The Securities and Exchange Board of India (Sebi) has reported a significant increase in the number of investigations initiated in the past year, reaching a count of 342 cases. This marks the highest number of investigations in nearly three decades, with the previous record being 245 investigations in FY17. Experts attribute this rise in violations to a buoyant equity market and higher retail participation, especially in derivatives trading.
Sebi, in conjunction with the National Stock Exchange (NSE), has noted a surge in retail participation in the equity and derivatives markets. This increase in retail involvement has led to a rise in market violations, particularly in areas such as front running and insider trading. The regulator has been actively monitoring these activities and has initiated investigations to address any potential violations.
Market manipulation and insider trading are the primary focus of Sebi’s investigations, with the number of cases steadily increasing over the years. Investigations into market manipulation have seen a significant uptick, with 160 cases reported in FY24. Similarly, insider trading investigations have also been on the rise, indicating a need for stricter enforcement measures to maintain market integrity.
The use of advanced technology tools, such as artificial intelligence-based analytics platforms, has enabled Sebi to monitor the large volumes of data generated by the surge in retail investors. These tools have enhanced the regulator’s surveillance capabilities and allowed for more nuanced investigations into market activities. Additionally, the creation of new investigative departments within Sebi has further strengthened the regulator’s ability to detect and address market violations.
While the increase in investigations is a positive sign of enhanced regulatory oversight, experts caution against going overboard, as it may deter investors. Striking a balance between rigorous enforcement and investor confidence is crucial for maintaining a healthy market environment.
Sebi’s collaboration with other market institutions, such as stock exchanges, brokers, and asset management companies, has also contributed to the rise in investigations. By leveraging the expertise and resources of these institutions, Sebi can more effectively identify and address market anomalies and fraudulent activities.
As Sebi continues to ramp up its investigative efforts, there is a growing need for increased operating capacity to expedite the disposal of cases. Streamlining the investigation process and enhancing regulatory efficiency will be key in addressing the rising number of violations and ensuring market integrity.
In comparison to past Sebi chairpersons, Madhabi Puri Buch has initiated a significant number of investigations during her tenure. With 545 investigations conducted so far, Buch’s proactive approach to enforcement signals a commitment to upholding regulatory standards and safeguarding investor interests. As her term progresses, it will be essential to monitor the outcomes of these investigations and assess their impact on market transparency and accountability.