Financial Daily from THE HINDU group of publications
Monday, Dec 12, 2005
Financial Daily from THE HINDU group of publications Monday, Dec 12, 2005 |
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Stock Markets Markets - Regulatory Bodies & Rulings Industry & Economy - Economic Offences SEBI tracking `abnormal' stock price movements C.R. Sukumar
Hyderabad , Dec. 11 BUOYED by the success in cracking the whip on jacked-up penny stocks and saving thousands of gullible investors, the Securities and Exchange Board of India (SEBI) has further strengthened its surveillance system for `early detection' of suspicious stock movements and brokers to prevent market manipulations. Against the earlier structure of collecting the information on abnormal activities and passing it on to the investigation teams for further action, the SEBI surveillance system is now compiling and analysing the information on its own, for fast action, including passing interim orders to prevent frauds. "We have done a lot of groundwork and rigorously trained our surveillance staff. Now, we are in a position to track the entire chain of stock movement and cash flows in a market manipulation. With the help of alerts generated by our surveillance system, we have even reached a level where we can prevent serious manipulations from taking place," the SEBI Chief General Manager, Surveillance, Mr R. Ravichandran, said. With the active coordination of depositories, the market watchdog has developed an effective software tool that tracks the stock movements on a regular basis and provides timely alerts on abnormal activities, he told Business Line. "The way a bank account provides spending patterns, lifestyle and psychology of an accountholder, the flow of stocks in a depository participant (DP) account gives enough indications on the nature of transactions of the investor, whether individual or institution. We are now in a position to track all the related patterns by analysing the stock movements in DP accounts and the associated cash flows," Mr Ravichandran said. According to him, the manipulators invariably resort to off-market transactions in the process of their operations. "But a close watch on the DP accounts will give enough clues that a manipulation is brewing. We are now constantly tracking all significant developments in the companies and their corporate announcements and relate them with their stock movements either prior to such developments or afterwards, both in volume and value terms. We are also keeping a close watch on stock advices being provided by the media, both electronic and print, and the associated stock movements." The SEBI surveillance department has prepared a huge database of manipulators, both established and suspected, and their associates in different layers of the market. The list includes stockbrokers, clients, market intermediaries and promoters of listed entities. " The Integrated Surveillance System that is under implementation, which functions on a real-time information flow, is going to further strengthen the regulator in early detection and prevention of market manipulations," Mr Ravichandran said.
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