Sebi proposes online monitoring of stock brokers' system audit by exchanges

Market regulator Securities and Exchange Board of India (Sebi) on Monday proposed online monitoring of stock brokers’ system audits by the stock exchanges.

 

Exchanges will have to ensure that auditors conduct physical visits to the premises of the stock broker. Further, they will have to develop a web portal to monitor and supervise the process.

 

“The proposed framework ensures that only the authorised auditor or the authorised partners in the audit firm will carry out the audit through physical visits to the premises of the stock brokers, which will be supervised by exchanges,” said Sebi.

 

The regulator has also proposed additional obligations on auditors to verify technical glitches, remedial steps taken, software testing, and compliance with the requirements of the disaster recovery site.

 

 

Stock exchanges may also impose a financial disincentive on stock brokers in cases where there are serious lacunae in the system audit of the stock broker.