Mumbai

To bolster investor confidence in the stock markets, the Securities and Exchange Board of India (SEBI) has directed stock brokers to establish robust mechanisms to prevent and detect market abuse and fraud. This directive, outlined in a circular, mandates that brokers must implement institutional frameworks for identifying and thwarting fraudulent activities.

SEBI underscores that these mechanisms must adhere strictly to the Broker Regulations, encompassing surveillance systems for monitoring trading activities, internal controls, obligations for brokers and their employees, escalation protocols, and the establishment of a Whistle Blower Policy.

Qualified Stock Brokerages (QSBs) are required to implement these measures starting from August 1, while other brokerages have a timeline ranging from January 1, 2025, to April 1, 2026, for implementation. The circular specifies that industry standards and operational guidelines will be developed by the brokers’ Industry Standards Forum (ISF) in collaboration with SEBI.

To ensure a smooth transition and effective compliance across all stock brokers, SEBI will enforce these provisions in a phased manner based on risk assessment, providing adequate time for brokers to adapt according to their operational scale.