Sebi asks stock brokers to put in place system for surveillance of trading activities
In the midst of a strong bull market, Sebi has introduced new guidelines for stock brokers aimed at preventing and detecting fraud and market abuse. These guidelines, outlined in Chapter IVA of the Broker Regulations, mandate surveillance systems for trading activities, internal controls, obligations for brokers and their employees, escalation procedures, reporting mechanisms, and the implementation of a whistle-blower policy.
Amid a raging bull market, the Securities and Exchange Board of India () has notified new norms for stock brokers to prevent and detect fraud or market abuse.In a circular to all stock exchanges and brokers, the regulator said brokers shall comply with the following mechanisms as laid down in Chapter IVA of the Broker Regulations - systems for surveillance of trading activities and internal controls, obligations of the stock broker and its employees, escalation and reporting mechanisms and whistle-blower policy.
Under Chapter IVA of the Securities and Exchange Board of India (Stock Brokers) (Amendment) Regulations, 2024, brokers are required to put in place an institutional mechanism for the prevention and detection of fraud or market abuse.
The standards for implementation of the same including operational modalities shall be formulated by the broker’s Industry Standards Forum (ISF), in consultation with SEBI.
"The provisions of this circular shall come into force in a risk-based, staggered manner to ensure smooth adoption and effective implementation for all the stock brokers by providing enough time for stock brokers, based on their size, for making necessary changes," Sebi said.
The effective date for implementation of the circular for Qualified Stock Brokers (QSBs) is August 1, 2024, considering enhanced obligations and responsibilities such as governance structure and processes and surveillance of client behaviour are already being followed by them.
Source: Stocks-Markets-Economic Times
