In a bid to contain manipulation of shares prices on the domestic equity bourses, the capital market regulator has directed all Sebi registered market intermediaries to put in place proper internal code of conduct and controls to check the flow of unauthenticated news circulated by them.
The market intermediaries have been asked to direct their employees to seek approval from their respective compliance officer before forwarding such market related news received by them.
In a circular issued on Wednesday, the Securities and Exchange Board of India (Sebi) observed that intermediaries do not have proper internal controls and lacks proper checks and balances to govern the conduct of their employees.
The regulator noted that the market rumours on certain listed companies can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanism.
?Due to lack of proper internal controls and poor training, employees of such intermediaries are sometimes not aware of the damage which can be caused by circulation of unauthenticated news or rumours,? said the Sebi circular.
While asking market intermediaries to discourage their employees from circulating such unaunthenticated news materials, the regulator stated that access to blogs, chat forums and messenger sites among others should be restricted under supervision for employees or their access should be denied.
However Sebi said that the logs for any usage of such blogs or chat forums shall be treated as records and the same should be maintained as specified by the respective regulations which govern the concerned intermediary.