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SEBI has directed AMCs to put in place a mechanism to curb instances of front running and fraudulent transactions in execution of trades. The new system is expected to identify and deter potential market abuse.
The mechanism will have to consist of enhanced surveillance systems, internal control procedures and escalation processes to identify, monitor and address specific types of misconduct including front running, insider trading, misuse of sensitive information, etc., said SEBI.
AMFI in consultation with SEBI will specify detailed standards to set up such an institutional mechanism.
Further, SEBI has clarified that fund houses can do away with the requirement of recording face-to-face communication including out of office interactions during market hours for dealers and fund managers if they implement the above mechanism.
