Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch on Friday said there is no country in the world in terms of “margin protection” better than India, where technology is widely used to protect clients’ securities. goes.
The Sebi chief said foreign investors often tell him that he is fortunate to have a data and technology culture in the country, which is making the role of the capital markets regulator effective.
“There is a huge technology change in the whole market. This has never been done anywhere in the world… and we have done it in India. So, today in terms of margin protection – the protection of client’s securities – none is better in the world than in India,” Butch said in his lecture on ‘Data and Technology in Capital Markets’.
The event was organized by the Indian Institute of Management-Bangalore on Friday to mark its 49th Foundation Day celebrations.
Explaining how the data is used for monitoring to check malpractices during trading, the SEBI Chairman said that the study of algorithms and alerts make it easier to study the trading patterns of people and understand that it is a ‘Inside business’.
SEBI has also embedded a QR code which, Butch said, was quite radical. When it is scanned, one can see a video clip which shows the ‘Delta’ position of that particular individual whose trading pattern is reflected.
The SEBI chief explained, “You watch that movie, and you say, ‘It’s insider trading. It can’t be anything else. So, we use the data in our surveillance’.”
The regulatory body is also using technology to check ‘front running’ in the mutual fund market.
However, he added that SEBI has also faced some setbacks as regulation has not kept pace with the technology, but it is trying to fix the problem in the next few months.
The SEBI chief said the board is now using ‘supertech’ or supervisory technology as well to ensure that everyone is following the rules.
Giving an example of mutual fund industry, he said that SEBI has started collecting data from all the 44 mutual fund houses operating in the country.
As the data started coming in, SEBI told the industry that they were going to develop 80 algorithms and explained to them the logic and interpretation of SEBI laws in the light of the algorithm that comes out of the data.
According to Butch, many of his colleagues were quite upset because they were against disclosing the algorithm and questioned the purpose behind it. However, Butch said that he offered an explanation that satisfied them.
“The purpose of the regulator is not to catch people doing bad things, but to stop them from doing bad things. So, we announced that we are going to create these 80 algos now,” she explained.
Today, Sebi conducts inspections every quarter, which might otherwise be done on a daily basis, as the board wanted to give the industry time to find its mistakes and correct them instead of showing up every day, Butch said.
“Now, this is only the beginning because it is the easy stuff. So, what is the hard stuff? The hard stuff is where you have to try to violate the spirit of the law and not the letter of the law,” the SEBI chief said.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)