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NISM-Series-XV: Research Analyst · Introduction to Securities Market

Regulatory Framework: SEBI, SEBI Act and SCRA

Updated 11 October 2026 · Fact-checked

The regulatory framework is the set of laws and bodies that govern India's securities market. SEBI, set up under the SEBI Act, 1992, regulates the market. SCRA, 1956 governs securities trading and stock exchanges. Research analysts are SEBI-registered intermediaries. To solve questions, match each rule to the Act or body that owns it.

Understand Regulatory Framework: SEBI and Market Regulations

A securities market needs rules. Without them, issuers could mislead investors and intermediaries could misuse client money. India solves this through laws, a regulator and the market's own institutions.

SEBI is the Securities and Exchange Board of India. It was first set up as an administrative body in 1988 and was given statutory status by the SEBI Act, 1992. Its three broad aims are to protect the interests of investors in securities, to promote the development of the securities market, and to regulate the securities market.

SEBI works in three ways. It makes regulations (a quasi-legislative role). It inspects, investigates and registers intermediaries (a quasi-executive role). It can pass orders and impose penalties after a hearing (a quasi-judicial role). Appeals against SEBI orders go to the Securities Appellate Tribunal (SAT).

The Securities Contracts (Regulation) Act, 1956 (SCRA) deals with the trading side. It regulates stock exchanges and the contracts in securities, and it governs the recognition of stock exchanges and the listing of securities. Other key laws are the Companies Act, 2013, which covers how companies issue securities and are governed, and the Depositories Act, 1996, which covers dematerialised holding of securities.

Research analysts sit inside this structure as intermediaries. A person who publishes research reports or gives research recommendations on securities must be registered with SEBI under the SEBI (Research Analysts) Regulations, 2014. SEBI frames the rules, and the analyst must follow them, including the code of conduct and disclosure of conflicts of interest. Recognised bodies such as exchanges and depositories support this structure, and AMFI plays a similar self-regulatory role for mutual funds.

Key formulas to remember

SEBI's statutory basis
SEBI Act, 1992 → statutory status to SEBI
SEBI existed from 1988 as an administrative body. The 1992 Act made it a statutory regulator.
SEBI's three objectives
Protect investors + Develop the market + Regulate the market
Questions often ask which of these is not an objective.
SEBI's three roles
Quasi-legislative + Quasi-executive + Quasi-judicial
Making regulations, inspecting and registering, and passing orders.
SCRA, 1956
SCRA → stock exchanges, securities contracts, listing
Recognition of exchanges and regulation of trading in securities sit here.
Research analyst registration
Research Analyst → registered with SEBI under SEBI (Research Analysts) Regulations, 2014
Applies to those who publish research reports or give recommendations.
Appeal route
SEBI order → Securities Appellate Tribunal (SAT)
Further appeal goes to the Supreme Court, on the points the law allows.

How to solve Regulatory Framework: SEBI and Market Regulations questions

Most questions on this topic ask who regulates what, or which law covers what. Use a fixed routine to match the subject to its source.

  1. 1Read the question and underline the subject: a body, an Act, a power or a participant.
  2. 2Decide whether the question is about the regulator (SEBI), the trading law (SCRA), company law (Companies Act), or depositories (Depositories Act).
  3. 3If it is about SEBI, classify the action as making rules, registering or inspecting, or passing orders and penalties.
  4. 4If it mentions research analysts, link it to the SEBI (Research Analysts) Regulations, 2014 and to registration with SEBI.
  5. 5Check words like 'only', 'always' and 'not'. These often turn a true statement into a trap.
  6. 6Eliminate options that give a body the wrong role, for example an exchange making SEBI regulations.
  7. 7Pick the option that matches the law's actual scope, not the one that merely sounds official.

Quickest way: Match the subject to its source

When to use it: Use this when you see a short 'which Act or body' question and have under a minute.

  1. SEBI regulates the market and intermediaries, including research analysts.
  2. SCRA relates to stock exchanges and securities contracts.
  3. Companies Act relates to company issuers and governance.
  4. Depositories Act relates to demat holding.
  5. SAT hears appeals against SEBI orders.
  6. Pick the option that fits and drop the rest.

Common mistakes in Regulatory Framework: SEBI and Market Regulations

  • Saying SEBI was created by the SEBI Act, 1992 in that year.

    Students link the Act with the birth of the body.

    Fix: Remember SEBI began in 1988 as an administrative body. The 1992 Act gave it statutory powers.

  • Assigning stock exchange regulation to the SEBI Act instead of SCRA.

    Both laws deal with the market, so they blur together.

    Fix: Link SCRA to exchanges and securities contracts. Link the SEBI Act to the regulator and its powers.

  • Thinking research analysts are regulated by the exchanges.

    Students know exchanges regulate their own members.

    Fix: Research analysts register with SEBI under the 2014 Regulations. Remember this as a SEBI-registered intermediary.

  • Confusing the SAT with a court of final appeal.

    Both hear appeals, so students assume equal rank.

    Fix: SAT is the first appellate body for SEBI orders. A further appeal lies to the Supreme Court.

  • Listing SEBI's objectives as profit and revenue goals.

    Students mix up regulators with commercial bodies.

    Fix: Learn the three: protect investors, develop the market, regulate the market.

Worked examples

Example 1

Which of the following statements about SEBI is correct? (a) SEBI got statutory status through the SCRA, 1956. (b) SEBI gained statutory status through the SEBI Act, 1992. (c) SEBI is a self-regulatory body run by brokers. (d) SEBI has no power to impose penalties.

Show the solution
  1. Check the source of statutory status. This is a feature of the SEBI Act, not the SCRA.
  2. Option (a) credits SCRA, so it is wrong.
  3. Option (c) is wrong because SEBI is a statutory regulator, not a broker body.
  4. Option (d) is wrong because SEBI has quasi-judicial powers, including passing orders and imposing penalties.
  5. Option (b) matches the facts.

Answer: (b) SEBI gained statutory status through the SEBI Act, 1992.

Example 2

A person wants to publish research reports with buy and sell recommendations on listed shares. Which statement is correct? (a) No registration is needed. (b) The person must be registered with SEBI under the SEBI (Research Analysts) Regulations, 2014. (c) Registration is done by the stock exchange under SCRA. (d) Only mutual funds need SEBI registration.

Show the solution
  1. Identify the activity: publishing research reports or recommendations on securities.
  2. This activity falls under the Research Analysts Regulations, 2014.
  3. Those regulations require registration with SEBI, not with an exchange.
  4. So (a) is wrong, (c) names the wrong registering body, and (d) is wrong because research analysts must register too.
  5. Option (b) is the match.

Answer: (b) The person must be registered with SEBI under the SEBI (Research Analysts) Regulations, 2014.

Exam tips

  • Learn the one-line scope of each law: SEBI Act for the regulator, SCRA for exchanges and contracts, Companies Act for issuers, Depositories Act for demat.
  • Watch for 'which is NOT' questions on SEBI's objectives and roles. Know the three of each.
  • Do not guess on 'only' or 'always' options. With negative marking of 25% of the marks for a question, a wrong answer costs you.
  • Link every research analyst question to SEBI registration and the 2014 Regulations, then read the options for the exact wording.

Practice questions from Introduction to Securities Market

Regulatory Framework: SEBI and Market Regulations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Regulatory Framework: SEBI and Market Regulations: frequently asked questions

What are the main functions of SEBI under the SEBI Act, 1992?

SEBI protects investors, promotes the development of the securities market and regulates it. It does this by making regulations, registering and inspecting intermediaries, and passing orders and penalties. Learn these as three objectives and three types of power.

What does SCRA, 1956 cover for the exam?

SCRA, 1956 governs stock exchanges and contracts in securities. It covers recognition of stock exchanges and listing of securities. For the exam, link it with exchanges and trading, not with the regulator's own structure.

Do research analysts need to register with SEBI?

Yes. Those who publish research reports or give research recommendations must be registered with SEBI under the SEBI (Research Analysts) Regulations, 2014. They must also follow the conduct and disclosure rules in those regulations.

Where do appeals against SEBI orders go?

They go to the Securities Appellate Tribunal (SAT). A further appeal to the Supreme Court is possible on the grounds the law allows.