New Document top_band
 
Business Standard

FMC to monitor trading systems

To do tech audit of MCX, others to weed out alleged malpractices by managements

Read more on:    Fmc | Nsel | Mcx | System Audit
Related News

The Forward Markets Commission () plans to order a of all national exchanges under its watch. For this, it plans to hire external consultants to audit the advanced technology-based trading systems and other software to detect and weed out alleged malpractices by the exchanges’ promoters or managements.

“We have taken cognizance of complaints regarding illegal terminals or software. We are ordering a systems audit on all national exchanges, including , to look into such malpractices,” a senior FMC official told Business Standard.

A systems audit, or information technology (IT) audit, is an examination of management controls within the IT infrastructure. Experts say while a financial audit is aimed at evaluating whether an organisation is adhering to standard accounting practices, an IT audit checks the system’s internal control design and effectiveness. Auditors would check efficiency, security protocol, development processes and IT governance or oversight.

There have been investor complaints and media reports that a large commodity futures exchange had misused its IT systems for the benefit of its promoter. According to these reports, an illegal dummy terminal was trading on the exchange and eating away the profits of traders and genuine investors.

In response to an email sent last week seeking comment on the FMC move, an MCX spokesperson said, “No comments”.

Currently, FMC doesn’t have enough manpower or technology to monitor or control such activity. While the Securities and Exchange Board of India has invested hundreds of crores in installing and maintaining an integrated market surveillance system that monitors every trade in shares and derivatives, such structures are yet to be established in the commodity futures markets. The traded turnover driven by technology-based systems and terminals stands at several thousand crores.

The systems audit being commissioned would provide valuable insight into loopholes in the infrastructure and suggest corrective steps.

MCX’s internal controls and IT systems had failed to detect or stop illegal trading by Indian Bullion Markets Association (IBMA). A forensic audit revealed about Rs 40,000 crore worth of trades were conducted by an entity belonging to arrested former National Spot Exchange Ltd chief Anjani Sinha’s wife, through IBMA.

The audit would also look into whether the people responsible for security had installed the necessary controls and implemented those effectively.

Sinha was taken to the group’s head quarters earlier this week to cross examine his claims of manipulated software that were put to use in .

Dipak Shah, head of market operations, MCX who was in charge of the surveillance function has been asked to leave by the  exchange. Shreekant Javalgekar, MD & CEO, too had to resign.

The FMC- commissioned audit would also look into whether the people responsible for security installed the necessary controls and implemented these effectively. The audit would also look into if there was any breach in security and what actions can be done to prevent future breaches.

Regulator Gets Tech Savvy

Complaints have surfaced about existence of illegal terminals

Manipulated software used in bourses to benefit trades of promoters

Anjani Sinha also said to have reported manipulated software in NSEL

FMC to order systems audit to look into IT infrastructure

Systems audit to look for shortfalls, breaches and suggest corrective measures


Read more on:   
|
|
|

Read More

TVS Motor hits 52-week high on hopes of higher scooter sales

The stock has rallied 42% so far in October compared to less than 10% rise each in Sensex and auto sector index.

Quick Links

 

Market News

FPIs pump in Rs 1.22 lakh cr in securities

In 2013, investments in Indian securities was Rs 62,288 crore

Markets snap eight-day winning streak on profit taking

Investors booked profits at higher levels after the Sensex and Nifty hit all-time highs in the previous session

Is Wipro the least preferred frontline IT stock?

Broad-based growth continues to elude the firm, sequential growth momentum fails to pick up over previous year

Gold imports stood at 638 tonnes in 2013-14

Quantity of gold imported in 2012-13 was 845 tonnes

Vietnam pepper exports crossed 110,000 tones

Whereas India could hardly managed to export only 9,500 tones of pepper during the period

Back to Top