Market Brief: Enhanced Surveillance in Brokerage Dealing Rooms India’s market regulator, SEBI, has significantly escalated its oversight of stockbroker operations under the newly implemented **SEBI (Stock Brokers) Regulations, 2026**. This updated framework, which became effective in early **January 2026**, replaces decades-old rules with a modernized mandate focused on preventing market abuse. The primary target is front-running, where brokerage employees use confidential information about large impending trades to profit personally. Under the new regime, brokers must establish an "institutional mechanism" specifically designed to detect and report such fraudulent practices. Tightening the Perimeter Regulatory focus has shifted from simple record-keeping to proactive prevention. Stockbrokers are now required to maintain all trading records and internal communications for a minimum of **8 years**, an increase from the previous 5-year requirement. This longer archival period ensures that investigators can trace complex trade patterns over a broader timeline. The 2026 regulations also introduce a residency requirement for management. Every brokerage must have at least one designated director residing in India for at least **182 days** per year. This ensures that a senior executive is directly accountable to local authorities for any compliance failures or ethical breaches. Tech-Driven Surveillance The oversight of dealing rooms has become increasingly data-centric. Brokers are now mandated to implement automated surveillance systems that flag suspicious activities to exchanges within **48 hours**. This is particularly critical for "Qualified Stock Brokers" (QSBs), who handle high volumes and are subject to even more stringent governance and technical capacity standards. Recent enforcement actions underscore the regulator's zero-tolerance policy. In **January 2026**, SEBI barred **12 entities** from the securities market for a period of **5 years** following a front-running investigation. The case resulted in the disgorgement of **₹1.07 crore** in illegal gains, plus **12% annual interest** and additional penalties totaling **₹90 lakh**. Institutional Accountability The regulator is looking closely at how trades are initiated for high-net-worth individuals and institutional clients. New rules prohibit brokers from operating unauthorized investment schemes or accepting cash from clients, aiming to close loopholes used for mule accounts and shadow trading. Compliance officers are now personally responsible for segregating client funds and ensuring that trading terminals are used only by authorized staff at approved locations. These measures collectively aim to protect market integrity as India’s trading volumes continue to reach record highs.