Sebi Moves to Predictive Oversight as Market Manipulation Grows More Sophisticated

Mumbai – October 12, 2025 — As India’s financial markets evolve with technology, the Securities and Exchange Board of India (Sebi) is stepping up its game, moving from reactive enforcement to predictive surveillance to curb sophisticated market manipulation.

Speaking at the Capital Market Confluence in Mumbai, Sebi Chairperson Tuhin Kanta Pandey outlined the regulator’s plan to leverage data analytics and algorithmic monitoring to detect fraudulent activities, including “pump and dump” schemes, before they spiral out of control.

“We have revamped our data warehouse system to develop rule-based alerts to identify ‘pump and dump’ patterns and detect fraudulent trades in bulk deals,” Pandey said. “Swift surveillance and regulatory agility are key to maintaining investor confidence.”

Proactive Monitoring with AI and Algorithms

Sebi’s enhanced oversight relies on algorithmic monitoring that tracks patterns observed in previous enforcement actions.

“Our surveillance system is proactively following and monitoring, learning from historical cases,” Pandey explained, emphasizing that early detection is critical in today’s high-speed markets.

Safeguarding Retail Investors

Retail investors remain particularly vulnerable during market turbulence. Last year, India’s stock exchanges processed over 1,600 crore messages daily, with peaks exceeding 2,900 crore messages, highlighting the scale of activity Sebi seeks to monitor.

The regulator is also targeting fraudulent digital broking apps. Whole-time member Kamlesh Chandra Varshney revealed that Google will soon add verification tick marks for genuine broker apps, helping investors distinguish authentic platforms from imposters.

“This initiative, expected in the next two months, will ensure investors know which apps are legitimate,” Varshney said, pointing to Sebi campaigns like ‘Sebi vs Scam’ and the valid UPI initiative.

Preparing for the Future: Algorithmic Trading

Varshney also noted efforts to revive the commodity market and operationalize algorithmic trading, which he called “the future of market trading.” Sebi aims to have regulatory frameworks ready by December 2025.

Pandey emphasized that digital resilience underpins market trust:

“An institution proves its resilience by innovating across the spectrum to create products and services that will genuinely deepen our markets. Client trust is the true source of resilience.”

As Sebi harnesses AI, algorithmic monitoring, and proactive enforcement, India’s markets are poised for greater transparency, investor protection, and technological readiness, signaling a new era in market regulation.