Sebi focuses on data, technology tools to detect malpractice in securities market

New Delhi: With an aim to strengthen transparency and fairness in the capital markets, Sebi is focusing on data tools to detect wrong-doing in the securities market as well as for its policy formulation.

Apart from data, another focus area for the Securities and Exchange Board of India (Sebi) would be deployment of technology.

"Data and technology are the two new tools that Sebi is building for itself," the regulator said, adding that the move would enhance transparency and fairness in the securities market.

In its annual report for 2021-22, the regulator said it is increasingly using more and more data to detect wrongdoings in the markets, whether it is in respect of surveillance of trading or investigation into fraud or inspection of market intermediaries.

In its decision making particularly in the context of policy formulation, the regulator said it "will rely more and more on data and eschew dogma in any form. The approach of decision making will be guided by principles and logic supported by data rather than bald references to precedent which may or may not be relevant in today's context".

To facilitate informed decision-making by investors, Sebi is working with Market Infrastructure Institutions (MIIs) and market participants to deliver free, standardised, structured and machine-readable data related to every segment of the market.

Also, the regulator is focusing on the deployment of technology in four broad areas --market, the functionality of digital interface between registered intermediaries and Sebi; automation of surveillance and investigation; and cyber security.

On the market, Sebi has been taking a large number of technology initiatives in respect of the equity markets, including the phased introduction of T+1 settlement, protection of investors' collateral through pledge-repledged mechanism and renunciation of rights.

The regulator said it will continue to invest in the functionality of the intermediaries portal to facilitate a seamless digital interface between all registered intermediaries and Sebi, particularly in the area of periodic compliance submission.

Also, the regulator will pursue investment in the automation of surveillance, investigation and inspection in order to build robust, agile, and scalable capabilities using artificial intelligence technology and machine learning techniques to ensure fairness for the orderly functioning of the market.

"As a part of SupTech initiatives, numerous new algorithms have been developed by the market surveillance team and mutual fund inspection team," Sebi said.

The regulator said it is committed to ensuring the deployment and use of effective cyber security tools across the markets.