In which year the SEBI formulated the 'Insider Trading Regulations'?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3: 1992.
Explanation:
The Securities and Exchange Board of India (SEBI) formulated the 'Insider Trading Regulations' (SEBI (Prohibition of Insider Trading) Regulations, 1992) in the year 1992 to maintain transparency and fairness in the capital market.
'Insider Trading' refers to the buying or selling of shares based on confidential information (Unpublished Price Sensitive Information) regarding a company that has not yet been made public.
SEBI has declared this a punishable offense in order to protect the interests of investors.
Additional Facts:
- Establishment of SEBI: SEBI was established on April 12, 1988; however, it attained statutory status through the 'SEBI Act, 1992' on January 30, 1992.
- New Amendment: To further strengthen the 1992 regulations, new 'PIT Regulations' (Prohibition of Insider Trading) were implemented in the year 2015.
- Insider: An individual who has access to confidential and material information regarding a company (such as a director, senior officer, or employee).
- Objective: To provide equal opportunities to all investors in the stock market and to prevent unfair gains.
Potential Questions for Upcoming Exams:
Question: In which city is the headquarters of the Securities and Exchange Board of India (SEBI) located?
Answer: Mumbai.
Question: In which year did SEBI receive recognition as a statutory body?
Answer: 1992.
Question: Which is India's oldest stock exchange regulated by SEBI?
Answer: Bombay Stock Exchange (BSE), established in 1875.