Sebi steps up market surveillance; inspections of brokers, advisers surge in FY25

The Securities and Exchange Board of India (Sebi) intensified its market oversight in FY25, significantly increasing inspections of intermediaries while maintaining a sharp focus on combating market abuse through various investigative actions.

According to Sebi's latest annual report released on Tuesday, inspections of stock brokers more than doubled to 312 in FY25 from 146 in the previous year. The capital market regulator also carried out 149 inspections of research analysts, a steep jump from just 15 in FY24, and 207 inspections of investment advisers compared to 21 a year earlier. Mutual fund inspections, however, remained largely steady at 24 against 25 in FY24.

On the enforcement front, Sebi initiated 287 investigations into insider trading cases during FY25, up from 175 in the preceding year. The number of front-running probes, however, fell to 44 from 83 a year ago, while price rigging cases declined to 61 from 77.

Cases related to fraudulent and unfair trade practices also saw a drop, with 106 probes taken up in FY25 compared to 160 in FY24. Investigations into fraud related to companies' financial statements marginally decreased to 59 from 63 in the previous year.

The sharp rise in inspections, particularly among research analysts and investment advisers, aligns with Sebi’s broader agenda to strengthen compliance culture among market participants and safeguard retail investors. This comes in the backdrop of a rapidly expanding retail investor base, greater use of algorithmic trading and a rise in digital-first investment platforms.

The increase in insider trading investigations highlights the regulator's reliance on sophisticated surveillance systems and data analytics to detect unusual trading patterns linked to price-sensitive information. Meanwhile, the drop in front-running and price rigging cases could point to improved preventive measures, market discipline, or a shift in enforcement priorities.

Sebi's annual report emphasised the importance of proactive inspections as a deterrent against malpractices, noting that timely regulatory interventions help in maintaining market integrity and boosting investor confidence. The watchdog has also been pushing for greater transparency, enhanced disclosures and stricter adherence to codes of conduct by intermediaries.