Sebi May Consult USAID, IBM On FIRE II Project

Mumbai, May 17: | Updated: May 18 2003, 05:30am hrs
The Securities and Exchange Board is expected to consult the US agency for international development (USAID) and IBM, under the FIRE II project, for implementing a suitable, centralised surveillance mechanism across all major stock exchanges. The move is to oversee the operations of market participants on a holistic basis and to independently view consolidated information of trades across all bourses.

The regulator is reviewing the present system of surveillance, wherein the primary level of surveillance is carried out by stock exchanges. It has informed the finance ministry on this.

However, Sebi has said developing such a system will take some time as it entails crystallising the system requirements, including domain analysis, production of requirement specification, issuing request for proposals and finalisation of project deliverables.

The government, which incorporated this and other actions of Sebi in its action taken report on the recommendations of the joint parliamentary committee probing the 2001 stock scam, has said as the requirement is for an integrated system across the bourses and across markets, preliminary studies suggest that there is no readymade system available, or in use, in other regulatory bodies. Also, the solution is to be worked out by adding more facilities to the existing systems to make them suitable to Sebi needs.

Elaborating on the details of how the surveillance department works, Sebi has said it keeps a watch on the surveillance activities of stock exchanges, which are entrusted with the responsibility of monitoring the market activities. Based on their monitoring, the bourses send reports to Sebi, which include periodic, event-driven and exceptional reports. Sebi also interacts with the stock exchanges through the inter-exchange market surveillance group, wherein feedback is obtained from bourses and policy decisions on surveillance matters are taken.

It was through this mechanism that Sebi was able to take several proactive measures during the period of rise and fall of the market.

The regulator has also informed the government that the issue of co-ordination and sharing of information is taken up in all the meetings of the inter-exchange surveillance group.

Exchanges periodically share information on the surveillance action, such as circuit-filter reduction, scrip suspensions, imposition of special margins, information on rumour verification done by the exchanges, securities identified for further investigations, list of investigations cases taken up and various matters as warranted.