Consider the following statements about the purpose and role of SEBI:…

Consider the following statements about the purpose and role of SEBI:

(A) SEBI aims to stimulate competition and encourage innovation.

(B) The environment created by SEBI includes the policy framework and infrastructure of the securities market.

(C) To the issuers, SEBI aims to provide protection of their rights through adequate, accurate and authentic information.

(D) To the intermediaries, SEBI aims to offer a competitive, professionalised and expanding market.

(E) The environment created by SEBI aims at meeting the needs of the issuers, the investors and the stock exchanges.

Which of the statements given above are correct?

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A), (B) and (D) only

(A) SEBI aims to stimulate competition and encourage innovation. — Correct. This is one of SEBI’s aims, along with its basic purpose.

(B) The environment created by SEBI includes the policy framework and infrastructure of the securities market. — Correct. The environment covers rules, institutions, instruments, practices, infrastructure and policy framework.

(C) To the issuers, SEBI aims to provide protection of their rights through adequate, accurate and authentic information. — Incorrect. This protection is meant for the investors. For issuers, SEBI aims at a market place to raise finances easily.

(D) To the intermediaries, SEBI aims to offer a competitive, professionalised and expanding market. — Correct. Such a market helps intermediaries serve investors and issuers better.

(E) The environment created by SEBI aims at meeting the needs of the issuers, the investors and the stock exchanges. — Incorrect. The third group is the market intermediaries. Stock exchanges are regulated by SEBI.

NCERT (Pre-rationalised Edition): “…Purpose and Role of SEBI The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. It also aims to stimulate competition and encourage innovation. This environment includes rules and regulations, institutions and their interrelationships, instruments, practices, infrastructure and policy framework.
This environment aims at meeting the needs of the three groups which basically constitute the market, viz, the issuers of securities (Companies), the investors and the market intermediaries.
• To the issuers, it aims to provide a market place in which they can confidently look forward to raising finances they need in an easy, fair and efficient manner.
• To the investors, it should provide protection of their rights and interests through adequate, accurate and authentic information and disclosure of information on a continuous basis.
• To the intermediaries, it should offer a competitive, professionalised and expanding market with adequate and efficient infrastructure so that they are able to render better service to the investors and issuers. …”