Question

State one more function of each category of the functions (Regulatory and Protective) identified in the case above.

Hint:

Insider trading is the illegal use of confidential company information for personal gain. Registration of brokers ensures that only authorized people handle public money. Investor education is also a vital protective function of SEBI.

Answer 1

Concept:

• Regulatory Category: Focuses on organizing and controlling the behavior of intermediaries like brokers and sub-brokers.

• Protective Category: Focuses on ensuring a level playing field and educating investors.
Step 1: State an additional Regulatory Function
Apart from conducting enquiries, another key regulatory function is:

Registration of intermediaries: SEBI is responsible for the registration of brokers, sub-brokers, and other players in the market to ensure they follow a strict code of conduct.

Step 2: State an additional Protective Function
Apart from prohibiting fraudulent trade practices, another key protective function is:

Prohibition of Insider Trading: SEBI prevents individuals with access to non-public, price-sensitive information from using that information to trade and make unfair profits.