SEBI is employing advanced technology and data analytics to detect pump-and-dump schemes and fraudulent trades quickly. The regulator has launched predictive oversight tools, safety nets for depositories, cyber resilience guidelines, and streamlined KYC processes for NRIs to bolster market integrity and investor protection.
The Securities and Exchange Board of India (SEBI) has unveiled a series of advanced technological measures aimed at swiftly identifying and curbing pump-and-dump market frauds, marking a decisive shift toward predictive market oversight. SEBI Chairman Tuhin Kanta Pandey shared these developments at the Bombay Stock Exchange Brokers Forum’s recent Capital Market Confluence, emphasizing a proactive approach to market surveillance.
SEBI has revamped its data warehouse system to implement rule-based alert systems that can detect the telltale patterns of pump-and-dump schemes and other fraudulent trading activities in bulk deals. These alerts are designed to identify manipulative behaviors before they cause significant damage, moving supervision from reactive to predictive. The technological upgrade enables SEBI to analyze vast trading data more effectively, drawing on patterns observed in past enforcement cases.
Alongside this, SEBI is developing a safety net mechanism for depository participants to ensure smoother operations during outages, similar to existing safeguards for stock brokers. The regulator is also focusing on cyber resilience by preparing guidelines to isolate core market infrastructure from external cyber risks through “Air Gap” measures, enhancing operational security.
Additional initiatives include simplifying the Know Your Customer (KYC) process for non-resident Indians using video-based verification in partnership with UIDAI and banking institutions, and reviewing regulatory frameworks to boost transparency, liquidity, and fair market practices in commodities, bonds, and securities lending.
SEBI’s sharpened focus on technology and data-driven oversight aims to restore and sustain investor confidence by preventing market manipulation, especially those leveraging social media and digital platforms to spread false information and hype stocks artificially.
Key highlights:
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SEBI transitions from reactive supervision to predictive oversight with new data-driven alerts.
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Advanced tools detect pump-and-dump patterns and fraudulent bulk trades rapidly.
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Safety net mechanisms are being developed for depository participants to address operational outages.
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Cyber resilience strengthened with upcoming “Air Gap” guidelines to protect market infrastructure.
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Video-based KYC system for NRIs to ease remote verification.
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Ongoing regulatory reviews to improve commodities, bonds, and securities lending markets.
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Efforts to counter fraudulent market practices amplified amid rising digital and social media risks.
These technological advancements reflect SEBI’s commitment to enhancing market transparency and protecting investors from manipulation in an increasingly complex and digital trading environment.
Source: Moneycontrol, Business Standard, The Hindu Business Line, ANI News, SEBI official statements
