| Sebi chairman M. Damodaran in Calcutta on Thursday. Picture by Kishor roy Chowdhury
Calcutta, Sept. 8: The Securities and Exchange Board of India (Sebi), the capital market watchdog, is tightening its surveillance mechanism in an attempt to crack down on manipulators who have pounced on the opportunity afforded by this year’s relentless bull run to ramp up penny stocks.
By next April, Sebi intends to have in place an integrated market surveillance system that will enable it to identify the market manipulators and the stocks that display an ‘irrational bounce’.
“The new system will enable us to get real time information from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). This information currently comes during the day in a random fashion. Once the system is in place, it will come faster, and on a continuous and systematic basis,” said Sebi chairman M. Damodaran.
“The order for the system has been placed with an Australian company in July this year and it should be in place by March or April next year,” he mentioned.
“As the market regulator, our job is to look at the markets on a continuous basis irrespective of its levels and direction. On a particular day or at some point of time on a particular day, if any particular stock or stocks move in a questionable manner which has no immediate rationale, we have to get to the bottom of it to detect whether there has been any market manipulation,” he explained.
“While a lot of money has been flowing into the Indian stock markets in the recent past, there has been unexplained movements in the prices of some scrips. These are not caused by the general exuberance but stock-specific irrational exuberance,” he added.
He said regulatory officials has seen several illiquid stocks, which had not ignited any investor interest, run up to tremendous heights.
“Our objective is to protect the interest of investors and we are doing this along with the NSE and BSE. At present, we exchange notes during the day, at the end of the day and weekly information on stock-specific movements and the detail,” he said.
He said the stock exchanges would continue to remain the regulator of the market at the first level. “We shall regulate on the second level. The installation of the integrated surveillance system does not indicate that we are taking away the regulatory power from stock exchanges,” he clarified.
Speaking on the sidelines of a seminar organised by the Indian Chamber of Commerce, the Sebi chief said the authority was exploring ways to make the public issue process more investor-friendly.
“We wish to speed up the process of allotment and refund of application money to the investors. We have sought permission from the Reserve Bank of India to allow for refund through ECS,” Damodaran said.