Mediaboss Marketing

New Delhi, Dec 1:

Dealing room activities of brokers, fund managers and other institutional investors have come under regulatory scanner for possible manipulations through use of web-based social networking apps and messaging platforms.

While use of personal mobile phones are already prohibited inside dealing rooms where trades are executed on behalf of clients some brokers and fund managers have been found to be active on social networking and other web-based groups and messaging platforms while placing orders, sources said.

This has brought to fore significant risks of insider trading, front running and other manipulative activities with regard to key client trade information being shared with outside investors or even among the dealers possibly working as a cartel, they added.

Brokers and fund managers are not allowed to use their personal mobile phones inside dealing rooms to receive orders from clients, while fund houses and brokerage firms are required to store records for all client calls for future inspections by SEBI.

According to sources, SEBI is considering further tightening its norms with regard to dealing room communications, given the fast emergence of social networking and other web-based messaging platforms.

Those likely to be affected include entities dealing in stocks, derivatives and currency trading, among others.

Restricted use of BBM, WhatsApp

In a global probe into suspected rigging of forex rates, including those involving rupee as well, foreign regulators already suspect use of intra-bank and web-based messaging platforms among the currency traders.

Subsequently, many large global banks have already started clamping down on use of such platforms inside their dealing rooms and similar action can be expected with regard to Indian markets as well, sources added.

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SEBI scans dealing room networking chats to curb insider trading