Which of the following is not a function of the stock exchange?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Providing regulatory rules for stock brokers
Option (1) Providing scope for speculation — A function of the stock exchange (Incorrect). It allows speculative buying and selling within the law, in a restricted and controlled way. This keeps the market active.
Option (2) Spreading of Equity Cult — A function of the stock exchange (Incorrect). It spreads share ownership among more people by regulating new issues and teaching the public about investment.
Option (3) Safety of transaction — A function of the stock exchange (Incorrect). Dealings take place under set rules, so investors trade on a safe platform.
Option (4) Providing regulatory rules for stock brokers — Not a function of the stock exchange (Correct). Registering and regulating stock brokers is the work of SEBI, the regulator of the securities market. The stock exchange works under SEBI’s rules; it does not frame them.
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): “6. Providing Scope for Speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner. …”
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