Sebi ups investment in data, tech for better transparency: Annual Report

Regulator equipped with numerous new algos for surveillance, inspection, says chairperson

The Securities and Exchange Board of India (Sebi) is investing in data and technology, two new tools to enhance transparency, ensure fairness, and to help investors make an informed choice, said chairperson Madhabi Puri Buch in her message in the regulator’s annual report for 2021-22.

The market regulator will invest in automation of surveillance, investigation, and inspection, she said.

“Numerous new algorithms have been developed by the markets surveillance team and mutual fund inspection team. These initiatives will be taken forward and also replicated across other domains of the market,” said Buch. She added that Sebi will rely more and more on data and eschew dogma in any form.  

The chairperson has advocated for data democratisation in her recent addresses and has also shown the path that Sebi is taking in achieving it. In her message, she said, “We are working with market infrastructure institutions and market participants to deliver free, standardised, structured, and machine-readable data related to every segment of the market.”

She added that they would like to encourage adoption of RegTech by all market participants going ahead.

While focusing on the need for more depth in the bond market, Buch said that a robust corporate bond repo market is required for market making to become commercially attractive and in turn to bring liquidity. During 2021-22, 784 corporates mobilised Rs 5.2 trillion through private placement in electronic bidding platform.

Moreover, building on the current ESG framework including disclosures by listed companies and investment by ESG-themed mutual funds, ESG rating providers may be required to give disclosures.

“Going forward, the third leg of the framework, that is disclosures by agencies that provide ESG rating services, is being deliberated,” said Buch. On the ESG front, she added that the regulator is conscious that along with the need to align with global benchmarks, there has to be adaptation for many ESG aspects that may be unique to emerging markets like India.

In one of the discussion papers floated by the regulator, it had proposed that credit rating agencies and research analysts with a minimum of Rs 10 crore net worth and with standard infrastructure and manpower will be eligible to be accredited by Sebi.

At the end of the previous financial year, there were eight mutual fund schemes in India having ESG themes with assets under management at Rs 11,652 crores.

The annual report showed the rising interest towards Alternate Investment Funds (AIFs). In FY22, 153 new AIFs were registered against 90 AIFs in FY21, depicting a 92.8 per cent increase in funds raised.

Sebi said that during 2021-22, it has taken up 38 new cases and completed 82 cases related to Fraudulent and Unfair Trade Practices (FUTP) violations. On the other hand, under intermediary regulations, 24 certifications of registrations were cancelled, six were suspended and warnings were issued to eight.