Violations and wrong-doings in the market can be done in many ways but insider trading and front running always grab the most headlines and all stakeholders, including capital markets regulator Securities and Exchange Board of India (Sebi) is well aware of the fact.┬а
Speaking at the 49th Foundation Day Lecture of IIM Bangalore, Sebi chairperson Madhabi Puri Buch highlighted the advancements that the regulator has done in terms of harnessing technology and data to prevent or minimise wrongdoings in the securities market.┬а
Interestingly, she also highlighted the way violators have evolved following the regulatorтАЩs enhanced focus on technology as a tool to aid in surveillance.┬а
тАЬPeopleтАЩs modus operandi becomes smarter and smarter. Earlier people used to be foolish enough to do insider trading in their own names. Then they realised that Sebi can catch them so they started doing [trading] in their mother, father, etc name,тАЭ she said while replying to audience queries post her presentation.┬а
тАЬThen they realised that common surnames also Sebi catches. Then they started doing in mother-in-lawтАЩs name. Then they realised Sebi is now able to connect mother-in-law also then тАШbehnoisтАЩ became very popular. I am serious. Because there is no way you can connect your sisterтАЩs husband. Then we realised we can do [catch] through call data records. Then they moved to WhatsApp. Now WhatsApp is a problem,тАЭ added Buch, the first female chief of the capital markets watchdog.┬а
While she acknowledged that regulators typically remain one step behind when compared to the wrongdoers, she stressed on the fact that the idea is to тАЬto make it harder and harder for people to do wrong thingsтАЭ.┬а
Meanwhile, during her speech, the Sebi chairperson said the capital markets watchdog has a strong algorithm тАУ developed in-house тАУ that throws alerts related to insider trading and front running.┬а
тАЬWe assembled a team of relatively young officers who put together the most amazing algorithms that I have ever seen across my 25 years of career. So today when we look at the data, we look at the algo and we look at the alerts, itтАЩs magic. Because you can look at the data and say here is this guy, look at his trading pattern, thatтАЩs insider trading. It is as simple as that,тАЭ she said.┬а
She further added that while there have been certain setbacks as the regulation has not kept pace with technology, the watchdog is now тАЬbusy trying to fix the regulation (and) we think we will get there in a few monthsтАЭ. ┬а┬а
тАЬThe objective of the regulator is not to catch people doing bad things. The objective is to prevent people [from] doing bad things,тАЭ she said.
Also Read:┬аSebi bars Bombay Dyeing, Wadia family from security market, slaps Rs 15.75-cr fine
Also Read:┬аSEBI fines Rs 6 lakh on 3 individuals for violating insider trading norms in PVR
