Letters: Watch out for insider trading

The Reserve Bank of India (RBI) intervenes in the foreign exchange market through the medium of commercial banks to stabilise rates. We are living in times of instant communication and real-time processing of information. Are enough checks and balances in place, either before or after the transaction, to prevent insider trading, directly or indirectly, by those with advance knowledge of the matter? Should we wait for another scam to break out before thinking of such preventive steps?

The central banks in the West, South East Asia, Japan and Israel intervene directly in the market without any intermediary. Can the RBI follow this procedure so that the number of people privy to the transactions is at a minimum? What is the merit of the current procedure? There is only an enlargement of the risk. There is also a conflict of interest when an authorised dealer is entrusted with market intervention.

A Seshan, Mumbai

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