Sebi unveils mechanism to curb market abuse

New Delhi: Markets regulator Sebi on Tuesday proposed an institutional mechanism that will require stock brokers to put in place systems for detection and prevention of market abuse. Currently, there are no specific regulatory provisions that cast responsibility on brokers to have a system to prevent market abuse.

In a consultation paper, Sebi has proposed a regulatory framework which will require broking firms as well as their senior management to be accountable for detection and prevention of fraud or market abuse, by setting up robust surveillance and control systems.

In addition, the regulator has suggested that brokers should have appropriate escalation and reporting mechanisms.


Sebi has also listed out probable instances of fraud or market abuse which a broker's system should be equipped to monitor. The probable instances can include creation of misleading appearance of trading, price manipulation, front running, insider trading and mis-selling.