SEBI Working on Tech Systems to Monitor Pump And Dump, Bulk Deals, Abnormal Trading

As per the NDTV Profit report, the Securities and Exchange Board of India (SEBI) is in the process of building technology tools to detect pump-and-dump schemes, track bulk deals, and identify abnormal trading activity. The project has been underway since last year, with some progress reported. The tools are being designed to generate alerts for suspicious trades and improve regulatory oversight.

Central Repository System Planned

A central repository system is also being developed with an aim to organise data more effectively and simplify inspection processes. This will support investigations and streamline the regulator’s access to trading records and related information.

AI Use in Document Review

SEBI is working on applying large language models(LLMs) to read and process documents submitted by companies, including draft red herring prospectuses (DRHPs). This was previously indicated by former SEBI Chairperson Madhabi Puri Buch. The idea is to automate the review process for public offerings and related filings.

IT Team 

The regulator has increased its in-house technology staff. In 2021, SEBI’s IT team had about 20 to 25 officers. By 2025, this number will have risen to nearly 100. The team is expected to grow further over the next five years as SEBI expands its digital operations.

Existing Alert Systems

SEBI already uses internal alert mechanisms for detecting insider trading and front-running. In a past case involving Ketan Parekh, SEBI’s systems flagged suspicious activity, leading to penalties totalling ₹65.7 crore.

Actions on Manipulative Trading

SEBI has recently passed orders against several entities involved in price manipulation and misleading trading practices. These include companies such as Pacheli Industrial Finance Ltd., Bharat Global Developers Ltd., and LS Industries. The new tech tools are being built to support faster detection of similar cases.

Read more: SEBI and DigiLocker Join Hands to Reduce Unclaimed Assets Securities Market!

Conclusion

SEBI’s current focus is on improving its surveillance and detection using technology. The measures are being developed to handle a growing number of market irregularities without relying on manual processes.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.