Consider the following statements about the functions of SEBI:
(A) Training of intermediaries of the securities market is a development function of SEBI.
(B) Calling for information by undertaking inspection of stock exchanges is a protective function of SEBI.
(C) Controlling insider trading and imposing penalties for such practices is a protective function of SEBI.
(D) Registration of collective investment schemes and mutual funds is a development function of SEBI.
(E) Exercising powers delegated by the Government of India under the Securities Contracts (Regulation) Act is a regulatory function of SEBI.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A), (C) and (E) only
(A) Training of intermediaries of the securities market is a development function of SEBI. — Correct. Training improves the skills of brokers and other intermediaries. It helps the market grow, so it is a development function.
(B) Calling for information by undertaking inspection of stock exchanges is a protective function of SEBI. — Incorrect. Calling for information through inspection, enquiries and audits is a regulatory function. SEBI uses it to check stock exchanges and intermediaries.
(C) Controlling insider trading and imposing penalties for such practices is a protective function of SEBI. — Correct. Insider trading harms ordinary investors. Controlling it and imposing penalties protects them, so it is a protective function.
(D) Registration of collective investment schemes and mutual funds is a development function of SEBI. — Incorrect. Registration is a control task. Registering collective investment schemes and mutual funds is a regulatory function.
(E) Exercising powers delegated by the Government of India under the Securities Contracts (Regulation) Act is a regulatory function of SEBI. — Correct. SEBI uses the powers under the Securities Contracts (Regulation) Act 1956 that the Government of India delegates to it. This is its last regulatory function.
NCERT (Pre-rationalised Edition): “Regulatory Functions … 2. Registration of collective investment schemes and Mutual Funds. “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. |