RBI introduces RBI (Prevention of Market Abuse) Directions, 2019. The directions are applicable to transaction done through financial instrument and exempts transaction through stock exchange and as per SEBI Regulation.
Further, RBI defines artificial price wherein market participants makes a transaction or does any act or doesn’t act with the sole or dominant purpose of setting or securing the price of a financial instrument at a particular level or moving it in a particular direction.
Thereafter, mentions about Market manipulation and further defines Price-sensitive customer information as the information of any market participant not available in public and if brought to public can affect the price of any financial instrument.
RBI further directs market participant to not use the ‘Price-sensitive customer information’ for transacting on their own account in a manner that adversely affects the outcome for the customer in that (those) transaction(s). Thereafter, directs market participant to maintain the confidentiality of price-sensitive customer information.
RBI further mentions that transmission of false or inaccurate information shall be deemed to have been done intentionally by a market participant if it had not exercised due diligence as to the veracity of the information before transmitting.
Furthermore, highlights, “ Market participants committing market abuse are liable to be denied access to markets in one or more instruments for a period that may not exceed one month at a time. No such action shall be taken by the Bank without providing reasonable opportunity to the market participant to defend its actions. All instances of such action shall be made public by the Bank”.