Role Of Technology In Detecting And Preventing Insider Trading: An Analysis Of Sebi’s Surveillance System
Kancharla Snigdha, Symbiosis Law School, Hyderabad
1. INTRODUCTION
The Government of India formed the Securities and Exchange Board of India as a statutory entity in 1992, and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) went into effect on January 30, 1992. The Securities and Exchange Board of India's Preamble states that its primary responsibilities are "to protect the interests of investors in securities, to promote the development of, and to regulate the securities market, as well as for matters connected with or incidental thereto." It is in charge of regulating the capital markets and securities in India. The Government of India owns SEBI, which oversees the securities and commodities markets in India. In order to protect investor interests, regulate the capital market, and create a transparent market, SEBI was founded. Investors' interests as well as those of securities issuers and market participants are protected. Additionally, it has done so by establishing guidelines, a requirement for information disclosure, etc. It forbids insider trading as well as unfair and dishonest business practices relating to the securities markets. Send out directives to safeguard the interests of investors, middlemen, fair trade, and the balance of trade. SEBI oversees the operation of stock exchanges, depositories, participants, custodians, foreign institutional investors, credit rating agencies, and venture capital funds.
When a person with access to confidential information about a company makes a purchase or a sale of the company's stock based on that information, it is known as insider trading. Information like financial performance, mergers, and acquisitions, or significant legal challenges could all have an impact on the stock price. Insider trading is illegal when certain traders have access to proprietary information, which can lead to an unfair advantage in free and open markets. Illegal trading can also impact stock prices, which makes it challenging for investors to decide which equities to buy or sell. This may result in improper resource allocation and market inefficiencies, both of which could have detrimental economic effects.
Last but not least, unlawful trading has the potential to undermine the financial system's foundational confidence. People may be less reluctant to invest their money or engage in the markets if they don't think the rules are being upheld and the markets aren't fair, which could reduce economic activity. Hence this paper would analyze the role of technology in detecting and preventing insider trading.
Comments