Put in place mechanisms to prevent market abuse and fraud: SEBI advises stockbrokers

(MENAFN- IANS) Mumbai, July 4 (IANS) In a further bid to instill investor confidence in equity markets, the Securities and Exchange Board of India (SEBI) on Thursday asked brokers to come up with an adequate mechanism to prevent and detect market abuse and fraud.

In the circular, the market regulator said that stockbrokers must implement an institutional mechanism to prevent and detect fraud and market abuse.

The market regulator stated that stockbrokers will comply with the mechanisms set out in the Broker Regulations.

These mechanisms are to provide for “trading supervision and internal control systems; stockbroker and employee responsibilities; escalation and reporting mechanisms; and whistleblower policies.”

Qualified brokerage firms (QSBs) will be required to implement these mechanisms from August 1, while other brokerage firms will be required to implement them between January 1, 2025 and April 1, 2026.

The circular stated that implementation standards, including modalities of operation, would be developed by the Industry Standards Forum (ISF) of brokers in consultation with SEBI.

As stated by the market regulator, the provisions of this circular will take effect gradually and on a risk-sensitive basis to ensure smooth adoption and effective implementation for all stockbrokers. Stockbrokers, depending on their size, will be given sufficient time to implement the necessary changes.

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