During one year SEBI took three steps: (i) it registered a new mutual fund; (ii) it ran a training course for the staff of brokers; (iii) it took action against a company that made misleading statements to push up its share price. To which groups of SEBI’s functions do these steps belong, in the same order?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Regulatory, Development, Protective
Option (1) Regulatory, Development, Protective — Correct. Registering a mutual fund is a regulatory function: SEBI registers collective investment schemes and mutual funds. Training the staff of brokers is training of intermediaries, a development function that helps the market grow. Acting against misleading statements is a protective function, because it stops fraudulent and unfair trade practices.
Option (2) Development, Protective, Regulatory — Incorrect. Every place is wrong. Registration is regulatory, training is development and action against misleading statements is protective.
Option (3) Protective, Regulatory, Development — Incorrect. Every place is wrong here too. Registering a mutual fund is a regulatory step, training brokers’ staff is development, and action against misleading statements is protective.
Option (4) Regulatory, Protective, Development — Incorrect. The first place is right, but the last two are swapped. Training brokers’ staff is development, and acting against misleading statements is protective.
NCERT (Pre-rationalised Edition): “Regulatory Functions 1. Registration of brokers and sub-brokers and other players in the market. “Development Functions 1. Training of intermediaries of the securities market. “Protective Functions 1. Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc.” |