The Securities and Exchange Board of India (Sebi) has introduced a ‘financial disincentives’ framework for stock exchanges and other market infrastructure institutions (MII) to address their lapses in detecting abnormal or suspicious trading activities.
“They need to be well equipped to detect market abuse, including new modus-operandi that could be adopted by unscrupulous elements and take suitable, prompt, effective and preventive action against such activities,” said Sebi in a circular on Thursday.
Under the new framework effective July 1, Sebi will impose penalties in case of surveillance related lapses on stock exchanges, clearing corporations, and depositories.
The penalty will be based on the annual turnover in the previous financial year and the number of instances of surveillance lapses during a financial year.
The money will be deposited in the investor protection and education fund.
The MIIs will be given an opportunity to make their submissions on the matter before a disincentive is levied. Further, Sebi has emphasised on the role of surveillance and MIIs as ‘first-level regulators’ amidst increased retail participation, trading in derivatives segment, and use of new trading techniques and strategies.
Sebi asks KRAs to link systems with central KYC records registry
In another circular on Thursday, Sebi has mandated KYC Registration Agencies (KRA) to integrate their systems with the central KYC records registry, and to start uploading know-your-customer data from August 1.
Further, KRAs will upload the verified or validated KYC information onto the system of the central KYC registry within seven days of receiving the same from intermediaries.
Registered intermediaries are to continue to upload or modify the KYC information with proper authentication on the systems of KRA, Sebi said.
KRAs also have to ensure that existing KYC records of legal entities and of individual clients are uploaded on to the registry within a period of 6 months from August 1.
Show-cause notice to PB Fintech chairperson Yashish Dahiya on $2 million investment
The Securities and Exchange Board of India (Sebi) has issued a show-cause notice to Yashish Dahiya, chairperson and CEO of PB Fintech for investing $2 million to buy a 26.72% stake in Dubai-based YKNP Marketing Management, the company informed exchanges in a filing.
The company said the notice pertains to investment in November 2022 in an unrelated party which was not considered as Unpublished Price Sensitive Information (UPSI) due to non-material value of the transaction.
It has clarified that there is no material impact on financials, operations or other activities of the show-cause notice on the company.