Sebi mandates institutional mechanism for fraud prevention in stock broking

Sebi on Thursday issued a circular requiring stock brokers to establish an institutional mechanism for prevention and detection of fraud or market abuse in a bid to protect the interest of investors in securities market.

The circular mandates the implementation of systems for the surveillance of trading activities and internal controls, introduction of a whistle-blower policy, among other obligations.

These requirements are part of Sebi (Stock Brokers) (Amendment) Regulations, 2024, which aim to ensure higher standards of market integrity and investor protection.

The standards for implementation of the same, including operational modalities will be formulated by the broker's Industry Standards Forum (ISF), in consultation with the Securities and Exchange Board of India (Sebi), the regulator said in the circular.

The implementation will be based on the size of the stock brokers. Brokers with more than 50,000 active Unique Client Codes (UCCs) are required to comply by January 1, ...