SEBI's Initiatives to Combat Price Manipulation in the SME Segment

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SEBI's Efforts to Combat Stock Price Manipulation in SME Segment


Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), recently highlighted the regulator's endeavors to address stock price manipulation in the small and medium enterprises (SME) segment. Speaking at an event organized by the Association of Mutual Funds in India (AMFI), Buch outlined several measures being implemented to curb manipulation both during initial public offerings (IPOs) and trading activities in the SME space.

Enhanced Disclosures on Risk Factors:

SEBI is considering requiring more extensive disclosures regarding risk factors associated with SME investments. Buch emphasized the importance of investors understanding that the SME segment differs from the mainboard in terms of regulatory requirements and risk profiles. The proposal aims to ensure transparency and provide investors with clear insights into the unique characteristics of SME investments.



Building a Strong Case before Action:

SEBI is diligently working to gather evidence of price manipulation, leveraging technology and insights from market participants. Buch emphasized the importance of building robust cases before taking regulatory action. By analyzing patterns of fraudulent activity and receiving feedback from the market, SEBI aims to effectively identify and address instances of manipulation.

Provision of Quality Information to Investors:

Efforts are underway to enhance the quality of information provided to investors in the secondary market. SEBI is exploring ways to improve the content and relevance of warnings issued by brokerage platforms when stocks are placed under surveillance measures. The objective is to provide investors with objective and informative alerts to aid their decision-making process.

Utilizing Artificial Intelligence (AI) Technology:

SEBI is harnessing the power of artificial intelligence (AI) to streamline the scrutiny of IPO filings. While manual checks are currently conducted to ensure adequate disclosures, SEBI aims to enhance efficiency by implementing AI technology. By automating document examination processes, SEBI expects to identify gaps in disclosures more effectively and expedite the evaluation of IPO filings. Buch highlighted the regulator's in-house expertise in AI and emphasized the potential for quick implementation of AI-driven solutions across exchanges.

SEBI's proactive approach underscores its commitment to maintaining market integrity and investor confidence in the SME segment. Through enhanced disclosures, robust regulatory actions, improved investor communication, and technological advancements, SEBI aims to safeguard the interests of investors and foster a transparent and fair marketplace.

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