The Securities and Exchange Board of India will put in place a comprehensive Integrated Market Surveillance System by February-March as part of efforts to keep a better vigil on the sudden surge or fall in share prices.
"The integrated market surveillance system will be in place by February-March," Sebi chairman M Damodaran said. The Sebi chief was in Delhi on Monday evening and had a series of meeting with senior finance ministry officials.
"Once IMSS is in place, we will have real data on the market," he said.
IMSS is expected to generate alerts that will help Sebi to identify and detect serious market violations such as market manipulations, insider trading and other types of frauds that undermine market integrity.
Sebi has already signed an agreement with a consortium of HCL Technologies Ltd and Securities Markets Automated Research Training and Surveillance Pty Ltd of Australia for the implementation of IMSS.
IMSS will enable Sebi to monitor market activities across various stock exchanges and market segments including both equities and derivatives.
The system envisages integration of data available from Stock Exchanges, Clearing Corporation and Depositories into a single IMSS.
The new surveillance system will help the regulator detect abnormalities in the trading patterns and market manipulations on a real-time basis and enable it immediately step into action and curb such unfair trade practices.
The proposed IMSS would be implemented across exchanges and segments and would integrate the surveillance systems of BSE, NSE, CDSL, NSDL and regional stock exchanges with that of Sebi in phases.
Till now, Sebi had to go through voluminous data on all the scrips, brokers and intermediaries received from the stock exchanges when there was any abnormal movement or market misconduct by any player. As a result, Sebi probes were time consuming and were not always effective in correcting the fault.
In contrast, IMSS would focus on real-time reports from exchanges pertaining to abnormalities and suspicious transactions in terms of price, volume and concentration.
Although Sebi may not unearth market manipulation in each and every abnormal or suspicious transaction reported through proposed IMSS, it can carry out intelligent data analysis in the new surveillance system. This will enable it to take up future investigations when it is necessary.
Market monitoring in India is itself a cumbersome process as there are over 9,000 brokers, several thousands of scrips and hundreds of market intermediaries trading daily.
IMSS is likely to focus on the big brokers, active shares and leading intermediaries who constitute about 80-85 per cent of the trading volumes.