SEBI slaps internet curbs on broker staff to check price manipulation
23 Mar 2011
The Securities and Exchange Board of India (SEBI) today announced a new code of conduct, which restricts access to internet forums for employees of market intermediaries, to ensure that unsubstantiated news, which could distort normal functioning and prices of stocks, do not circulate.
SEBI has directed market intermediaries to put in place proper internal code of conduct and controls to ensure that its employees and other staff connected with the business do not pass on unverified information obtained from clients.
More particularly, the market regulator has asked market intermediaries to restrict or supervise access to blogs/chat forums/messenger sites etc so as not to encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification.
The move comes in the wake of observations by the market regulator that unauthenticated news related to various scrips are being circulated in blogs, chat forums or e-mails by employees of broking houses and other intermediaries in violation of rules.
"SEBI registered market intermediaries are directed that proper internal code of conduct and controls should be put in place," the regulator said in a circular.
It is a well-established fact that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms, the regulator said.
