SEBI holds awareness camps in small towns for people who are new to t…

SEBI holds awareness camps in small towns for people who are new to the share market, on how to check a company before buying its shares. Which objective of SEBI does this serve?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → To guide and educate investors, particularly individual investors

Option (1) To regulate stock exchanges and the securities industry — Incorrect. This objective aims at the orderly functioning of exchanges. The camps do not regulate any exchange.

Option (2) To guide and educate investors, particularly individual investors — Correct. The camps teach new, small investors how to check a company before buying its shares. This is guiding and educating individual investors.

Option (3) To prevent trading malpractices in the securities market — Incorrect. This objective is about stopping wrong practices in trading. The camps only teach investors; they act against no wrongdoer.

Option (4) To develop a code of conduct for intermediaries like brokers — Incorrect. A code of conduct is meant for intermediaries such as brokers. The camps are held for investors.

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.”