functions and objectives of SEBI |what are the powers of SEBI

  ICC International is the governing body of cricket which decides what should be the playing conditions, which teams will participate in the world cup this time and what will be the rules for that, with who the umpires are registered with or licensed. So all the things related to cricket at international level are regulated and governed by ICC. 

functions and objectives of SEBI |what are the powers of SEBI

Similarly, in the invest mentor securities market, SEBI governs the whole market. In today’s article ,you  will learn about what SEBI is, who are SEBI  Licensed Professionals who create these small cases, and how many types of such professionals there are. So, as we talked, ICC governs the entire international cricket, similarly, the invest mentor securities market is governed by Securities and Exchange Board of India (SEBI). If a business or a person wants to operate in this market, for example, if you want to open a brokerage house or get a license of research analyst or for portfolio management… all the types of different units or businesses which operate in the investment or securities market have to get themselves registered with SEBI. And this registration process is quite long. You have to submit your application to SEBI. SEBI examine lots of things in these applications. Like, who are these people who want to start this business, what is their qualification background, what is the net worth of the company, does company have all the necessary resources to carry out all the things they want to do.

 After examining all the minor details thoroughly, SEBI gives license for a work or to a unit. So every unit operating in the securities and exchange market has to get itself registered with SEBI. Only then it gets the license to operate. On this point, let’s draw one more analogy from the cricket. In ICC… ICC governs the whole international cricket, but every country has its own individual Board too. And the individual cricket board ,which is BCCI in case of India, it may have some disputes with Pakistan’s cricket board or Australia’s cricket board, but ultimately, they have to follow all the rules and regulations made by ICC. 

Similarly, in the securities market ,let’s say, there is any dispute between two brokers or any two participants, then the solution to that dispute is the one that properly follows the rules and regulations made by SEBI. Thus, SEBI works in the interest of investors, grants license after examining everything thoroughly, and regulates the whole securities market. So now we have understood how SEBI works. Before we learn about the SEBI Licensed Professionals . Let’s have a quick look at what smallcases are, and where you can buy them. A smallcase is a portfolio or basket of stocks which is related to an idea, theme, or strategy. For example, Brand value is a smallcase having those companies which have strong brands which we see, wear, or use.  

Similarly, Smart Beta smallcase are smallcases which are based on very quantitatively sophisticated strategies, and those strategies are used to select the stocks in it. But generally speaking, a smallcase is a diversified portfolio of stocks, and you can it buy at any big brokerage houses, like, HDFC Securities, Axis Direct ,or Zerodha, and many other brokerage houses, and you can invest in it. Now let’s see who are these SEBI Licensed Professionals who create these smallcases. So majorly there are three different types of SEBI Licensed Professionals who create the smallcases. And firstly, we will learn about the research analysts. Like I said earlier, every business operating in securities market has to first submit an application to SEBI, and then it gets license.

 Similarly, the research analysts, who can either be individuals or big firms, they all have to apply SEB Ifor the license. And SEBI, after examining their qualifications and requirements, grants them the license. Now let’s learn about what research analysts do. The research analysts research on different products and generate a better portfolio or recommendation. Let’s say a research analyst tracks the FMCG sector. So his job is to learn, know ,and understand that sector and guide his client about the good stocks of that sector. Similarly, there are many such research analysts who create quantitative strategies and then create good portfolios or products on its basis and present them to their clients.

 So, generally, the main function of a research analyst is to research and create good portfolios or products on the basis of strong research and present them to their clients. Let’s have a quick look at which research analysts already creates portfolios at smallcase platform. So first and biggest research analysts are the brokerage houses because every broker has a strong team of researchers. For example, if you go on the platform of HDFC Securities, you will find the portfolios made by their research analysts. Similarly, if you go on the platform of Axis Direct, you will find the smallcases made by the research analysts of Axis Direct. Similarly, if you go on the platform of any other broker you will find the smallcases made by them. 

That was about brokerages. Apart from brokerages, independent research analysts can also create smallcases. Like, Alpha multiple and The Calm Investor both are research analysts registered with SEBI. And, actually, you can access the small  cases made by them by clicking on the link below. Thus individuals are also making smallcases. It is important to understand here how the individuals or the big brokerages are serving their clients through small cases. Because earlier when there were no small cases, they used to provide their research or recommendation to the client through excel, or email, or WhatsApp. 

Then clients would visit their broker to put those trades… individually. And probably come back later to tell them the fills. So there was a coordination mismatch. The advice or the recommendation was not actionable. Now, through small cases platform, they can easily package their product as a smallcase and present them to their clients in an actionable form. And clients too, instead of placing 20-25 different orders and keep tracking different stocks, they can execute their one portfolio in a single click very seamlessly and easily. And they can also provide tracking to their research analysts. So now let’s learn about other types of SEBI Licensed research professionals who create small cases. They are investment advisors. Just before this, we learned about what research analysts are whose main function is to research and create very good portfolio strategies. 

The primary function of investment advisors is to advise their client after discovering the goals and objectives of their clients. Here, it is important to understand the difference between investment advisors and research analysts. Investment advisors can advise or recommend on the already existing research or portfolio. It is not necessary that the portfolio was created by them. They can make portfolios if they want after understanding their client’s needs. But they can also suggest an existing portfolio to their client if they feel that the portfolio is good for the client. On the other hand research analysts primarily develop their own portfolio or strategy after doing a strong research. Now we have understood how investment advisors work. Again, there are many investment advisors who creates small cases so that they can provide actionable advice to their clients in a single click. 

If you want to knowhow investment advisors, like, Weekend Investing or Finance, are showing all these smallcasesto their client and how their clients are executing them easily and conveniently. then click on the links below the article  to access their respective websites or small cases. Now let’s know about the third and final SEBI licensed research professionals who are creating these smallcases. They are portfolio management houses or people providing portfolio management services. Okay? So now we have learned about research analysts and their function, we have learned about investment advisors and their function.

Similarly, the portfolio managers are licensed by the SEBI. And they primarily manage the entire portfolio of the client. They can research and create a portfolio for the client, they can also advice on the portfolio that the client already has, or they can create a dedicated portfolio and give it to the client after doing his risk profiling and understanding everything. They can also execute it on behalf of the client. Now, the key difference between the three is a portfolio manager can perform all the functions of an investment advisor or a research analyst. Similarly, an investment advisor can perform all the functions of a research analyst, but he can’t perform the functions of a portfolio manager. And a research analyst can only research and create good products. 

He can’t perform advisory functions or portfolio management. Now that we have understood who portfolio managers are, if you want to know which portfolio managers are already live on the smallcases platform, you can click on the links below. Great portfolio managers like, Deepak Shenoy of Capital mind, and Anish Teli of QED Capital, are already creating small cases for their clients, which are very easily and conveniently actionable in just one click. So now we have understood  which SEBI Licensed Professionals create small cases. 

So now let’s quickly understand what are the other instruments  like smallcases in which you can invest or which are available in the securities market. They are mutual funds. Okay? Just like small case is a basket of stocks which is diversified and attached to an idea, mutual funds are also a basket of stocks. But it is important to note and understand that mutual funds and small cases, both of which are basket of stocks and investing in them is investing your money in the stock market, how they are different from each other and which one is better. If you want to know that, we have made a post  on how smallcases are better than mutual funds. And if you decide to invest in the smallcase, I’ll insist you to  And if you have decided that you want to invest in the small cases, you can go to any of our partner brokers like, HDFC Securities, Axis Direct, or Zerodha, and start investing in just one click.

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