With the growth in the dealings of stock markets, lot of malpractices also started in stock markets such as price rigging, an unofficial premium on new issue, and delay in delivery of shares, violation of rules and regulations of stock exchange and listing requirements. Due to these malpractices the customers started losing confidence and faith in the stock exchange. So government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India (SEBI).

The Securities and Exchange Board of India (SEBI), a statutory body appointed by an Act of Parliament (SEBI Act, 1992), is the chief regulator of securities markets in India.

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities And Exchange Board of India as "...to protect the interests of investors in securities and to Promote the development of, and to regulate the securities market and for matters Connected there with or incidental there to".

The overall objectives of SEBI are to protect the interest of investors and to promote the development of stock exchange and to regulate the activities of stock market.

• • To regulate the activities of stock exchange.
• • To protect the rights of investors and ensuring safety to their investment.
• • To prevent fraudulent and malpractices by having balance between self-regulation of business and its statutory    regulations.
• • To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc.