SEBI, which is also known as the Securities and Exchange Board of India is a regulatory body, which regulates the securities and commodity market in the country. As Forex trading in India becomes more and more popular and the number of brokers increases gradually, they are obliged to be licensed by this regulatory body.
SEBI is a self-regulatory organization and it operates under the jurisdiction of the Ministry of Finance. The organization was established on the 12th of April in 1992. It is headquartered in Bandra Kurla Complex, Mumbai. The main obligation and responsibility of SEBI, apart from controlling and regulating commodity markets and securities, is to protect investors’ rights and make the environment more transparent and attractive for people. What’s more, SEBI formulates the guidelines for companies that are linked to the financial sector and operate in India, including Forex brokers. SEBI registered Forex brokers are famous for their reputation and the way they are performing in the marketplace.
In order to get a license from SEBI, Forex brokers need to take several steps, which is also known as examination. As it means a lot to be protected from malpractice and fraud brokers, SEBI is there for FX traders to minimize the chances of being the victim of fraud. Moreover, SEBI is responsible for investors’ security and transparency of financial trading, which makes it one of the most famous regulatory organizations around the world.
SEBI is the successor of Controller of Capital, which was considered a regulatory body before SEBI came into existence. Controller of Capital became the regulatory body after the 1947 act, which is known as Capital Issues (Control) Act.
What Does SEBI Do?
SEBI is the abbreviation of the Securities and Exchange Board of India and it is the regulatory body, which operates the processes in the financial sector and commodity market. The main idea of the body is to make a safe environment for investors to make their investments more protected. Through its actions, SEBI attracts more and more investors in the country. You can find the list of SEBI-regulated Forex brokers at the bottom part of this guide.
Apart from that, according to SEBI 2009 act the organization’s funds should be used for the protection of investors. What’s more, SEBI uses its funds for growing the awareness of investors in accordance with its regulations. The regulatory body furnishes investors with educational materials and activities, including seminars, webinars, and publications. Moreover, it has awareness programs that are implemented through the media both digitally and hard cover. In addition, SEBI has an advisory committee for funds, which is responsible for rational and proper distribution of money towards several activities, including protection-related departments.
SEBI India – Is It a Reliable Regulatory Authority?
Since the Securities and Exchange Board of India (SEBI) was formed by an Act of Parliament in 1992, it has launched a range of initiatives aimed at controlling and expanding the Indian securities market, as well as improving its protection and performance. These policies have had a significant effect on almost every sector of the industry.
The Indian securities market is one of the most secure and effective trading venues in the world. The Indian corporate governance code is compared to the United States Sarbanes-Oxley Act. India has one of the world’s fastest-growing and most mature asset management industries, with both state-owned and private-sector operators.
As the foreign exchange market in India grows and more and more people start to get involved in it, SEBI actively uses its regulation system and guidelines to protect investors from scammers.
How Does SEBI Operate?
SEBI operates independently, with subscription dues collected by member companies to cover operating expenses. As a result, SEBI does not rely on taxpayer funds to finance its activities, giving it total control. SEBI-regulated Forex brokers in India must go through a stringent licensing process to obtain a legitimate SEBI license.
In order to get a SEBI license, as already mentioned, brokers need to take several steps and processes. Firstly, they need to get a Certificate of Registration (CoR). After this, they need to pay membership fees which are applicable after the regulator considers brokers eligible to become SEBI registered brokers.
SEBI carries out three key functions to perform its responsibilities and obligations, including protective, regulatory, and development.
Protective Functions – SEBI carries out these tasks in order to protect the interests of investors and financial institutions. Checking market fixing, preventing insider trading, encouraging fair practices, raising investor interest, and prohibiting fraudulent and deceptive trade practices are all examples of protective functions.
Regulatory Functions – SEBI regulates the activity of financial sector intermediaries through its regulatory functions. It creates rules and a code of ethics for financial intermediaries and oversees corporate mergers, amalgamations, and takeovers.
SEBI also investigates and audits stock markets. It serves as a registrar for traders, sub-brokers, merchant bankers, and other financial professionals. The SEBI has the authority to charge fees on stock market investors. SEBI oversees credit rating agencies in addition to regulating intermediaries.
Development Functions – one of the SEBI’s growth duties is to provide instruction to intermediaries. SEBI encourages fair trade and the reduction of malpractices. It further educates and informs customers about the financial market by using IEPF funds. Investors can see all the available resources on the SEBI website.
How can you determine the authenticity of a SEBI-regulated broker?
There are numerous brokers both in India and abroad, so the main question is how can you find a broker which is regulated and licensed by SEBI? The ones that are licensed by the SEBI are assigned a specific license number, which can be used to classify the organization and scan the SEBI database for significant business records.
SEBI-regulated FX brokers also prominently feature their SEBI license details on their website, as well as all of the advantages and privileges that traders enjoy under SEBI and its regulatory frameworks. The SEBI website also offers a brief background story and useful statistics on a licensed broker in the category of SEBI registered brokers list. The main thing which helps traders to find which SEBI-registered broker apart from the organization’s website can be recognized with the letters “INB” and those that are registered as sub-brokers can be found with the letters “INS”.
How hard is it to find a SEBI-regulated broker?
Finding SEBI-regulated brokers is quite easy, like setting up a brokerage in India. The main things you need to do to find your favorable broker and the brokers which have the most suitable offers for you and your strategy you need to go on SEBI’s official website.
What’s more, SEBI encourages healthy competition among Forex brokers by providing a safe atmosphere in which brokers can deliver the best services without sacrificing efficiency or openness of operations. Financial markets such as spread betting and binary options trading have since been made legal in India, and are directly regulated by the SEBI.
Three Main Powers of SEBI
SEBI has three main powers, which are known as Quasi-Judicial, Quasi-Executive, and Quasi-Legislative. Each of these powers is related to the responsibilities that must be fulfilled by the organization.
Quasi-Judicial power means that the SEBI is responsible for delivering judgments related to fraud and scams. Through these actions, SEBI tries to make the environment more transparent for the investors and get rid of the results of malpractice. Also, SEBI ensures fairness and accountability in the financial market.
The power of Quasi-Executive is for implementing those regulations and guidelines that are set by this authority. Also, it empowered them to take legal actions against those people that are violating the rules and regulations. This means SEBI protects people from coming across scammers and being a victim of fraud.
Authority’s Quasi-Legislative power is shown through those regulations and laws that are framed by the SEBI. SEBI is responsible for framing fair rules for both sides and maximally protecting the interest of investors.
