Sebi seeks mechanism to check fraud in stock broking
Market regulator issued a circular directing stock exchanges to bring the provisions to the notice of stock brokers and also disseminate the same on their websites
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New Delhi: Sebi on Thursday issued a circular to stock brokers on establishing an institutional mechanism for prevention and detection of fraud or market abuse in a bid to protect the interest of investors in securities market. The circular mandates the implementation of systems for the surveillance of trading activities and internal controls, introduction of a whistle-blower policy, among other obligations.
These requirements are part of Sebi (Stock Brokers) (Amendment) Regulations, 2024, which aim to ensure higher standards of market integrity and investor protection. The standards for implementation of the same, including operational modalities will be formulated by the broker’s Industry Standards Forum (ISF), in consultation with the Securities and Exchange Board of India (Sebi), the regulator said in the circular.
The implementation will be based on the size of the stock brokers. Brokers with more than 50,000 active Unique Client Codes (UCCs) are required to comply by January 1, 2025. Further, those with 2,001 to 50,000 active UCCs have to comply by April 1, 2025, and brokers with up to 2,000 active UCCs must comply by April 1, 2026.
