MUMBAI: India’s markets regulator is examining whether the recently introduced common penalty framework can also be extended to companies listed on the stock exchanges, Securities and Exchange Board of India (Sebi) chairperson Tuhin Kanta Pandey said at the Mint BFSI conclave on Friday.
On 10 October, Sebi rationalized the process for levying penalties on stockbrokers, who often hold memberships across multiple exchanges and risk facing duplicate penalties for similar violations. Under the revised framework, only the lead exchange will impose penalties for breaches occurring across exchanges.
Pandey said Sebi is now exploring whether a similar unified framework can be applied to listed companies that trade on both the National Stock Exchange and BSE Ltd.
As part of the common penalty framework for stock brokers, Sebi also reduced penalty amounts and capped maximum penalties for certain violations. In the first phase, 235 existing penalty items were reviewed. Penalties on 40 violations were removed, while 105 minor procedural lapses were reclassified as “financial disincentives,” bringing the number of actual violations down to 90, the Sebi circular said.
The 10 October circular also proposed using the term “financial disincentive” instead of “penalty” for procedural lapses or technical errors to avoid unnecessary reputational damage to brokers. “The term penalty is generally associated with stigma,” it noted.
Beyond the common framework for listed companies, Pandey said Sebi is actively monitoring social media platforms for misleading content related to the securities market.
“Over the last one and a half years, we have escalated more than one lakh such instances. We'll intensify our efforts to take down such content, especially now that the Sebi has been notified as an authorized agency under the Information Technology Act,” Pandey said.
Pandey also said Sebi’s revamped surveillance architecture now generates predictive, rule-based alerts on manipulative trading patterns.
