- Currently, there are no regulations in place to monitor and control market abuse in the country. To address this, SEBI has established a mechanism to put an end to market abuse.
- The mechanism will monitor and control unauthorized trading, stop firms from enabling mule accounts, and put a focus on ending spoofing, pump and dump, and disproportionate trading. Brokers and trading firms are required to report to SEBI.
- The mechanism outlines instances with a higher likelihood of price manipulation, mis-selling, front running, etc.
- Front running refers to the illegal practice of buying securities, while price manipulation involves artificially affecting the supply and demand of a company's product to manipulate the stock price.
- Mule refers to receiving and transferring illegal money, while spoofing involves a trader placing large orders on a share to mislead others. Pump and dump refers to boosting stock prices through fraudulent and misleading means. The mechanism aims to eliminate these practices.
Question:
Q.1 What is the aim of the mechanism launched by SEBI to control market abuse in India?
a. To monitor unauthorized trading
b. To facilitate mule accounts
c. To increase the price of company stocks through manipulation
d. To put an end to practices such as spoofing, pump and dump, and disproportionate trading
a. To monitor unauthorized trading
b. To facilitate mule accounts
c. To increase the price of company stocks through manipulation
d. To put an end to practices such as spoofing, pump and dump, and disproportionate trading
