Which of the following statements about the objectives of SEBI is inc…

Which of the following statements about the objectives of SEBI is incorrect?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → SEBI aims to promote the development of, and regulate, the money market.

Option (1) SEBI aims to regulate stock exchanges and the securities industry to promote their orderly functioning. — True. This is SEBI’s first objective.

Option (2) SEBI aims to promote the development of, and regulate, the money market. — False. SEBI’s broad objective is to develop and regulate the securities market. The money market deals with short-term funds of up to one year, and SEBI’s objectives do not cover it.

Option (3) SEBI aims to prevent trading malpractices in the securities market. — True. This is part of SEBI’s third objective.

Option (4) SEBI aims to regulate and develop a code of conduct and fair practices by brokers and merchant bankers. — True. This is SEBI’s fourth objective, which aims to make intermediaries competitive and professional.

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.”