The question asks which of the given options is not a protective function of the Securities and Exchange Board of India (SEBI). Let's analyze each option:
- Prohibition of fraudulent and unfair trade practices: This is a protective function as SEBI ensures that the securities market is free from manipulative practices to protect investor interest.
- Controlling insider trading and imposing penalties for such practices: This also falls under protective functions, as controlling insider trading protects market integrity and investor trust.
- Promotion of fair practices and code of conduct in securities market: This is another protective measure to safeguard the interest of investors and ensure transparency.
- Undertaking measures to develop the capital markets by adapting a flexible approach: This option focuses on market development rather than protection, aligning with developmental functions, not protective ones.
Therefore, the correct answer is the fourth option: Undertaking measures to develop the capital markets by adapting a flexible approach. This option highlights a developmental role rather than a protective function.