- SEBI proposes a web-based portal to oversee stock broker system audits, ensuring thorough regulatory checks.
- Stricter criteria for auditors and mandatory site visits are part of the framework.
- Enhanced measures address gaps like inadequate sampling and lack of physical verification.
- Public comments on the proposal are open until December 26, 2024.
The Securities and Exchange Board of India (SEBI) has proposed a new online monitoring mechanism to enhance the quality of system audits for stock brokers, aiming to minimize technological glitches and improve regulatory oversight.
In a consultation paper released on Tuesday, SEBI highlighted gaps in current audit processes, such as poor-quality assessments, lack of physical site visits by auditors, and inadequate sampling methods. The regulator plans to address these issues by introducing a web-based portal managed by stock exchanges to monitor the entire audit cycle.
Key Highlights of SEBI’s Proposal
| Feature | Details |
|---|---|
| Online Portal | Stock exchanges to develop a web-based platform to track audits from appointment to completion. |
| Mandatory Auditor Visits | Auditors must conduct physical site visits to stock brokers’ premises for on-ground verification. |
| Geo-Tracking & Secure Login | Geo-location tracking of auditors and secure login systems to ensure process integrity. |
| Stricter Eligibility Criteria | Auditors will be assessed individually, focusing on qualifications rather than firm credentials. |
| Standardised Reporting | Auditors must submit uniform audit reports and action-taken reports (ATRs) via the platform. |
| Surprise Inspections for High-Risk Brokers | High-risk brokers, such as those involved in algorithmic trading, will face unannounced checks. |
| Enhanced Evidence Submission | The portal will allow auditors to upload audit evidence directly for regulatory scrutiny. |
Get priority access to the latest updates, tips, and special announcements. Join our WhatsApp channel to always stay ahead.
Proposed Benefits
- Improved Audit Quality: Ensures auditors personally verify the IT infrastructure.
- Transparency & Integrity: Geo-tracking and secure logins strengthen the credibility of the audit process.
- Risk Mitigation: Identifies vulnerabilities in technologically advanced trading systems.
- Standardisation: Streamlines reporting practices for easier compliance and review.
Context & Public Feedback
The proposals come in response to increasing complexities in trading systems and growing risks posed by technological glitches. SEBI believes the measures will align auditing practices with modern trading challenges, creating a more robust regulatory environment.
Public comments on the consultation paper can be submitted until December 26, 2024.
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice or an endorsement of any IPO or investment opportunity. While we strive to ensure the accuracy of the details shared, the content is based on publicly available information, research, and reports from credible sources. Readers are advised to verify the details independently and consult with a financial advisor before making any investment decisions.Stay informed and exercise caution while making financial decisions.
Create Your Wealth with Paytm Money
