Sebi gets new software tools for fraud detection, probes

With an aim to beef up its capabilities to detect frauds and bring scamsters

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to book, Sebi is putting in place new software tools to help in its investigations and surveillance activities.

The new tools would help the capital markets watchdog in keeping a close watch on possible manipulative activities in the stock markets by monitoring suspicious trades as also by analysing the information available in the public domain such as on social media and other Internet platforms.

According to a senior official, Sebi has identified enhancement of its market surveillance capabilities as a core focus area for the current financial year.

"Capacity building for effective integrated surveillance particularly of derivatives market is essential so as to allign with the ever-changing market dynamics.

"During the year, special focus will be laid on enhancement of skill sets for using analytical and statistical tools to facilitate effective surveillance," he added.

In the budget estimates for the current fiscal 2014-15, Sebi has already accounted for the necessary expenses towards 'software for investigation work and Fraud Intelligence Software', sources said, while adding that this project was currently under implementation.

Sebi has already carried out upgradation of its Integrated Market Surveillance System (IMSS), through which it undertakes its market surveillance functions and collects data for suspicious market activities through multiple sources, including its network systems at stock exchanges and other market infrastructure institutions.

Sebi also intends to further beef up in due course its Data Warehousing and Business Intelligence System (DWBIS), which is used for speedy analysis of data and identification of possible violations like insider trading, sources said.

For the time being, an intermediate upgradation is being carried out of the DWIBS tool, while an open-tender process may be adopted in some time for further works in this regard.

Sebi already has got a sophisticated surveillance system, which generates at least 100 alerts of suspicious trading activities every day. After following up on all these alerts on various automated parameters, an estimated 8-10 alerts are taken for next-level analysis and therefore investigation and enforcement actions are carried out for necessary cases.

The surveillance systems also track media reports for information being shared among the investors and those are put under scanner that appear suspicious and in violation to the Sebi regulations and model codes of conduct for various entities, including listed companies and market intermediaries.

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