Sebi to study surveillance systems in overseas markets

With an aim to strengthen its surveillance functions to detect fraudulent and manipulative activities, Sebi is planning to study market intelligence infrastructure and techniques of regulators in the US, UK, Australia and Hong Kong.
The proposed study will also include the best practices followed in developed markets for surveillance of algorithmic and high frequency trading, an area which has been a matter of concern not only for India but also for many others.
The study is one of the major policy initiatives proposed by capital markets regulator Sebi for the next financial year beginning April 1, 2014, for which it has identified 'capacity building' as a core focus area, a senior official said.

According to the proposed move, a comprehensive study needs to be undertaken to understand the "trend/pattern discovery by regulators in developed markets like the US, UK, Australia and Hong Kong" in order to keep pace with the ever increasing globalisation of Indian markets.
"The study would include analysis of their surveillance infrastructure and techniques to decipher patterns in the trading, formation of associations between entities, gathering of market intelligence including linkage of price volume pattern to market information, etc," the official added.
In 2014-15, the Securities and Exchange Board of India (Sebi) also plans to organise an International Research Conference with an aim to commence a dialogue on ways to tackle newer challenges faced by securities markets by ameliorating the pool of research talent around the world.

Sebi, which was established on April 12, 1988, has also proposed to organise a Foundation Day lecture each year, beginning the next fiscal by inviting a Nobel laureate or an eminent person from the fields like economics and finance to talk on relevant issues for securities markets.

With regard to Sebi's capacity building initiatives, an independent consultant has suggested that the regulator needs to undertake technical training, especially in areas like inspection and surveillance, on a much larger scale and the same would be pursued in the next fiscal more vigorously.
At present, Sebi's average training budget per person per year is the lowest among all its peer regulators, while the area of skill development also needs a further fillip.

While Sebi is already working on increasing its staff strength in a gradual manner from about 700 currently, it is looking to achieve quality enhancement of staff through better training and skill enhancement measures, so as to further bolster the supervisory and regulatory capacity of the organisation.