Given below are two statements:Statement I: SEBI aims to stimulate co…

Given below are two statements:

Statement I: SEBI aims to stimulate competition and encourage innovation in the securities markets.

Statement II: The environment that SEBI aims to create includes rules and regulations, instruments, practices, infrastructure and the policy framework.

In the light of the above statements, choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Both Statement I and Statement II are correct.

Statement I: SEBI aims to stimulate competition and encourage innovation in the securities markets. — Correct. Besides its basic purpose, SEBI also aims to stimulate competition and encourage innovation. Competition and new ideas help the market grow.

Statement II: The environment that SEBI aims to create includes rules and regulations, instruments, practices, infrastructure and the policy framework. — Correct. The environment is the whole set-up of the market. It also covers institutions and their interrelationships.

NCERT (Pre-rationalised Edition): “…Purpose and Role of SEBI The basic purpose of SEBI is to create an environment to facilitate efficient mobilisation and allocation of resources through the securities markets. It also aims to stimulate competition and encourage innovation. This environment includes rules and regulations, institutions and their interrelationships, instruments, practices, infrastructure and policy framework.
This environment aims at meeting the needs of the three groups which basically constitute the market, viz, the issuers of securities (Companies), the investors and the market intermediaries.
• To the issuers, it aims to provide a market place in which they can confidently look forward to raising finances they need in an easy, fair and efficient manner.
• To the investors, it should provide protection of their rights and interests through adequate, accurate and authentic information and disclosure of information on a continuous basis.
• To the intermediaries, it should offer a competitive, professionalised and expanding market with adequate and efficient infrastructure so that they are able to render better service to the investors and issuers. …”