You are here: Home » Markets » News
Business Standard

Sebi looks to implement project on automation of surveillance of MFs

The move will help in reducing the lag in recognition of violations, its chief Ajay Tyagi said

SEBI | Mutual Funds | Ajay Tyagi

Press Trust of India  |  New Delhi 

brokers, market, sebi, regulator
Representational image

regulator is in the process of implementing a project on automation of inspections and surveillance of mutual funds, a movethat will help in reducing the lag in recognition of violations, its chief said.

The Securities and Exchange Board of India (Sebi) is eyeing a major technological leap in its surveillance and investigation functions.

"is also in the process of implementing a project onautomation of inspections and surveillance of mutual fund," Tyagi said in the regulator's annual report for 2019-20.

Under the project, mutual fund related data would be ingested in database and use of algorithms in order to generate instances of breaches of regulatory guidelines by in respect of several important guidelines where quantitative analysis is possible.

Successful implementation of this project will enable Sebi to leverage technology to move towards automation of inspections of mutual funds, 100 per cent inspection of data in place of samples and to reduce the lag in recognition of violation, according to the annual report.

In addition, Sebi has taken several measures to strengthen the regulatory framework for debt oriented schemes of mutual fundand is ready to initiate more reforms if required, Tyagi said.

The steps taken by Sebi for debt include mandating minimum investments in liquid assets and introduction of exit load for liquidschemes, placing restrictions on investment in unlisted and unrated debt securities and review of the sectorallimits on investments.

In addition, steps have been taken to improve the robustness of valuation of debt securities by

These reforms are aimed at placing mutual funds in a better position to deal with credit events and redemption pressures, strengthening prudential normsfor investments and bringing more transparency in their investments, Sebi chief said.

"More reforms, as may be required, wouldbe brought in going forward," Tyagi said.

Also, Sebi has already developed an in-house automated system by which it is able to do system based reconciliation of client level securities holdings by brokers thus detecting client securities misuse by brokers, if any.

Further, in order to detect possible market manipulation and strengthenmarket supervision through technology solutions, Sebi has initiated a "data analytics and data models project.

Apart from taking steps towards increasing technological sophistication of the markets, Sebi said it has continuouslyupgraded technology in its own regulatory functions.

The regulator has started work on a data lake project which would have the capability to store and retrieve quickly,a large amount of structured, semi-structured and unstructured data.

The data lake project will supportadvanced analytical tools, such as artificial intelligence and machine learning (AI/ML), deep learning, big data analytics, pattern recognition, processing of structuredand unstructured data, text mining and natural language processing thereby significantly augmenting surveillance capabilities.

At the same time, to safeguardagainst the associated risks including cyber frauds in newer technologies, Sebi implemented its Security andNetwork Operations Center project adhering to international security standards and best practices.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, February 10 2021. 16:29 IST