Financial Markets: Focus on Roles of SEBI and AMFI

Markets regulator, the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI) have a crucial role to play in regulating and fostering a consistent growth of the financial markets in the country. 

As a regulatory authority, SEBI is entrusted with the responsibility of ensuring transparency, fairness, and investor protection in the securities market. To promote confidence among investors, it formulates policies while enforcing regulations to address concerns about fraudulent transactions, insider trading, market manipulation, etc. 

At the same time, AMFI represents the mutual funds industry and works in tandem with SEBI. The core aim of AMFI is to safeguard the interests of investors in mutual funds, distributors and Asset Management Companies (AMCs) or fund houses. 

AMFI is entrusted with the responsibility of educating the general public about mutual funds, the benefits of investing in mutual funds, and associated risks. It undertakes various initiatives to boost the reach of mutual funds while promoting retail participation. 

A few of the notable initiatives undertaken by the two regulatory authorities include:

Investor education and awareness programs: In an effort to provide a fillip to financial literacy, SEBI conducts various educational initiatives from time to time. Such programs tend to focus on different investment options, risks, and the importance of due diligence. 

e-KYC (Know Your Customer): SEBI provides investors with the option of completing the KYC process through digital mode. While promoting digital inclusion, the initiative led to simplifying and expediting the account opening process. 

Mutual fund promotion through campaigns: AMFI has been conducting various campaigns periodically to spread awareness about mutual fund schemes and promote their benefits as a suitable investment instrument. 

Standardisation of scheme categories: AMFI, in association with SEBI, has been responsible for the standardisation of mutual funds scheme categories, thus helping investors to undertake informed decisions as per clear and concise categories and attributes. 

Formulation of the code of conduct for distributors: AMFI has been responsible for introducing a code of conduct for distributors of mutual funds, thereby ensuring fair and ethical practices. Apart from instilling confidence among investors, the initiative has been fruitful with regard to enhancing transparency in the equity market.