SEBI is also in the process of implementing a project on automation of inspections
Markets regulator SEBI is in the process of implementing a project on automation of inspections and surveillance of mutual funds, a move that will help in reducing the lag in recognition of violations, said SEBI’s chief Ajay Tyagi.
In its surveillance and investigation, the Securities and Exchange Board of India (SEBI) is eyeing a major technological leap.
In the regulator’s annual report for 2019-20 Tyagi said, “SEBI is also in the process of implementing a project on automation of inspections and surveillance of mutual fund”.
The scope of project involved ingesting mutual fund (MF) related data in the database of SEBI and use of algorithms in order to generate instances of breaches of regulatory guidelines by MFs in respect of several important guidelines where quantitative analysis is possible.
Successful implementation of this project will make SEBI able to leverage technology to move towards automation of inspections of MFs, to reduce the lag in recognition of violation and 100 per cent inspection of data in place of samples, as per the annual report.
Tyagi said, “In addition, Sebi has taken several measures to strengthen the regulatory framework for debt oriented schemes of mutual fund and is ready to initiate more reforms if required”.
Mandating minimum investments in liquid assets and introduction of exit load for liquid schemes, placing restrictions on investment in unlisted and unrated debt securities and review of the sectoral limits on investments are the steps taken by SEBI for debt MFs.
Also to improve the robustness of valuation of debt securities by MFs, SEBI has taken additional steps.
These reforms are aimed at placing mutual funds in a better position to deal with credit events and redemption pressures, strengthening prudential norms for investments and bringing more transparency in their investments, Tyagi said.
He added “More reforms, as may be required, would be brought in going forward”.
Also to do system based reconciliation of client level securities holdings by brokers and detecting client securities misuse by brokers, SEBI already has developed an in-house system based on automation.
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