Q.Briefly explain how a stock exchange, together with SEBI, protects the interests of investors.

Investor protection is not one single rule but the combined effect of the whole regulatory system covered in this chapter.

Investor protection in the securities market is not the work of any single rule; it is the combined effect of several mechanisms studied through this chapter:

1. A regulated, transparent trading system. Because trading happens only through SEBI-registered brokers on a recognised exchange, under the Securities Contracts (Regulation) Act, 1956, an investor deals in a market with known rules and continuously visible prices, not an informal, unsupervised bargain.
2. Guaranteed settlement. The exchange's Clearing Corporation stands as the counterparty to every trade, so an investor is protected even if the original buyer or seller were to default; the T+1 rolling-settlement cycle also shortens the time money or securities are at risk.
3. Mandatory disclosure through listing obligations. A listed company must regularly disclose material financial and corporate information, so investors can make informed decisions rather than trading blind.
4. SEBI's protective functions. SEBI directly bans fraudulent and unfair trade practices and insider trading, regulates takeovers to protect minority shareholders, and provides investor-education and grievance-redressal channels for a wronged investor to seek recourse. …

Naming only SEBI as the protector and forgetting the exchange's own structural safeguards (Clearing Corporation guarantee, listing disclosu …