(i) To regulate stock exchange and securities industry to promote their orderly functioning.
(ii) To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
(iii) To prevent trading malpractices and achieve balance between self-regulation by the securities industry and its statutory regulation.

SEBI stands for Securities and Exchange Board of India. SENSEX is the benchmark index of BSE.Since the BSE has been the leading exchange of Indian securities market.Stocks of thirty companies actively traded in the market constitute the SENSEX in Bombay Stock Exchange.

The Securities and Exchange Board of India (SEBI) was established by the government of India on 12th April 1988 with an objective to protect the interest of investors and to promote the development of and regulate the securities market.
The SEBI has many objectives, some of them are described below:
(i) To regulate stock exchange and securities industry to promote their orderly functioning.
(ii) To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
(iii) To prevent trading malpractices and achieve balance between self-regulation by the securities industry and its statutory regulation.

The stock exchange is an institution which provides a platform for buying and selling of existing securities.
Functions performed by a stock exchange are:
(i) Provides liquidity and marketability to existing securities The primary function of a stock exchange is to provide a ready and continuous market where existing securities can be bought and sold.
This provides both liquidity and cash marketability to already existing securities in the market.
(ii) Pricing of securities Share prices on a stock exchange is determined by the forces of demand and supply.Stock market indices like SENSEX, NSE, etc reflect market direction and indicate day-to-day fluctuations in share prices.
Thus, both buyers and sellers can get constant information about price movements of shares in the market.
(iii) Safety of transactions The membership of a stock exchange is well defined according to the existing legal framework. This ensures that the investment of public is safe and they will get a fair deal in the market.

The stock exchange is an institution which provides a platform for buying and selling of existing securities.
Functions performed by a stock exchange are:
(i) Provides liquidity and marketability to existing securities The primary function of a stock exchange is to provide a ready and continuous market where existing securities can be bought and sold.
This provides both liquidity and cash marketability to already existing securities in the market.
(ii) Pricing of securities Share prices on a stock exchange is determined by the forces of demand and supply.Stock market indices like SENSEX, NSE, etc reflect market direction and indicate day-to-day fluctuations in share prices.
Thus, both buyers and sellers can get constant information about price movements of shares in the market.
(iii) Safety of transactions The membership of a stock exchange is well defined according to the existing legal framework. This ensures that the investment of public is safe and they will get a fair deal in the market.

Secondary market means market for purchase and sale of previously issued securities. Once a company has sold its shares and debentures to the public, these securities are traded on the stock exchange where they are listed.

Functions of financial market are as follows:
(i) Provides liquidity to financial assets  The investors can invest their money, whenever they desire in securities through the medium of financial markets.They can also convert their investment into money, whenever they so need.This is how it provides liquidity to securities.
(ii) Reduces the cost of transactions  Financial markets provides complete information regarding price, availability and cost of various financial securities.
So, investors companies do not have to spend much on getting such information.
(iii) Facilitates price discovery Households represent the supply of funds and the business firms represent the demand.The interaction between demand and supply helps in the price discovery of financial asset, which is being traded in a particular market.

Malpractices such as existence of self-styled merchant bankers, unofficial private placements, rigging of prices, unofficial premium on new issues, non-adherence of provisions of the Companies Act, violation of rules and regulations of stock exchanges and listing requirements, delay in delivery of shares, etc. had eroded investors' confidence and multiplied investor grievances. In order to fight with such problems, government established SEBI as a separate regulatory body.
Regulatory Functions
(i) Registration of brokers, sub-brokers and other players in the market.
(ii) Registration of collective investment schemes and mutual funds.
(iii) Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and the business in stock exchanges.
(iv) Regulation of takeover bids by companies.
(v) Levying fee or other charges for carrying out the purposes of the Act.
(vi) SEBI conducts inspections, enquiries and audits of stock exchanges.
(vii) Perform and exercise such power under Securities Contracts (Regulation) Act 1956, as may be delegated by the government of India.

Trading procedure on a stock exchange.
(i) Selection of a Broker
The first step is to select a broker, who will buy/sell securities on behalf of the speculator/investor. This is necessary because trading of securities can only be done through SEBI registered brokers, who are members of stock exchange. Brokers may be individuals, partnership firms and corporate bodies.
(ii) Opening Demat Account with Depository
The next step is to open a Demat account. Demat(Dematerialised) account refers to an account which an Indian citizen must open with the depository participant(bank and stock brokers) to trade in listed securities in electronic form. The securities are held in the electronic form by a depository.' Depository' is an institution/organization which holds securities (e.g. shares, debentures, bonds, mutual funds, etc) in electronic form, in which trading is done.
(iii) Placing the Order
The next step is to place the order with the broker. The order can be communicated to the broker either personally or through telephone, cell phone, email, etc.
The instructions should specify the securities to be bought or sold and the price range within which the order is to be executed. Only the securities of listed companies can be traded on the stock exchange.
(iv) Executing the order
According to the instructions of the investor, the broker buys or sells securities. The broker then issues a contract note. A copy of the contract note contains the name and the price of securities, names of the parties, brokerage charges, etc. It is duly signed by the broker.
(v) Settlement
This is the last stage in the trading of securities done by the brokers on behalf of their clients. the mode of settlement depends upon the nature of the contract. Equity spot markets follow a T+2 rolling settlement.
This means that any trade taking place on Monday gets settled by Wednesday. The stock exchange operates from Monday to Friday between 9:55 am and 3:30 pm. Each exchange has its own clearing house, which assumes all settlement risk.

The stock exchange is an institution, which provides a platform for buying and selling of existing securities.
Functions of Stock Exchange
(i) Provides liquidity and marketability to existing securities
The primary function of a stock exchange is to provide a ready and continuous market where existing securities can be bought and sold.
This provides both liquidity and cash marketability to already existing securities in the market.
(ii) Pricing of securities
Share prices on a stock exchange are determined by the forces of demand and supply.Stock market indices like SENSEX, NSE, etc reflect market direction and indicate day-to-day fluctuations in share prices.
Thus, both buyers and sellers can get constant information about price movements of shares in the market.
(iii) Safety of transactions
The membership of a stock exchange is well defined according to the existing legal framework. This ensures that the investment of public is safe and they will get a fair deal in the market.
(iv) Contributes to economic growth
In stock exchange. the process of disinvestment and reinvestment channelise the savings into productive investment avenues. This leads to capital formation and economic growth
(v) Spreading Equity Cult
It is an organised market, which takes various steps to guide and educate investors, publish information about companies listed on the exchange and ensures better and safe trading practices. These practices have played a vital role in increasing the number of people investing in equity, thus leading to wider ownership of equity.
(vi) Provides Scope for Speculation
It is generally accepted that a certain degree of speculation is necessary to ensure liquidity and price continuity in the stock market. Thus, it provides sufficient scope for speculation in a restricted and controlled manner within the provisions of law.