Question : Case Study 81
OPQ Ltd. is a technology startup planning to trade its shares on a stock exchange. The company's management is reviewing the protective functions of SEBI.
Question :
What is one of the protective functions of SEBI that ensures fair practices in the securities market?
Option 1: Providing loans to companies
Option 2: Facilitating mergers and acquisitions
Option 3: Regulating interest rates
Option 4: Prohibiting insider trading
Correct Answer: Prohibiting insider trading
Solution : The correct answer is (d) Prohibiting insider trading
One of the protective functions of SEBI (Securities and Exchange Board of India) that ensures fair practices in the securities market is prohibiting insider trading. Insider trading refers to the illegal practice of trading in securities of a company based on non-public, material information about that company. SEBI regulates and enforces rules to prevent insider trading, aiming to maintain a level playing field for all investors and ensure fair and transparent trading in the market. This helps in upholding the integrity of the securities market and protecting the interests of investors.
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