Question

Which of the following is not a function of Securities and Exchange Board of India (SEBI)?

• A. Registration of brokers and sub-brokers and other players in the market
• B. Training of intermediaries of the securities market
• C. Controlling insider trading
• D. Pricing of securities

Hint:

Remember:

• SEBI $\rightarrow$ Regulates and protects the securities market
• Controls insider trading and registers intermediaries
• Does not fix security prices directly

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The Securities and Exchange Board of India (SEBI) was established to regulate the Indian capital market and protect the interests of investors.
Its functions are broadly divided into three categories:
1. Regulatory Functions: Controlling the players and rules of the market.
2. Protective Functions: Preventing fraud, unfair trade practices, and insider trading.
3. Developmental Functions: Promoting the growth of the market through education and innovation.
Step 2: Detailed Explanation:
Let us evaluate each option based on SEBI's mandate:
(A) Registration of brokers: This is a Regulatory Function. SEBI ensures that only legitimate, qualified entities can act as intermediaries between investors and the stock exchange.
(B) Training of intermediaries: This is a Developmental Function. SEBI conducts workshops and exams (like NISM) to ensure that brokers, advisors, and agents have the necessary knowledge to serve investors.
(C) Controlling insider trading: This is a Protective Function. Insider trading is the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information. SEBI has strict laws to punish this.
(D) Pricing of securities: This is NOT a function of SEBI.
In a modern, liberalized economy like India, the price of a share or security is determined by Market Forces—Demand and Supply.
If more people want to buy a stock than sell it, the price goes up. SEBI does not tell a company what its share price should be.
It only ensures that the disclosure of information is truthful so that investors can make an informed decision on what price they are willing to pay.
Step 3: Final Answer:
SEBI is a regulator, not a price-setter. Market forces determine the Pricing of securities.