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New Delhi, July 12 The Securities and Exchange Board of India has decided to ask stock exchanges and depositories to undertake annual systems audit and submit reports of such an exercise to the capital market regulator.

“We will issue a circular requiring the stock exchanges and depositories to do annual systems audit. The reports of the systems audit should be considered by the respective boards and then also forwarded to SEBI. This would to some extent reduce the possibility of frauds happening internally,” Dr T.C. Nair, SEBI Whole-time Director, said at an Assocham conference on ‘State of corporate fraud control in India’.

SEBI is looking to issue this circular in a month’s time, Dr Nair said. He noted that systems audit was essential in such organisations in the wake of technology-related advancements and increased scope for economic offences. To a suggestion that SEBI should come out with some form of code governing the information technology (IT) operations, Dr Nair felt that it may not be appropriate for SEBI to come up with technical codes on the IT side.

Reeling out statistics on the cases initiated in the last few years for securities market-related offences, Dr Nair said that the success rate of the capital market regulator in such cases was about 80 per cent.

“We have success rate of 80 per cent, which only indicates that we have been efficient in taking action against market manipulators,” Dr Nair said.

He, however, rued that the legal process for punishing the perpetrators was time consuming.

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