. It is responsible for making the rules for all the people who will distribute financial products.
7. It keeps a check on the working of stockbrokers, share transfer agents, sub brokers etc
8. It conducts inquiries into the working of stock exchanges.

SEBI has also played an active part in keeping a tight check of scandals and scams in our economy. In the 1990s the scams were rampant. However, the number of scams has gradually come down in the economy over the years.

So these are the 3 main regulators in the Indian stock markets and their respective roles.

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