Operation Demat Daka impact: SEBI directs exchanges to record IP addresses of trades, Anil Singhvi welcomes move

Operation Demat Daka impact: In a bid to keep a check on the rising incidents of fraud in the share market involving retail investors, the Securities and Exchanges Board of India (SEBI) has directed exchanges to keep a track of the IP addresses of all the trades. The directive came in the backdrop of Zee Business' 'Operation Demat Daka' show which highlighted the loopholes in the system being used by fraudsters to rob the investors.

The market regulator in its new order said that it is necessary for trading members to share information about the IP address of the clients.

Zee Business Managing Editor Anil Singhvi welcomed the decision and vowed to continue raising the voice of investors. He said that brokers allowing internet desk trading or Securities Trading using Wireless technology to clients will have to record the IP address of clients in a particular format.

The cases of hacking investors’ Demat account and selling their portfolio stocks, while wiping out all their assets and money from the account- was reported by Zee Business in an hour-long special show on Operation Demat Daka in two editions.

In the first edition, the channel explained the modus operandi while inviting some victims to the studio, whereas in the second edition it explained the loopholes in the system and brokers as well as GRC’s reaction to this hacking.

Earlier on Friday, SEBI had also released a framework for automated deactivation of trading and Demat accounts of investors in case of inadequate Know Your Client (KYC) details. The framework will come into effect from August 31, according to a circular.

Noting that addresses form a critical part of the KYC procedures, SEBI said that every address recorded for the purpose of compliance with the KYC procedures has to be accurate.

An intermediary is required to update the address from time to time. However, the regulator observed that in some cases accurate or updated addresses of clients are not maintained. This is borne out of the fact that when Sebi issues any notices, during any enforcement proceedings on such addresses, the same remains unserved.

The new rules are aimed at ensuring that the client furnishes accurate or updated details of address and ensuring that KYC details are correct.