Market regulator Securities and Exchange Board of India (SEBI) is developing a framework to prevent the misuse of trading terminals and exploring graded compliance requirements for stockbrokers based on their size, client exposure and reliance on technology, chairman Tuhin Kanta Pandey said on Saturday.
The proposed framework comes against the backdrop of the alleged misuse of proprietary trading terminals by some brokers. Moneycontrol reported that certain broking firms were allowing individual traders to trade through the brokers' own accounts in return for fees or profit-sharing arrangements, allegedly bypassing regulatory requirements on margins and disclosures.
One of the measures under consideration is mapping terminals to their Media Access Control (MAC) addresses and static IP addresses to identify where trades are executed and who is using the terminals.
The market regulator is also reviewing short-selling and securities lending and borrowing rules to improve liquidity and price discovery, developing a market-making framework to boost secondary-market trading in corporate bonds, and working to reduce compliance costs for tender offers, buybacks and offers for sale (OFS).
Addressing the 16th International Capital Market Convention of the Association of National Exchanges Members of India (ANMI) in Mumbai, Pandey outlined SEBI's roadmap for simplifying regulations, deepening markets, promoting responsible technology and widening investor access.