A pivotal institution in India’s financial sector, SEBI or the Securities and Exchange Board of India is instrumental in upholding market integrity and protecting investor interests. Established on 12 April 1992, under the SEBI Act, 1992, SEBI regulates the securities and commodity markets in the country.
Founded with the aim of establishing a transparent marketplace SEBI safeguards the interests of all the market players. Read on as we elaborate on the role of SEBI in regulating demat accounts and stock market practices.
Role of SEBI in Regulating Demat Accounts
Let us take a detailed look at the various advisories issued by the SEBI to protect the interests of the investors as well as the brokers.
When You Open Demat Account
When you open Demat account there are certain guidelines issued by the apex body that you must keep in mind.
- The following documents are required to be submitted by the applicant:
- Duly filled Application Form
- Address Proof
- PAN Card details
- Bank details to link the demat and savings account.
- You can open more than one demat account with the same or a different broker/ Depository Participant (DP)
- The investor must sign a standard agreement with their DP
- The agreement details the rights and responsibilities of both the investor and the DP
- The DP needs to provide the investor with a copy of the agreement and a schedule of charges.
- Once the DP opens Demat account in their system, the investor will receive a unique account number, known as the BO ID (Beneficial Owner Identification number), for all future transactions.
- There are no account opening charges, transaction charges, custody charges as well as account closing charges
- SEBI advises the DPS to submit their fee structure annually by 30th April. The DPs need to put this information on their official website
- In case there is any discrepancy in your account statement, SEBI recommends you to raise the issue with your DP.
Role of SEBI in Regulating Stock Market Practices
The SEBI oversees the functioning of the share market. It has various roles, the most prominent ones are:
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SEBI plays the Role of a Regulator
As a regulator, SEBI supervises the share market. Its charter of duties includes protecting the interests of the investors as well as the brokers. With its quasi-executive powers, it can enforce compliance, impose fines and take measures to make sure the participants adhere to the standards. The SEBI also monitors the registration and operations of foreign investments.
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SEBI plays the Role of a Supervisor
SEBI ensures that all the market participants follow its regulations and guidelines. As a supervising body, it checks the operations, conducts inspections, and investigates, to ensure minimal malpractices and violations.
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SEBI plays the Role of a Developer
SEBI fosters growth in the securities market by introducing new products, encouraging foreign investment, and enhancing investor education. It also upgrades market infrastructure and technology to support development.
Did you know? Intending to boost the participation of small investors, SEBI recently increased the threshold for the Basic Services Demat Account (BSDA) from ₹2 lakh to ₹10 lakh.
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SEBI plays the Role of a Protector
SEBI’s main role is to safeguard investors’ interests by ensuring listed companies give accurate, timely information, preventing insider trading and fraud, and addressing regulatory violations. It also educates investors on investment risks and offers a grievance redressal system.
SEBI requires companies to provide accurate, timely information to investors, including financial statements, board meetings, and other key details. Compliance with these disclosure requirements ensures transparency and helps investors make informed decisions.
Summing Up
SEBI plays a vital role in advancing India’s securities market. It helps boost liquidity through introductions such as equity derivatives, short-selling, and algorithmic trading. It has also eased regulations to support the listing of start-ups and SMEs, enhancing market depth and appeal. If you are looking for the best Demat account lowest brokerage then you would need to carefully explore your options.
Simply put, SEBI is crucial in India’s securities market, regulating market participants and ensuring fair, transparent transactions while protecting investors. It also promotes market development and enforces regulations, enhancing market efficiency and transparency.
