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Participants found guilty of market abuse may be subject to regulatory action, including temporary or permanent stoppage of access to markets in one or more instruments, according to the Reserve Bank of India’s draft directions on prohibition of market abuse.
Market abuse includes market manipulation, and/or benchmark manipulation, and/or misuse of information, and/or any other similar practice.
Market manipulation means any transaction or any act of omission or commission by a market participant, or a group of market participants acting in collusion, that may result in a false or misleading impression as to the price of, or supply of or demand for a financial instrument, carried out with the intention of making a financial gain or any other material benefit from such transactions or other actions.
The central bank said no action will be taken without providing reasonable opportunity to the market participant concerned to defend its actions, or without giving due regard to underlying intentions and circumstances surrounding its actions.
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