The Securities and Exchange Board of India (SEBI) on February 18, 2025, issued a Consultation Paper on technology based measures to secure trading environment and to prevent unauthorised transactions in trading/Demat account of investors.
The objective of this consultation paper is to seek comments from public on the proposed technology based measures to create secure trading environment and to prevent unauthorized transaction in trading and Demat account.
To enhance security and ensure that only authorized users can access trading accounts, the proposal suggests implementing a SIM binding mechanism. This approach is inspired by UPI payment applications, where the system recognizes the SIM, mobile device, and associated bank account for transaction authentication. Similarly, for trading accounts, access would only be granted if the trading application identifies the unique combination of the User's Customer Code (UCC), the SIM card, and the mobile device. This multi-factor authentication mechanism adds an additional layer of protection, preventing unauthorized access and reducing the risk of fraudulent activities.
The proposed framework aims to enhance the security and functionality of trading accounts by introducing several key provisions. These include SIM binding, biometric authentication, and support for logging in from multiple devices. It also offers options for family account operations and the temporary locking of accounts for added security. Additionally, the framework seeks to strengthen access to trading in cases where investors use call-and-trade or walk-and-trade facilities. Further, the proposal includes other technological measures designed to improve and safeguard the trading ecosystem as a whole. A detailed version of the proposal is outlined in Annexure A.
The proposed provisions will be applicable to all the stock brokers in a phase manner. Initially, top 10 Qualified Stock Brokers would be required to implement these provisions and put in place the technology based requirements to enable it.
The comments are invited on the proposals mentioned in the consultation paper. The comments/ suggestions should be submitted latest by March 11, 2025, through the following link: https://www.sebi.gov.in/sebiweb/publiccommentv2/PublicCommentAction.do?doPublicComments=yes
