Sebi to tighten oversight mechanism for brokers

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Sebi to tighten oversight mechanism for brokers (PTI) Sebi to tighten oversight mechanism for brokers (PTI)
SummarySebi today proposed a strict oversight mechanism for brokers and other market intermediaries.

Sebi today proposed a strict oversight mechanism for brokers and other market intermediaries to cover the risks posed by their business activities on investors and the overall market.

Besides, the regulator has also asked various stock exchanges to establish an "information sharing mechanism" among themselves for exchange of inspection results of their respective member brokers.

The proposed moves are aimed at tackling any possible systemic risks posed by individual conduct business irregularities at any of the market entities.

"The stock exchange or the Clearing Corporation, as the case may be, shall, in consultation with Sebi, formulate a policy for annual inspection of their members in various segments and follow up action thereon," the capital markets regulator said in a circular.

"The policy shall also cover various kinds of risks posed to the investors and market at large on account of the activities/business conduct of their members," the Securities and Exchange Board of India (Sebi) said.

Clearing Corporations work with the exchanges to handle confirmation, delivery and settlement of transactions. They play a key role in ensuring that executed trades are settled within a specified period of time.

The regulator also asked all the recognised bourses and Clearing Corporations to conduct the inspection of their members in various segments as per the new policy framework.

In case of members holding memberships of multiple exchanges, the stock bourses would also need to establish an information sharing mechanism with one another on the important outcome of inspection in order to improve the effectiveness of supervision.

The regulator said these decisions are taken after consulting with stock exchanges and the associations of stock brokers.

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