Sebi Issues Updated Master Circular to Tighten Market Surveillance Framework

The Securities and Exchange Board of India (Sebi) has issued an updated master circular on surveillance of the securities market, consolidating various rules, operational guidelines and compliance requirements aimed at strengthening market monitoring and investor protection. The circular brings together earlier instructions issued by Sebi’s Integrated Surveillance Department and serves as a single reference point for stock exchanges, listed companies, brokers and other market intermediaries.

Sebi said the move is aimed at improving transparency, curbing market manipulation, and ensuring better monitoring of trading activities across Indian capital markets. The master circular categorises surveillance-related provisions under different sections, including trading rules, dematerialised shareholding norms, monitoring of unauthenticated news circulation and disclosure requirements under insider trading regulations.

One of the key focus areas of the circular is stricter control over the circulation of unverified market-sensitive information by Sebi-registered intermediaries through social media platforms, messaging apps and other communication channels. The framework requires intermediaries to put in place internal controls and monitoring systems to prevent the spread of misleading or unauthorised information that could impact stock prices.

Sebi also called for boosting the framework for disclosures under the regulations to prohibit insider trading. The framework will have disclosure mechanisms and reinforce rules related to trading window closures and restrictions on designated persons. These measures are intended to reduce the possibility of insider trading and improve accountability among company officials and market participants.

Sebi has also noted the importance of maintaining shareholding in dematerialised form and adherence to trading rules by market participants. The circular consolidates earlier directions related to surveillance actions and monitoring practices followed by stock exchanges and other market infrastructure institutions.

The updated circular is expected to improve operational clarity for intermediaries by bringing multiple circulars under one framework. It will also help listed entities and brokers better understand their compliance obligations while enabling regulators and exchanges to respond more effectively to suspicious trading patterns and market abuse.

The circular comes at a time when Indian capital markets are witnessing rising retail participation and increasing use of digital communication platforms and social media for market-related discussions. According to analysts, Sebi’s tighter surveillance framework will play an important role in maintaining investor confidence and ensuring fair market practices. Sebi added that the master circular supersedes earlier surveillance-related circulars listed in its annexures, while actions already taken under previous rules will continue to remain valid.