Sebi earmarks Rs 5 bn for upgrading surveillance to tackle mkt manipulators

To tighten the noose around market manipulators, the Securities and Exchange Board of India (Sebi) has earmarked Rs 5 billion for upgrading its surveillance and network monitoring systems.

The markets regulator is planning to rope in an information technology (IT) provider for implementing an integrated market surveillance system (IMSS) through a centralised monitoring system that will operate round the clock.

The IT provider will have to set up entirely new systems and carry out exhaustive data analysis. The IT vendor will be initially contracted with Sebi for a period of three years.

A regulatory source confirmed the information. However, an email sent to Sebi seeking official response remained unanswered. According to the source, the latest technology is aimed at tackling growing and new-age threats to the stock market ecosystem.

“Improvisation and strengthening of surveillance is required as integration of commodity and equity exchanges has posed new challenges,” said the regulatory source.

The new technology will also help remotely monitor the surveillance system and provide real-time status reports. This will help mitigate cyber security threats and detect the cause for technical glitches as and when it appears.

The new software will be equipped to operate during a period of high volatility or during big events, such as elections. It will work as an oversight system and keep tabs on Sebi’s risk management system, especially payment and settlement of trades.

The software will be designed to automatically collect data from stock exchanges and depositories. It will also be capable of identifying manipulation and raising alerts accordingly.

The system will conduct data analysis in an extensive manner and provide reports that will help the regulator understand the situation better to take effective policy decisions, explained the source.

Sebi’s market surveillance system went live in 2007. The system collects data for suspicious market activities through several sources. However, the regulator keeps on upgrading the software to mitigate the risk of threats.

The regulator has taken a number of steps and imposed hefty penalty on erring individuals and entities through enforcement action throughout the year.

Recently, in order to align with international standards, Sebi has revamped its insider trading regulations and notified rules on settlement of administrative and civil proceedings.  The regulator has made several cases pertaining to ponzi and collective investment schemes to make the markets more secure and regulated.