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India’s Sebi aims to tighten rules for fintech companies



India’s capital market regulator has increased vigil over new age fintech companies amid exponential growth in that sector and pledged to tighten scrutiny of their business models after some large initial public offerings left retail investors with significant losses.
“In past we have been little late to the party but now it is our intention to narrow that gap as much as possible.” Madhabi Puri Buch, chairperson of Securities and Exchange Board of India (Sebi), said at an event in Mumbai.
Buch said Sebi’s main job was to ensure investors make informed decisions and the regulator would safeguard them against operators who were out to make a quick buck by promising high returns.
“If your business model is based on a black box… if your claims cannot be audited or validated then it cannot be permitted,” Buch said referring to some of the new fintech companies that are offering algorithmic-trading opportunities to retail investors.
Misuse of algo software, where the machine tracks prices and initiates trades, has been a matter of concern for exchanges and the regulator in recent years amid its growing adoption. Earlier this month, Sebi issued a circular asking brokers to refrain from mentioning past returns or expected future returns.

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