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- A market is a location where buyers and sellers come into contact with each other to exchange goods or services. Markets can exist in different forms depending upon the nature of location and mode of contact.
- The essential features of a market are Existence of the buyers (demand side of the market) and the sellers (supply side of the market), Existence of price for every asset, Allocation of resources, Existence of regulatory mechanism.
- A sound regulatory framework is expected to provide transparency, maintain market integrity, fairness and ensure investor protection. The lack of adequate regulations can lead to manipulations and market abuses, which endanger the integrity of the market and damage the confidence of the investors.
- To fulfill the need of a single independent regulatory body empowered to supervise and regulate the securities market, the Securities and Exchange Board of India (SEBI) was set-up initially as an administrative arrangement and later as a statutory body.
- There are also some self-regulatory organizations present in the financial market; but there is no clear-cut and accepted definition of a Self-Regulatory Organization (SRO) in India.
- However, SEBI has been attempting to accelerate the process of self-regulation and encouraged the formation of SROs. Various market participants like Association of Merchant Bankers of India (AMBI), Association of Mutual Funds of India (AMFI) and Registrars Association of India (RAIN) are some of the main SROs formed in India.