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Informist, Tuesday, Dec. 3, 2024

MUMBAI – The Securities and Exchange Board of India Tuesday said it proposes to create an online monitoring and supervision mechanism for stock exchanges to monitor and supervise the entire system audit lifecycle of stockbrokers on a concurrent basis. The market regulator has sought public comments on the consultation paper by Dec. 26.

SEBI has proposed that the monitoring mechanism by exchanges captures the geolocation of the auditor. This, according to the market regulator, can verify if auditors physically visited the premises of clients. SEBI has proposed that the exchanges develop the web portal and create technology-based mechanisms for online monitoring and supervision. It has proposed that the portal be made accessible to the auditor during a particular audit. Under this proposal, exchanges will be required to ensure that only the authorised auditor or a person of the audit firm has access to the web portal while conducting the audit through a secure one-time password-based mechanism.

According to SEBI's proposal, during every visit to the stockbroker's premises while an audit is on, the auditor will have to log into the web portal of the exchange from the stockbroker's location. The login will be enabled only to the authorised auditor through secured mechanisms such as a one-time password on the mobile device of the auditor. Information such as the date when the audit started, date when the auditor visited the premises, entry time, exit time, members of the audit team visiting, people with whom the auditor has interacted during the visit, details of the systems inspected, and the date of the audit ending have to be provided by the auditor on the web portal, SEBI said. 

SEBI said that exchanges might also conduct a surprise visit to the premises of qualified small business to verify the audit being actually carried out by the authorised auditor or authorise people from the audit firm. As per the proposal, the system auditor will carry out offsite assessments of the virtual assets provided by third party vendors such as cloud services.

SEBI believes the proposed new online framework will improve the overall audit process, enhance the quality of audit, and make the auditor more responsible for the system audit of stockbrokers. The online mechanism will also help exchanges better identify the deficiencies in the audit process before the completion of an audit, also enabling them to interact with the auditor during the process, SEBI said.  End

Reported by Akash Mandal

Edited by Ashish Shirke

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