Sebi, stock exchanges step up surveillance

Capital markets watchdog Sebi and stock exchanges have stepped up their live surveillance of intra-day trading in select stocks in the wake of increased volatility seen in these scrips; and any manipulator would face strict regulatory action.

Sources said the Securities and Exchange Board of India (Sebi) has asked the exchanges to beef up their vigil for any possible manipulation in stocks that are witnessing huge volatility and to report any irregularity urgently to the regulator for further action.

These surveillance measures include identification of unusual concentration of positions intra-day, stepping up of the already existing order-level surveillance in addition to the trade-level surveillance, a source familiar with the regulatory move said. Besides, Sebi will also look at intra-day trading in these stocks through its own surveillance mechanism and take necessary action wherever required.

The regulator has its own state-of-the-art integrated surveillance mechanism in addition to the surveillance systems of the stock exchanges.

Following a directive from Sebi, top exchanges BSE and NSE, on Tuesday night, also asked their respective trading members to enhance their own monitoring of intra-day trading activities of their clients, and proactively report any adverse observation immediately to the bourses.

The stepped-up vigil by the regulator and the exchanges follows huge volatility seen in some stocks amid adverse news flow regarding their promoters and top management, and other issues. The exchanges have already sought explanations from these companies about volatility as well as the media reports.

In separate but similar circulars, the BSE and the NSE said they have stepped up their surveillance in view of the recent volatility in the market, and the trading members also have a responsibility of monitoring the trading activity of their respective clients.

“Accordingly, trading members are advised to step-up monitoring of the trading activity of their clients including intra-day activity and proactively report to the exchange observations/findings, if any,” the circular said.

A source said the Sebi’s directive to the exchanges followed a significant stock-level volatility seen in the market and is aimed at keeping a watch on possible manipulation of prices of these stocks.

There are already robust surveillance systems in place, and these new measures are in addition to the existing vigil mechanism.

There has been an overflow of news regarding various scrips which has contributed to the volatility, and the regulator wants to ensure that these situations should not be misused to manipulate the market.

“Such additional surveillance measures are taken by Sebi and exchanges whenever the market is volatile and it also serves as a caution to manipulators,” the source said.