Tech to help Sebi against insider trading practices

Tech to help Sebi against insider trading practices

Will align with global best practices

Tech to help Sebi against insider trading practices

The Securities and Exchange Board of India (Sebi) has decided to further strengthen insider trading norms using the latest technology to create an atmosphere of trust in the capital markets.

Simply put, the market regulator plans to work towards a "stricter and prompter enforcement" regime using the latest technology.  It also decided to take steps to attract more retail investors to the markets as "more of domestic savings have been channelised into physical assets of late and financial savings have undergone a marked decline," Sebi said in its latest annual report to the government.

Further, Sebi continued, the way forward for securities market is to create an atmosphere of trust in the market, confidence in the investor and efficiency in the system.  Therefore, it said: "We need to work towards stricter and prompter enforcement, spreading financial education and upgrading technology."

Observing that higher individual investor participation will be a precedent to the development of markets, Sebi said it would continue to take measures to shore up the retail presence in the capital markets. It has already introduced anchor investors in initial public offerings (IPOs) and prohibited non-retail investors from withdrawing or lowering bid sizes as part of steps to attract individuals investors.

At the same time, Sebi said insider trading regulations would be updated to bring them in line with global best practices. 

"The extant regulatory regime on insider trading would be reviewed and realigned with the best practices adopted globally under the supervision of a high-level committee," the regulator noted.

It also pointed out that amendments to insider trading regulations to fortify the framework that protects a fair marketplace is also in progress. 

In this context, Sebi said it has set up a 16-member committee to suggest new rules on insider trading, which would replace the almost two-decade old set of norms. The committee will examine practices followed in other parts of the world and would submit its recommendations on insider trading by next year.

Sebi also felt it crucial to promote fair practices that align with the best in class through stronger enforcement measures and in harmony with the technological developments worldwide. 

Although some market segments may require constantly evolving vigil due to their pervading effects, but all grey areas would require immediate intervention and as such, investor education would remain a priority area, it added.