Which of the following pairs of a function of SEBI and its group is correctly matched?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Registration of collective investment schemes and mutual funds – Regulatory function
Option (1) Training of intermediaries of the securities market – Protective function — Incorrect. Training of intermediaries is a development function. It improves the skills of brokers and other intermediaries, and so helps the market grow.
Option (2) Controlling insider trading and imposing penalties for such practices – Regulatory function — Incorrect. This is a protective function. Insider trading harms ordinary investors, so controlling it and punishing it protects them.
Option (3) Registration of collective investment schemes and mutual funds – Regulatory function — Correct. SEBI’s regulatory functions begin with registration. After brokers and sub-brokers, SEBI also registers collective investment schemes and mutual funds.
Option (4) Prohibition of fraudulent and unfair trade practices – Development function — Incorrect. This is a protective function. It stops misleading statements, manipulations and price rigging, which would cheat investors.
NCERT (Pre-rationalised Edition): “Regulatory Functions 1. Registration of brokers and sub-brokers and other players in the market. “Development Functions 1. Training of intermediaries of the securities market.” “Protective Functions 1. Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc. |