Which of the following is not an objective of SEBI

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → To ensure active trading of intermediaries

Option (1) To regulate stock exchange — An objective of SEBI (Incorrect). SEBI regulates stock exchanges and the securities industry so that they work in an orderly way.
Option (2) To regulate code of conduct — An objective of SEBI (Incorrect). SEBI regulates the code of conduct and fair practices of intermediaries such as brokers and merchant bankers.
Option (3) To develop code of conduct — An objective of SEBI (Incorrect). It also develops that code, to make intermediaries competitive and professional. Options (2) and (3) are two halves of the same objective.
Option (4) To ensure active trading of intermediaries — Not an objective of SEBI (Correct). SEBI does not try to make brokers trade more. Its aim is to protect investors and to make intermediaries follow fair practices. How much they trade is their own business.

Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below.

NCERT (Pre-rationalised Edition): “Objectives of SEBI The overall objective of SEBI is to protect the interests of investors and to promote the development of, and regulate the securities market. This may be elaborated as follows:
1. To regulate stock exchanges and the securities industry to promote their orderly functioning.
2. To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
3. To prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.
4. To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers etc., with a view to making them competitive and professional.”

Which of the following is not an objective of SEBI

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → To ensure active trading of intermediaries

Option (1) To regulate stock exchange — An objective of SEBI (Incorrect). SEBI regulates stock exchanges and the securities industry so that they work in an orderly way.
Option (2) To regulate code of conduct — An objective of SEBI (Incorrect). SEBI regulates the code of conduct and fair practices of intermediaries such as brokers and merchant bankers.
Option (3) To develop code of conduct — An objective of SEBI (Incorrect). It also develops that code, to make intermediaries competitive and professional. Options (2) and (3) are two halves of the same objective.
Option (4) To ensure active trading of intermediaries — Not an objective of SEBI (Correct). SEBI does not try to make brokers trade more. Its aim is to protect investors and to make intermediaries follow fair practices. How much they trade is their own business.