Question

Also state one more function of each category of the functions identified in (i) above.

Hint:

Remember: Conducted audits/inspections = Regulatory Function. Banned unfair/fraudulent trade practices = Protective Function.

Answer 1

Correct Answer: 4

Step 1: Recall the two SEBI functions identified in the previous part.
The two functions of SEBI identified earlier were: (1) Regulatory Function and (2) Protective Function. Now we need to state one additional specific example of each.
Step 2: State one more Regulatory Function.
One additional Regulatory Function of SEBI is: Registration of brokers, sub-brokers, merchant bankers, and other intermediaries operating in the securities market. SEBI lays down rules and regulations governing their conduct and can levy fees and impose penalties for non-compliance.
Step 3: Explain the Regulatory Function further.
This ensures that only qualified and accountable market intermediaries are allowed to operate, which keeps the market organized and transparent, protecting it from entry by unqualified or dishonest players.
Step 4: State one more Protective Function.
One additional Protective Function of SEBI is: Controlling and prohibiting insider trading. Insider trading happens when a person with access to confidential, price-sensitive information about a company uses it to trade and make unfair profits, at the cost of uninformed investors. SEBI strictly monitors and penalizes such activity.
Step 5: Explain the Protective Function further.
By curbing insider trading, SEBI ensures that all investors - both large institutional and small retail investors like Riya - operate on a level playing field, which maintains trust in the capital market.
Step 6: Conclude.
One more Regulatory Function: Registration of market intermediaries and levying of fees. One more Protective Function: Controlling insider trading and imposing penalties.
\[ \boxed{ \text{Additional SEBI functions: Registration of intermediaries (Regulatory); Controlling insider trading (Protective)} } \]