SEBI Permitted Use of Wireless Technology in Securities Trading

The Securities and Exchange Board of India (SEBI) on 26 August 2010 for the first time allowed registered brokers who provide internet-based trading to facilitate securities trading to use wireless technology, including mobile phones and laptops with data cards. SEBI mentioned in a circular issued on 26 August that the stock exchange should ensure the broker complies with requirements of secure access, encryption, security of communication for internet-based trading and securities trading using wireless technology. The circular reiterated the regulator’s commitment to enable a wider network of retail investors participate in stock markets. Given that Indian telecom industry is the fastest growing in the world, and that number of mobile users have progressively risen from 5 million in 2001, there exists huge opportunity in using wireless technology in securities trading. SEBI specified that in case of failure of wireless network, alternative means of communication for placing orders should be available. SEBI asked for additional provisions specifying possible risks, responsibilities and liabilities be incorporated in the broker-client agreement or by bringing to notice of clients.