MUMBAI: The rise of algorithmic and high-frequency trading brings efficiency but also demands robust risk controls, real-time monitoring, and compliance safeguards, SEBI chairman Tuhin Kanta Pandey has said. Stronger controls are needed, according to Pandey, because of the rapid technological change, growing market interconnectedness, and rising investor expectations have created fresh complexities for financial intermediaries.
“Intermediaries today navigate a landscape defined by rapid technological change, interconnected markets, and rising stakeholder expectations,” he told the annual Morningstar Investment Conference here Tuesday. He also cautioned that while technology improves speed and access, it also magnifies risks and urged brokers, mutual funds, distributors, and advisors to go beyond compliance and proactively strengthen transparency, investor protection, and governance.
Fair access, robust disclosures, risk management, operational resilience, and ethical culture as key to building a trustworthy, stable, and inclusive capital market, he said.
“Brokers, mutual funds, distributors, and advisors must move beyond compliance checklists and act decisively to build a more transparent and resilient capital market,” he said, adding financial intermediaries are expected to play a stronger, more proactive role in safeguarding investor trust and market integrity.
Intermediaries form the backbone of our financial system by channeling funds from savers to enterprises and driving economic growth. But as technology, innovation, and retail participation reshape the marketplace, new risks have emerged, Pandey said. “By managing risks, conducting due diligence, and promoting financial awareness, intermediaries are contributing to financial inclusion, wealth creation, and greater market stability,” Pandey said, adding that their role today goes far beyond transaction execution.
Investor protection and market integrity, Pandey stressed, must move from being regulatory slogans to everyday practice. True investor protection means ensuring investors receive clear and accurate information, their assets are held securely and separately, and they have access to redress when things go wrong. Market integrity, in turn, demands transparent and fair dealings, strong governance, and resilience to operational or behavioural shocks.
Transparency, Pandey said, is foundational to maintaining confidence in the system. With product innovation accelerating, he urged intermediaries to take greater responsibility for clear disclosures and robust due diligence. Every product offered must be backed by an understanding of its risk, cost, and suitability to client profiles, according to Pandey.Underlining the importance of asset safety and operational resilience, he said investors expect their holdings to remain secure even when an intermediary is under stress, which calls for strong back-office systems, cyber resilience, and contingency planning.
“A single breakdown can shake confidence in the entire market,” he warned.In a move to resolve legacy investor grievances, he said the regulator is proposing to allow investors who had purchased physical securities before FY20 but could not lodge such transfers earlier to complete them now and have those securities transfer their name. “This measure will provide long-awaited relief to physical shareholders,” said Pandey.
“As markets evolve, new technologies and global linkages bring fresh complexities. The next frontier, therefore, lies not only in compliance but in anticipating risks before they surface,” Pandey said.According to him, cybersecurity remains a foremost concern for all market participants. He urged firms to safeguard sensitive client data and critical infrastructure from sophisticated threats. Robust risk controls, real-time monitoring, and compliance safeguards need to be put in place, even as algorithmic and high-frequency trading rise, which brings efficiency.
Sebi is also reviewing the stock brokers regulations, 1992, to make them more relevant, simple, and streamlined, Pandey said and reiterated that institutions form the backbone of markets and lead in governance, innovation, culture, and collaboration. “When institutions make such transparency a habit, they begin to transform investor relationships from transactional to enduring,” he said at the conference.
