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Answer the Following Question: State the Protective Functions of the Securities and Exchange Board of India. - Business Studies

Short Note

Answer the following question:
State the protective functions of the Securities and Exchange Board of India.

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Solution

The followings are the Protective functions of SEBI:

  1. Prohibition - SEBI prohibits fraudulent and unfair trade practices. In addition, it prevents the spreading of misleading statements which are likely to affect the functioning of the securities market.
  2. Checks on insider trading: Insider trading refers to a situation wherein an individual connected with the company leaks out crucial information regarding the company which may adversely affect its share prices. SEBI keeps a strict check on such practices.
  3. Promotion - SEBI encourages fair trade practices and promotes a code of conduct for the intermediaries to assist fair trade.
  4. Protection - SEBI undertakes various steps and protective measures to protect the interests of the investors in the financial markets.
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