Market regulator Securities and Exchange Board of India (Sebi) will continuously update the regulatory framework governing Algorithmic and High-Frequency Trading (HFT) to ensure fairness, transparency, and market integrity, Chairman Tuhin Kanta Pandey said on Thursday.
India’s high-frequency trading space has come under sharper regulatory focus after the Sebi accused Jane Street Group of manipulating the country’s stock and derivatives markets, allegedly disadvantaging millions of retail investors. However, the US-based trading firm has denied the allegations, asserting that its trades were part of a standard index arbitrage strategy.
Speaking at the Bloomberg Forum for Investment Management on "Sebi's Vision for Financialization in India", Pandey said the regulator has moved from "reactive supervision to predictive oversight", using technology to detect and mitigate emerging market risks.
“Our surveillance system now uses rule-based alerts to proactively identify manipulation patterns,” he said, adding that Sebi's offsite inspections are increasingly technology-driven to enhance supervision of market infrastructure institutions and intermediaries.
Pandey said Sebi has launched new safeguards such as validated UPI handles and the 'Sebi Check' facility, allowing investors to verify the authenticity of payment details of intermediaries — a measure aimed at curbing cyber fraud. He added that investors can now freeze or block their trading accounts, similar to ATM cards, if they detect suspicious activity.
The Sebi chief emphasized that the regulator is intensifying efforts to combat misleading financial advice from unregistered finfluencers and proactively monitor social media to take down manipulative content. “Protecting investors from cyber frauds and misleading advice will continue to be a major objective,” he said. "Our goal is to move beyond just protection. We aim to build true investor resilience through tools, transparency, and education," Pandey added.
India’s financial landscape, the Sebi chairman said, is undergoing a structural shift from a nation of savers to a nation of investors. “Unique investors now exceed 130 million, while mutual fund investors have crossed 56 million. Monthly SIP flows are above Rs 28,000 crore and the MF industry’s AUM has crossed Rs 75 trillion,” he said.
Pandey attributed this transformation to Sebi’s push for ease of investment through digital measures such as e-KYC, mobile-first platforms, UPI-enabled ASBA, T+1 settlement, and a T+3 IPO listing cycle, which have reduced friction and made investing faster and safer.
To broaden investment avenues, Sebi has introduced the MF Lite framework and Specialized Investment Funds, eased business norms for Asset Management Companies, and rationalized “skin-in-the-game” requirements while safeguarding unitholder interests.
Pandey said REITs and InvITs have seen strong growth, with recent reclassification of REITs as equity expected to attract more inflows from mutual funds. The Alternative Investment Fund (AIF) segment has expanded fivefold in six years to Rs 5.7 trillion, and SEBI is encouraging adoption of the ‘Accredited Investor’ framework to boost participation.
The Sebi c hairman said the regulator is taking concrete steps to deepen India’s corporate bond market, explore bond derivatives, and facilitate the growth of municipal bonds through regulatory reforms. Institutional participation in commodity markets will also be enhanced, he added.
For global investors, Pandey said, Sebi has rolled out the ‘SWAGAT-FI’ single-window system to provide trusted investors with unified registration and minimal compliance. The efforts are underway to streamline NRI KYC norms to make participation easier.
Concluding his address, Pandey said Sebi’s goal is to build an inclusive, digitally empowered, and resilient market ecosystem that supports India’s economic transformation.
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