Question

State any three protective functions of the Securities and Exchange Board of India (SEBI).

Hint:

SEBI’s regulatory framework ensures transparency, fairness, and efficiency in financial markets, fostering investor confidence.

Answer 1

SEBI plays a crucial role in regulating and protecting investors in the securities market. Below are three key protective functions:
(i) Prohibiting fraudulent and unfair trade practices: SEBI prevents unethical activities such as price rigging, misleading statements, and insider trading to ensure market transparency.
(ii) Controlling insider trading: SEBI monitors and penalizes individuals who use privileged information to manipulate stock prices, thereby ensuring a level playing field for all investors.
(iii) Ensuring investor protection: SEBI enforces regulations that safeguard investors’ interests, promoting fair dealing in the securities market.