Sebi installs new alerts software to spot suspicious transactions

All alert-generating systems, including the latest one, generate 50-100 alerts a day

Expanding its surveillance mechanism to catch market manipulators and fraudsters early, watchdog Sebi has put in place a new alert-generation system to detect possible wrongdoings by the traders and their group entities with significant exposure to any particular stock.

This new system has been linked to recently implemented mandatory disclosure of any holding of one per cent or more in a single stock by a trading member, individually or through group entities.

All alert-generating systems, including this latest one, are resulting into 50-100 alerts in a day, on an average, while their numbers rise even further on certain days when markets see significant movements or when some important policy developments or market-moving incidents take place, sources said.

However, the number of cases where prima facie some violations are eventually found after further inspections and investigations stand much lower, they added.

These alerts are analysed as and when they come on a round-the-clock basis, including through automated systems, for further possible inspections and eventually for necessary regulatory actions if some wrongdoings are found.

The official said that the new alert system for brokers with significant exposure to stocks has been put in place by the Integrated Surveillance Department (ISD) of the Securities and Exchange Board of India (Sebi).

The ISD also holds surveillance meetings at regular intervals with the stock exchanges, clearing corporations, as also with other market intermediaries as and when required.

Among others, the ISD receives information through media scanning, Intelligence Bureau reports, online investor redressal system SCORES, stock exchanges, suspicious transaction reports from various entities, as also IMSS (Integrated Market Surveillance System) and DWBIS (Data Warehousing and Business Intelligence System) tools of the regulatory authority.

Explaining the alert-generation process, sources said that the information is aggregated across the exchanges and analysed by dynamic system-based parameters and pattern-recognising modules, which throw up alerts for first-level processing.

These first level alerts are further analysed by a central processing team to filter out alerts for second-level scrutiny. These alerts and the trading pattern in the related stocks and of involved entities are then further taken up for a comprehensive analysis by the stock exchanges and the ISD for ascertaining any prima facie violations and for any immediate action.