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Published on 16 July 2025
Sebi Urges Fintech Companies to Report Trading Malpractices for Market Integrity
Ananth Narayan to Fintechs and Brokers: Market Integrity Isn’t SEBI’s Job Alone
At the second edition of the Moneycontrol Fintech Conclave held in Mumbai on December 18, 2024, SEBI Whole-Time Member Ananth Narayan delivered a sharp yet collaborative message to India’s growing universe of fintech firms, online brokers, and market enablers: regulatory stewardship is no longer a spectator sport. Maintaining the integrity of capital markets, he stressed, must be a shared responsibility — not one shouldered by SEBI alone.
A Shift Toward Ecosystem-Backed Regulation
In a strikingly candid address, Narayan urged market participants to be proactive watchdogs for the ecosystem they serve.
“We would much rather hear it from you than from the media or enforcement alerts,” he said, encouraging industry leaders to flag suspicious conduct before it snowballs into broader regulatory risk.
He acknowledged a growing concern: the twin dangers of under-regulation, which leaves investors vulnerable to fraud, and overregulation, which stifles innovation. The answer, he said, lies somewhere in the middle — in evidence-driven, collaborative oversight built jointly with those on the ground.
From Brokers to Platforms: Everyone Has Skin in the Game
Narayan singled out India’s digital brokers and fintechs for their role in making markets more accessible — platforms like Zerodha, Groww, Dhan, Upstox, and Angel One, which have redefined equity participation for millions.
“You know more about the ground than we do,” he told the gathering. “Use that insight not just to grow your business — but to shape better regulation.”
He clarified that SEBI’s steady stream of circulars and advisories isn’t about bureaucracy. Instead, it reflects a real effort to strike the right balance: foster innovation without letting the system slip into disorder.
Curbing F&O Speculation Without Handcuffing Innovation
Narayan addressed SEBI’s recent policy shifts aimed at tempering retail speculation in the F&O segment, where data shows that more than 90% of retail traders incur losses.
While SEBI has moved to revisit contract sizes, leverage norms, and the suitability of derivatives for newer investors, Narayan signalled that the door remains open for refinements:
“If you think we’ve missed something, tell us. Don’t just push back — help us do it better.”
Reporting Misconduct Isn’t Whistleblowing — It’s Safeguarding the System
Perhaps the most powerful portion of his remarks came when Narayan dismantled the stigma around alerting SEBI to fraud or misconduct.
“It’s not whistleblowing — it’s responsibility,” he said. “You're protecting the very ecosystem that your business depends on.”
He encouraged firms to:
- Report clone advisors and unauthorised research outfits,
- Flag suspicious trading activity on their platforms,
- Share early-warning signals before issues erupt into scandals.
The underlying message: staying silent is not neutrality — it’s complicity.
SEBI’s Broader Mission: Empower Without Overreach
Narayan reiterated that SEBI’s ultimate objective isn’t to micromanage markets or freeze innovation. Instead, its mandate remains rooted in three pillars:
| Objective | Purpose |
|---|---|
| Investor Protection | Ensure transparency, suitability, and grievance redress |
| Market Development | Enable technology-led growth, new products, and efficiency |
| Fairness and Ethics | Maintain a level playing field for all participants |
He acknowledged the practical pain points the industry often raises:
- Compliance costs that scale disproportionately for smaller firms,
- Rigid timelines that don’t always match product cycles,
- Outdated rules that need to keep pace with tech innovations.
“We are open to evolving,” Narayan noted, “as long as the ethical guardrails remain intact.”
Takeaways for Industry Stakeholders
| SEBI's Message | Implication for Fintechs & Brokers |
|---|---|
| Report what looks wrong | Early reporting protects your platform and your users |
| Don’t wait for enforcement | Help SEBI act before problems spiral |
| Participate in policy shaping | Suggest constructive alternatives, not just complaints |
| Treat investor trust as non-negotiable | Ethical conduct is the foundation of durable growth |
Final Word: Co-Creation, Not Command-and-Control
Narayan’s remarks mark a philosophical evolution in how financial regulation is being imagined in India. The old model of top-down control is giving way to collaborative stewardship, where industry insight and regulatory vigilance operate in tandem.
“This isn't about who polices whom,” he said in closing. “It’s about coming together to protect the trust we’ve all worked hard to build.”
In a market increasingly powered by platforms and code, compliance and conscience must advance hand in hand. For fintechs and brokers shaping the next decade of retail investing, integrity isn’t a regulatory box to tick—it’s a business imperative.