SEBI Chief Slams Repeated Exchange Glitches, Vows Action; New Broker Rules by December

SEBI Chairman Tuhin Kanta Pandey has voiced significant concern over repeated technical breakdowns at stock exchanges, including the recent incident at Multi Commodity Exchange of India (MCX). He emphasized that such frequent disruptions are unacceptable and that SEBI has a standard operating procedure (SOP) to address these issues, which involves reporting, root cause analysis, and detailed reports.

Pandey stressed the importance of operational resilience and business continuity for market intermediaries amidst rapid digital transformation. He identified cybersecurity as a paramount concern, urging firms to safeguard sensitive client data and critical infrastructure from sophisticated threats.

The SEBI chief indicated that revised rules governing the conduct of stock brokers, originally framed in 1992, are expected to be implemented by December this year after SEBI board approval.

Commenting on algorithmic and high-frequency trading, Pandey acknowledged their efficiency benefits but warned of the accompanying demand for robust risk controls, real-time monitoring, and compliance safeguards.

He underscored the crucial role of a strong market culture in building investor trust, cautioning that markets perceived as "rigged" would deter investors. Intermediaries were urged to act decisively to maintain this trust and ensure they can provide audit trails if required.

Separately, Reserve Bank of India (RBI) Chief General Manager Dimple Bhandia noted that retail forex trades have not grown as expected and highlighted the need for more derivative instruments for hedging in the forex market.

Impact: This news directly impacts investor confidence by addressing systemic risks and regulatory oversight. It signals stricter compliance and potentially higher operational standards for exchanges and brokers. The emphasis on cybersecurity and risk controls could lead to changes in trading infrastructure and practices. The overall effect is positive for market integrity but could impose costs on intermediaries. Impact rating: 8/10.

Difficult Terms: Operational Resilience: The ability of a company or system to continue operating effectively and recover quickly after disruptions, such as technical failures or cyberattacks. Business Continuity: The process of planning for and preparing for the continuation of business operations in the face of disruptions. Algorithmic Trading: Using computer programs to execute trades at high speeds, often based on pre-set instructions and market data. Audit Trails: A chronological record of system activities that allows for the reconstruction of the sequence of events that have affected a specific transaction or event.