Consider the following functions of SEBI:
(A) Promotion of fair practices and code of conduct in the securities market
(B) Registration of collective investment schemes and mutual funds
(C) Undertaking steps for investor protection
(D) Levying fee or other charges for carrying out the purposes of the Act
(E) Controlling insider trading and imposing penalties for such practices
How many of the above are protective functions of SEBI?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Three
(A) Promotion of fair practices and code of conduct in the securities market — Protective function. It keeps the market fair for investors, so it is one of the protective functions.
(B) Registration of collective investment schemes and mutual funds — Not a protective function. Registering schemes and mutual funds brings them under SEBI’s rules. It is a regulatory function.
(C) Undertaking steps for investor protection — Protective function. Protecting investors is the very purpose of the protective functions.
(D) Levying fee or other charges for carrying out the purposes of the Act — Not a protective function. Collecting fees helps SEBI run its work under the Act. It is a regulatory function.
(E) Controlling insider trading and imposing penalties for such practices — Protective function. Insider trading harms ordinary investors. Stopping it and punishing it is a protective function.
NCERT (Pre-rationalised Edition): “Regulatory Functions 1. Registration of brokers and sub-brokers and other players in the market. “Protective Functions 1. Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc. |