Sebi calls for books of 70 top brokers

Sebi randomly audits around 10% of the brokers every year.

The Securities and Exchange Board of India (Sebi) has asked the top 70 brokers and 30 sub-brokers (based on their turnover in all major stock exchanges) in the country for their books of accounts for the last two years.

Sebi sent a notice to this effect to brokers late last week. "This is unusual because for the first time Sebi has asked for data from brokers directly," said a broker who received a notice.

Brokers have to submit their audited accounts to the exchanges anyway and Sebi, if it wishes, can call for the accounts from the exchanges.

While the exchanges have already submitted the information to Sebi, the notice seeking the additional audit is supplementary to this. Further, the notice clearly states that Sebi can verify any data relating to the last two years.

A senior Sebi official, however, said: "This is a regular, routine exercise that has nothing to do with the recent stock market crash. We annually check the books of brokers, based on their turnover. This is part of that exercise."

Sebi randomly audits around 10 per cent of the brokers every year. The audit is done by a panel of brokers approved by the regulator.

This year's audit comes close on the heels of several investigations launched by Sebi last financial year into brokers' activities because the markets were fairly volatile then. The securities watchdog is already in the process of investigating bank scrip movements in the last financial year.

Sebi has a market alert system, where any rise or fall of around 100 points in the benchmark index usually has its surveillance team seeking details from the stock exchanges.

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Under the scanner

• While the exchanges have already submitted data on brokers to Sebi, the notice seeking the additional audit is supplementary to this.
• Sebi randomly audits around 10 per cent of the brokers every year. The audit is done by a panel of brokers approved by the markets regulator.