To whom an investor has to first approach if he wishes to buy or sell any security?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Registered broker or sub broker
Option (1) Registrar of companies — Incorrect. The Registrar administers the incorporation and filings of companies and has no role in buying or selling their shares.
Option (2) SEBI official — Incorrect. SEBI regulates the market and protects investors, but it does not execute trades for them.
Option (3) CEO of the company in which investor is planning to invest — Incorrect. Shares already issued change hands between investors in the secondary market; the company is not a party to those dealings.
Option (4) Registered broker or sub broker — Correct. Securities are traded on a stock exchange and only members of the exchange may trade on it. An investor is not a member, so the first step is to approach a broker registered with SEBI, who can place the order on the investor’s behalf.
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): “The following steps are involved in the screen-based trading for buying and selling of securities: |