Business StudiesFinancial Markets

One objective of SEBI is to regulate and develop a code of conduct an…

One objective of SEBI is to regulate and develop a code of conduct and fair practices by intermediaries like brokers and merchant bankers, with a view to making them __________.

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → competitive and professional

Option (1) fair and efficient — Incorrect. “Easy, fair and efficient” is how SEBI wants issuers to raise finances.

Option (2) registered and inspected — Incorrect. Registration and inspection are regulatory functions of SEBI. They are means of control.

Option (3) trained and informed — Incorrect. Training of intermediaries and publishing information are development functions of SEBI. They are separate functions.

Option (4) competitive and professional — Correct. A code of conduct sets the rules of fair behaviour for brokers and merchant bankers. Following it makes them competitive and professional.

NCERT (Pre-rationalised Edition): “Securities and Exchange Board of India (SEBI) … 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.”