It’s no wonder that before the demat account system started, SEBI could only pick up 2-3 cases for investigation a year. But with the paperwork dumped and shares being dematerialised in 1996 the number jumped phenomenally. For context in FY95 SEBI could only take up 2 cases for investigation. But just the next year that went up to 60. It was also around the same time that SEBI’s Market Surveillance System was set up. It would monitor abnormal market movements and detect manipulations. (View Highlight)
So here’s the thing. The stock market works on a system of order matching. It simply means that if you want to sell a share at ₹y and I’m willing to buy it at the same price, the system automatically matches this order and the trade is executed. But something else happens with this transaction too. The LTP or the Last Traded Price of the stock changes. So if the LTP of this stock was ₹x, it now changes to ₹y. It could be higher or lower. Now imagine if a stock is illiquid, meaning it’s not traded much, and only a coterie of 10 people keep trading it. They can keep placing buy and sell orders at higher prices and nudge the LTP upwards. (View Highlight)
Well, the folks who were internally manipulating V-Marc’s shares were doing exactly that. And with just a trick like that, SEBI alleges that they accounted for 70% of the higher LTP of V-Marc during the investigation period. (View Highlight)
It has had the Data Warehousing and Business Intelligence System (DWBIS) since 2011 that’s loaded with pattern recognition algorithms. In 2021, it created a special division called CRAC (Connection Research and Analysis Cell) that would rely on data analytics to recognise relationship patterns between individuals and entities while investigating complex cases. There’s Picture-based Information News Accumulator and Key Information Analyser or Pinaka for short which is an AI tool that tracks stock recommendations on TV shows and checks for huge corresponding changes in stock prices and volumes which came out last year. (View Highlight)
And it’s even working on a tool to analyse social media and internet chatter around stocks and the markets. That way it can keep an eye on social media influencers who are pumping and dumping stocks. (View Highlight)
As you can see, SEBI’s really doubling down on its tech prowess. And it’s using its might to keep tabs especially on SME IPOs. After all, these small listings have seen a massive boom of late — 135 SME IPOs in 2023 raised a whopping ₹3,500 crores! And with many of their share prices doubling in the blink of an eye, SEBI doesn’t want retail investors to be lured into a trap set by dubious operators. (View Highlight)
