Question

Why does NSE ensure stringent eligibility criteria for membership?

Hint:

Strict NSE membership rules ensure market safety, professionalism, and investor protection.

Answer 1

The National Stock Exchange (NSE) enforces stringent eligibility criteria for membership to maintain high standards of integrity, reliability, and financial discipline among its members. These criteria ensure that only financially sound and professionally competent individuals or firms are allowed to participate in trading activities on the exchange.
Key reasons for enforcing strict eligibility include:

Protecting Investors: Ensures that only credible and trustworthy members handle investor transactions, thereby protecting investor interests.
Maintaining Market Integrity: Prevents fraudulent practices and promotes fair and transparent trading.
Ensuring Compliance: Members must follow SEBI regulations, exchange rules, and financial disclosures.
Promoting Professionalism: Encourages ethical conduct and responsibility in financial dealings.
Thus, stringent membership criteria help NSE build a safe, efficient, and trustworthy trading environment for all market participants.