Sebi: Bourses Not Vigilant Enough On Manipulation

The Securities and Exchange Board of India (Sebi) yesterday pulled up major stock exchanges for not doing much to check manipulative tendencies

Although the regulator expressed satisfaction on collection of margins, it informed the bourses that they needed to be far more proactive on abnormal price movements and identifying investors responsible for such movements.

Sebi sources said senior executive director L K Singhvi was unhappy over the progress in integrating the markets even though considerable ground had been made on safety issues like collecting margins.

Sebi was also miffed over the fact that none of the exchanges had been able to furnish details of the positions, volumes and evidence of any circular trading by their top 20 brokers, as demanded by the regulator two weeks back.

 

"None of the exchanges was able to give definite figures. They are not doing enough. The capability to detect abnormal price movements exists, but the issue is to what extent they use this capability. We have told them that they must pull up their socks," said a top Sebi official who was present at the meeting.

Sebi also criticised the exchanges for their inability to to implement the earlier decision of relaxing price bands by 4 per cent after a 30-minute gap. The exchanges' excuse is that due to software-related problems it is not possible to electronically track the relaxation of these bands.

But Sebi officials said the exchanges had agreed to implement this at an inter-exchange surveillance group. "We have, in fact, been forced to defer the move indefinitely owing to their failure to address the software-related issues," said the official. Sebi had recently asked the exchanges to identify their top 20 brokers and gather data on their trade, volumes and detect indications of circular trading.

About a month back, the regulator wrote a strong letter to all the exchanges, expressing its unhappiness over the way they were tackling unusual volatility in prices.

Sebi chairman DR Mehta said the regulator was by and large satisfied with the exchanges since this time the regulator found exchanges to be "far more alert".

But this, Sebi officials said, pertained more to the stock exchanges' slapping margins on scrips rather than actually detecting manipulations in scrips and reporting it to the regulator.