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

Step 1: Identify the concept being tested.
The question wants one additional function under each of the two categories already identified in the earlier part, Regulatory and Protective functions of SEBI.
Step 2: Explain the concept.
Regulatory functions are about organising and controlling how market participants such as brokers and sub-brokers behave, while Protective functions are about creating a fair, safe environment for the investor.
Step 3: State one more function under each category.
Under Regulatory Functions, SEBI also registers brokers, sub-brokers and other intermediaries and makes sure they follow a proper code of conduct. Under Protective Functions, SEBI prohibits insider trading, that is, it stops people who have access to non-public, price-sensitive information from using it to trade unfairly.
Step 4: Final answer.
Regulatory Function: registration of brokers, sub-brokers and other intermediaries. Protective Function: prohibition of insider trading to stop misuse of confidential information.