Curbing Social Media Misuse For Market Manipulation Not Against Freedom Of Speech: UK Sinha 

Outgoing SEBI chief UK Sinha on Monday took on those who had raised the “bogey” of “curtailment of freedom of speech” following the market regulator's proposed social media restrictions. Sinha was speaking to reporters for the last time before he steps down from his current position on March 31, 2017.

Earlier, attempts by the Securities and Exchange Board of India (SEBI) to put checks on social media being used to provide trading tips and stock recommendations to the general public had been criticised.

Also Read: SEBI's Social Media Regulatory Overreach

SEBI has received comments on this issue and is re-looking at the matter, Sinha said, before releasing the final set of guidelines on the issue.

The market regulator has been able to take some action in this regard even though even existing tools that the regulator has at its disposal are “not very sufficient”, he added.

SEBI had in October 2016, released a consultation paper to amend SEBI (Investment Advisers) Regulations 2013. Under the consultation paper, SEBI sought to tighten advertisement code for investment advisers. The market regulator sought to prevent use of social media to solicit investments through advertisements and promotions on the social media platform unless the investment adviser is registered or exempted by the regulator.

No person shall be allowed to provide trading tips, stock specific recommendations to the general public through any other social networking media such as WhatsApp, ChatOn, WeChat, Twitter, Facebook, etc. unless such persons obtain registration as an Investment Adviser or is specifically exempted from obtaining registration, the consultation paper had proposed.

Algorithmic Trading

SEBI is also looking at imposing a bigger penalty for misuse of high-speed algo trades as also "following up" on full implementation of directions it issued in the case involving NSE, Sinha said.

The regulator has provided for a high order-to-trade penalty system but these are minimum penalties, the outgoing SEBI chief said, adding that it it a highly technical issue and people who comment on the subject have conflict of interest.

SEBI has sought market feedback on this issue, and was asked to formulate regulations based on data collated from trading in the Indian stock markets, instead of relying on data of overseas exchanges.

The regulator has appointed an very evolved and highly qualified technical team from Indian Institute of Technology-Bombay looking to analyse the trading data provided by SEBI and find ways to solve this issue, Sinha said.