Sebi widens net to keep investors safe in markets

Mumbai: To combat the growing instances of online investment-related scams, markets regulator Sebi on Thursday said it has reached out to major social media platforms and internet search engines to put in place robust mechanisms to prevent misuse of their platforms.

Lately Sebi has doubled down on its efforts to make it safer for existing and prospective investors from every corner of the country to carry out transactions in the securities market domain.

"In an effort to enhance investor protection , Sebi has formally communicated with major social media platforms and internet search engine providers, urging them to implement robust mechanisms to prevent the misuse of their platforms for fraudulent activities," the regulator said in a release. "This initiative aligns with the global call to action by the International Organization of Securities Commissions (IOSCO)."



In May this year, IOSCO had highlighted the critical role of platform providers in combating online harm and urged them to enhance efforts to reduce the risk of financial harm to investors. Sebi supports IOSCO's recommendations and to address these challenges decisively, it asked these platforms to immediately prioritize and fast-track some important measures for the Indian market.

Among Sebi's requests to these social media and search engine platforms was to verify the credentials of those who advertise in the securities market domain. "Implementing a verification process to ensure that only Sebi-registered entities can advertise investment products and services," Sebi said in its letter to the platforms.

The regulator also requested these platforms to introduce a distinct label for authentic, regulated trading applications available on app stores to help investors differentiate them from fraudulent apps, the regulator said in a release. In the last few months, Sebi has also launched several initiatives to make it safer for investors to invest in the securities market.

Among those initiatives, one is for investors using the UPI system to transfer money to a market intermediary to ensure if the UPI QR code through which the money is being sent is verified. Sebi has asked investors not to transfer money through UPI system to any market intermediary if the UPI handle is not verified. The regulator has launched an app for such verifications and checks if the funds are being transferred to genuine market intermediaries.

Investors can also visit the Sebi website and verify if an app they are using to carry out securities market-related transactions are authentic ones from Sebi registered intermediaries or not. Similarly, investors can also verify registration of market intermediaries before investing by visiting the Sebi website.