Comments on Chapter IV | SEBI Report for Public Comments on Fair Market Conduct

Chapter and sub- Recommendations of Suggestions/Comments Rationale for

heading to which the Committee
comment pertains
IV - High Frequency Allotment of Unique
Trading/Algorithmic Identification Number to
Trading each approved algorithm.
Limited Approval by
exchanges according to
information submitted by
brokers.
Ensuring mechanism so that algorithmic trading
developers are educated in securities laws, so that
the products they come up with do not violate the
laws.
(https://www.bloomberg.com/professional/blog/se
c-approves-finra-rule-requiring-registration-of-
algorithmic-trading-developers/ )
Suggestions/Comments
This should be done so that firms
engaged in electronic trading are
trained and therefore can be held
accountable later. This would
also reduce the burden on
exchanges to approve as the high
threshold for application would
exclude casual developers.

Self-certification by Brokers
regarding compliance with
specified norms/risk checks

Implementation of “Model
Risk Checks for Algo
Trading”

IV – Measures to Curb Two-tiered approach for Increasing cost of trading in companies of illiquid It will be unfair to small
Manipulation investigation and stocks would not be a good signal for small companies.
enforcement- Fast track and companies.
normal course.

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 Comments on Chapter IV | SEBI Report for Public Comments on Fair Market Conduct
For deterrence of
manipulation of illiquid
stocks: Increasing cost of
trading in such companies;
GSM for such stocks; 100%
dematerialisation of shares
of these companies
IV – Power to Intercept SEBI should seek direct A proper system of checks and balances has to be Although it is correctly stated in
Conversation power to intercept calls established first before going ahead with this the report that SEBI having
recommendation as without the same, the results direct powers to track repetitive
could wreak havoc on citizen’s privacy otherwise. offenders but having a direct
power like this means nothing
would stop SEBI from
intercepting conversations
without any basis.
IV – Inter regulatory Signing a MoU with
Cooperation regulatory bodies and
enforcement agencies such
as RBI, ITD, EOW, ED,
MCA, etc.
IV- Whistle-blower Central Government may
Mechanism delegate power to SEBI to
grant immunity by amending
Section 24B (1)
IV – Discouraging Rules for deciding an
Layering of Funds “affordability index” based
on income/net worth of
investor.
Broker to be made
responsible to calculate the
above based on supporting
documents given by client.

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 Comments on Chapter IV | SEBI Report for Public Comments on Fair Market Conduct
Certain volume of trading
normal, beyond it, then
brokers has to enhance
diligence till the next
prescribed level. Even
beyond that, suspected mule
account.
Can be rebutted by
submitting appropriate
documents.

IV – Structured Library of Vendor for the creation of

Orders passed by SEBI, the same.
SAT and courts