The Securities and Exchange Board of India (SEBI) on August 05, 2024, issued a circular regarding the Institutional mechanism by Asset Management Companies for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities.
It is stated that AMCs shall put in place an institutional mechanism for the identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities. This mechanism shall consist of enhanced surveillance systems, internal control procedures, and escalation processes such that the overall mechanism is able to identify, monitor and address specific types of misconduct, including front running, insider trading, misuse of sensitive information etc.
The mechanism shall ensure the following –
• Accountability
• Alert-based surveillance mechanism
• Processing of alerts
• Standard operating procedures
• Action on suspicious alerts
• Escalation process
• Whistle blower policy
• Periodic review
• Trade related information from exchanges
• Reporting to SEBI
In order to ensure uniform implementation of the abovementioned institutional mechanism across the industry, AMFI in consultation with SEBI, shall prescribe the detailed implementation standards within fifteen days from the date of this circular.
[Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/107]
