Given below are two statements:Assertion (A): One objective of SEBI i…

Given below are two statements:

Assertion (A): One objective of SEBI is to achieve a balance between self regulation by the securities industry and its regulation by the stock exchanges.

Reason (R): One objective of SEBI is to prevent trading malpractices in the securities market.

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

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A) is false but (R) is true.

Assertion (A): One objective of SEBI is to achieve a balance between self regulation by the securities industry and its regulation by the stock exchanges. — False. The balance is between self regulation by the securities industry and its statutory regulation, that is, regulation by law.

Reason (R): One objective of SEBI is to prevent trading malpractices in the securities market. — True. This is part of SEBI’s third objective, along with the balance between self regulation and statutory regulation.

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.”