Sebi ramps up investigations amid market turmoil

livemint.com:

Sebi have resulted in higher, and more nuanced investigations. Sebi, along with the National Stock Exchange (NSE), has acknowledged an increase in retail participation in equity markets. Additionally, the regulator has also been raising concerns over the surge in retail participation in the derivatives (futures and options) market.

As a consequence, there has been an increase in market violations, experts said. “A very large quantum of retail flows has also kept markets elevated, oblivious of the geopolitical risks the world is facing," said Ketan Dalal, managing director of Katalyst Advisors. “In this context, cases of front running and insider trading are more likely to have happened or suspected to have happened and increase in Sebi investigations seem more a consequence of that." A majority of Sebi probes are to trace market manipulation and violation of insider trading norms.

Data showed that investigations against market manipulation were steadily increasing. There were 38 such investigations in FY22, and 54 in FY22, before the number hit 160 in FY24. That apart, investigations into insider trading kept growing.

During former chairperson C.B. Bhave’s tenure, Sebi took up 24 investigations into insider trading in FY09 and FY10. This went up to 132 during former chairperson U.K.

Sinha’s tenure (2011-17). Comparatively, Buch’s tenure so far has had 277 investigations into insider trading. Legal experts said that an artificial intelligence-based analytics platform and other technology tools could be helping monitor the large volumes of data that is being generated due to the surge in retail investors.