To adopt tech to track market manipulations like insider trading, front running, etc
Markets regulator Sebi is looking to engage an agency to implement a “data analytics project” to track possible market manipulations like insider trading and front running. The move is part of Sebi's effort to address and handle challenges arising out of technological advancements in the markets.
In a notice on Wednesday, the regulator has invited expression of interest (EoI) from “reputed and reliable solution providers for implementation of data analytics project and building of data models at Sebi”.
The regulator is looking to leverage artificial intelligence, machine learning and deep learning to address critical challenges for data analytics impacted by the processing of a vast amount of data, either structured or unstructured.
As a precursor to this project, a data lake with an analytics platform has been set up by the markets regulator. The agency is expected to build analytical models, including artificial intelligence and machine learning. Further, the analytics/model development would be done as per the regulator's requirements. This includes developing new models, implementing analytics project, enhancement of a model in terms of adding new data sources in existing models, among others.
In addition, the analytics development would include establishing linkages between various entities in the market, automated extraction of details from documents filed with Sebi and prediction of market manipulations such as insider trading and front running.
Spelling out the eligibility criteria, Sebi said the bidding company should have been in operation for at least 3 years and should have successfully implemented a similar project of analytical model development with a certain cost, preferably for a regulatory body or a banking and financial institution over the last seven financial years.
Among others qualification, the interested party should be 'fit and proper' as it should not be a blacklisted firm due to unsatisfactory performance, breach of instructions, corrupt or fraudulent or any other unethical business practices, Sebi said.
The interested bidders need to submit their applications by July 13, the Securities and Exchange Board of India (Sebi) said.
In its annual report for 2019-20, Sebi chairman Ajay Tyagi mentioned that the regulator has already developed an in-house automated system by which it is able to do system based reconciliation of client level securities holdings by brokers, thus detecting client securities misuse by brokers, if any.
Further, in order to detect possible market manipulation and strengthen market supervision through technology solutions, Sebi initiated a "data analytics and data models project”.
"Sebi is also in the process of implementing a project on automation of inspections and surveillance of mutual fund," Tyagi had said.
Apart from steps towards increasing the technological sophistication of the markets, Sebi mentioned that it has continuously upgraded technology in its own regulatory functions.