(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.

Stock market is a place where securities of different companies are bought and sold.It serves as a platform for investors.The presence of stock exchange in stock market assures the investor that their investment can be converted into cash whenever they want. Thus, we can say stock market impart liquidity to investment.

Money market is the market for short-term funds. It provides means for raising funds for meeting short-term needs of cash on one hand and deployment of surplus funds for short period on the other. Instruments in money market are:
(i) Call money  It is a method used by commercial banks to borrow funds from each other to be able to maintain the Cash Reserve Ratio (CRR). It is a short-term finance repayable on demand, with a maturity period of 1 day or 15 days.
The interest paid on call money loans is known as the call rate. It is a highly fluctuating rate that changes from day-to-day and sometimes even from hour-to-hour.
(ii) Commercial bill It is a bill of exchange used to finance the working capital requirement of a business firm. It is short-term, unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period.
When the seller makes credit sales, it draws a bill of exchange on a buyer, to pay the amount on certain date. On acceptance by buyer, it becomes a trade bill. This trade bill, when presented to the bank for discounting, and the bank accepts it, is called commercial bill.

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.

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.

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.