Master Circular on Surveillance of Securities Market
Summary
This part of the Master Circular establishes the framework for surveillance of the securities market by consolidating various circulars into a single document. It explicitly rescinds previous circulars listed in the appendix while preserving the legal validity of actions taken under them prior to rescission. The section also initiates specific trading rules, mandating Trade for Trade (TFT) segments for certain corporate actions and new listings. Section 2 mandates SEBI Registered Market Intermediaries to implement internal controls and monitor employees' use of communication channels to prevent the circulation of unauthenticated news. Section 3 establishes a framework for financial disincentives against Market Infrastructure Institutions (MIIs) for surveillance-related lapses, defining such lapses and specifying penalty amounts based on revenue. The section further outlines the procedure for imposing these penalties, including opportunities for submission, payment timelines, and mandatory disclosure requirements. Section 3.6 preserves SEBI's right to initiate actions under various statutes despite the FDSRL framework. Section 4 details disclosure and reporting obligations under the
Text
the Master Circular dated September 23, 2024, on the subject, is being further updated to incorporate the provisions of the following circulars: a. “Framework of “Financial Disincentives for Surveillance Related Lapses” at Market Infrastructure Institutions” dated June 06, 2024... b. “Allowing subscription to the issue of Non-Convertible Securities during trading window closure period” dated December 30, 2024... c. “Trading Window closure period... Extension of automated implementation of trading window closure to Immediate Relatives of Designated Persons...” dated April 21, 2025.
With the issuance of this Master Circular, all directions/ instructions contained in the Circulars listed out in the Appendix to this Master Circular shall stand rescinded to the extent they relate to Surveillance of Securities Market.
Notwithstanding such rescission: a) anything done or any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular; and b) any application made to the Board under the rescinded circulars prior to such rescission, and pending before it, shall be deemed to have been made under the corresponding provisions of this Master Circular; and c) the previous operation of the rescinded circulars... shall not be affected by such rescission and shall be enforceable as if the rescinded circulars have continued to be in force.
This Master Circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
In the following cases (except for the original scrips, on which derivatives products are available or included in indices on which derivatives products are available), the trading shall take place in Trade for Trade (TFT) segment for first 10 trading days with applicable price band [***]: 1.1.1. Merger, demerger, amalgamation, capital reduction/consolidation, scheme of arrangement... 1.1.2. Securities that are being admitted to trading from another stock exchange... 1.1.3. Where suspension of trading is being revoked after more than one year.
Further, in all cases, the stock exchange(s) shall ensure that before starting trading in scrips, the companies have complied with the disclosure requirements and the same is publicly disseminated on the website of the stock exchange(s) to enable investors to take informed decision.
It has been observed by SEBI that unauthenticated news related to various scrips are circulated through social media platforms/ instant messaging services/ VoIP/ blogs/chat forums/e-mail or any such medium by employees of Broking Houses/other intermediaries without adequate caution as mandated in the Code of Conduct for Stock Brokers and respective regulations of various intermediaries registered with SEBI.
It was also observed that the Intermediaries do not have proper internal controls and do not ensure that proper checks and balances are in place to govern the conduct of their employees... It is a well-established fact that market rumours can do considerable damage to the normal functioning and behaviour of the market and distort the price discovery mechanisms.
In view of the above facts, SEBI Registered Market Intermediaries are directed that: Proper internal code of conduct and controls should be put in place.
Employees/temporary staff/voluntary workers etc. employed/working in the offices of market intermediaries do not encourage or circulate rumours or unverified information obtained from client, industry, any trade or any other sources without verification.
Access to social media platforms/ instant messaging services/ VoIP / Blogs/Chat forums/ websites/e-mail or any such medium should either be subject to controlled supervision or access should not be allowed.
Logs for any usage of such social media platforms/ instant messaging services/ VoIP / Blogs/Chat forums/websites/e-mail or any such medium shall be treated as records and the same should be maintained as specified by the respective regulations which govern the concerned intermediary.
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Source: SecMarx — Master Circular on Surveillance of Securities Market. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.