Without going into to the details any further, such as margin payments etc, this is the essence of surveillance. An important ingredient in all this is market intelligence from various market players who would be prepared to share market information on a confidential basis with the regulator. When badla was stopped in 1993 it was only because the stock exchanges were unwilling to segregate trades between badla and cash trades. The Patel committee also recommended such segregation in 1995 and suggested that there should be an audit trail for each transaction. It is not clear if this has been implemented till now.
Exchanges have a nerve centre where all trades during the day are received and collated.
Information leaked out from this centre during the day can be used by unscrupulous persons for their benefit. It would be desirable to have a Sebi person of integrity to sit at this centre all day and to relay to the Sebi office the pattern of major trades and major brokers at the end of the day, for Sebi officials and the RBI to discern the overall pattern and to begin action the following day itself to call in the concerned brokers for questioning. If it is known that Sebi is watching on a daily basis and will take deterrent action by suspending the registration of the broker and his associates found to be indulging in malpractices this will send the right signals and prevent wrongdoing to a large extent. The key is timely information and the will to take timely and deterrent action. There is considerable scope for malpractices in trading in multiple exchanges for arbitrage and margin evasion.