Manipulation of the stock markets and vulnerabilities in the bourses need to be checked, Finance Secretary Ashok Lavasa said on Monday. As the size of the Indian market increases, regulation needs to become more transparent, he said.
‘Transparent regulation’
“Manipulation, perversity in market needs to be dealt with,” Mr. Lavasa said while speaking at a seminar on the policy framework for algorithmic trading in India. “As we move forward, we are talking of more equity. So, it needs to be regulated and managed in a transparent way. It should have reliable infrastructure to involve more and more participants.”
The Finance Secretary said that the use of algorithms in trades creates an uncompetitive environment, giving some users an advantage over others.
‘Equitable, fair’
Economic Affairs Secretary Subhash Garg said that the role of a policymaker was to ensure market access was equitable and fair.
“About 50% of trading in India is automated or algorithmic,” Mr. Garg said. “As a policymaker, we have to ensure equitable and fair market access to everyone. Algorithmic trading should not impede people from trading in markets.”
“There is a dilemma between what technology and manual trading can provide,” Mr. Lavasa added. “The increase of algorithm trading should not prevent people from participating in the stock market.”
Mr. Garg added that the Department of Economic Affairs was working on a system where financial securities would be dealt with using efficient systems and immediate remedial measures would be used if there were any problems.