Depository RFI and Trade Surveillance as per the latest mandates

Introduction: The Evolving Role of Compliance in Capital Markets

The capital markets landscape is evolving rapidly. With increased digital participation from retail and institutional investors, the market dynamics have become more complex, making compliance more critical than ever. Regulators such as SEBI, the National Stock Exchange (NSE), and the Financial Intelligence Unit (FIU) have responded by tightening surveillance and enforcement protocols to protect market integrity.

For brokers and intermediaries, this regulatory update necessitates a fundamental reassessment of surveillance systems and risk governance strategies, transitioning from reactive, manual monitoring to a technology-driven, real-time approach.

The focal point of TrackWizz’s event on 20th March 2025 — “Compliance Without Compromise” was to provide insights into surveillance requirements, regulatory applications, and the unification of technology in compliance with regard to depository RFI & surveillance regulatory changes. The event gathered over 114+ delegates representing several capital market institutions. These institutions came together to discuss the practical challenges and solutions related to NSE Circular No. 428/2024 and the FIU-RFI mandates.

This blog deep dives into these latest regulatory mandates, the critical insights shared at the event, and the practical steps brokers must take to align with the new compliance reality.

Why This Matters: The Regulatory Push Behind It All

In recent months, regulators have introduced a series of stronger surveillance expectations for market intermediaries. On December 31, 2024, the National Stock Exchange (NSE) released Circular No. 428/2024, following SEBI’s July 2024 guidelines, to reinforce what brokers must do to detect and prevent market abuse. These are not just high-level advisories — they come with specific responsibilities across firm sizes.

Trading Members (TMs) are now expected to proactively monitor client behavior, detect irregular trading patterns, flag suspicious activities, and establish dedicated surveillance systems. Trading members are advised to take note of the same and ensure compliance with these guidelines. These include:

Automating alert generation (mandatory for brokers with 2,000+ UCCs)
Building a separate surveillance team or function (especially for large and QSB brokers)
Conducting voice and email surveillance for dealers and employees
Monitoring trades for signs of insider trading, front running, spoofing, or pump-and-dump schemes
Quarterly and half-yearly reporting to exchanges, including action taken or ‘nil’ reports
Implementing a whistleblower policy and training programmes for surveillance staff
E-certification is to be done by mid and senior-level staff of all Trading Members (including the Principal Officer) handling KYC and Surveillance Activity.

The compliance requirements have increased, but so has the importance of a strong, preventive surveillance framework. That’s what led to our event “Compliance Without Compromise” with a knowledge sharing session on the same to enhance awareness for our clients to best deal with these changes.

What’s New: RFI Updates for Depository Participants

Alongside Exchange-level surveillance mandates, Depository Participants (DPs) now face their own expanded alert responsibilities.

On December 31, 2024, the FIU-IND issued new Red Flag Indicators (RFIs) for DPs — a consolidated update that replaces and expands earlier suspicious transaction guidelines. These updates came into immediate effect, adding urgency to industry discussions.

The circular introduces 36 alert indicators, categorized across sources like:

Employee-initiated alerts (EI)
Transaction monitoring patterns (TM) and more.

These RFIs demand timely action, clear SOPs, and seamless integration into existing monitoring systems. Platforms like TrackWizz are helping institutions operationalize these RFIs, offering pre-built modules for transaction monitoring, media screening, typology mapping, and more, which is what our event explored.

Event Insights: How the Industry Is Responding

The March 20 event was a vibrant exchange of ideas, challenges, and best practices around the NSE surveillance and FIU-RFI mandates.

Summary of 20th March 2025 Event: “Compliance Without Compromise”.

With 114+ delegates and over 64 capital market institutions actively participated in our discussions about implementing NSE’s surveillance circular and managing DP RFIs.

Highlights from Audience Q&A and Engagement

Attendees posed pointed questions about the practicalities of deploying real-time alert systems, aligning multiple teams around the Accountability Grid, and integrating whistleblower policies into daily operations. The candid exchange revealed common obstacles such as limited technology integration, resource constraints, and evolving regulatory interpretations.

Spotlight on Implementation – Groww’s Example

A highlight was the presentation by Mr. Manishkumar Sabu, Head of Compliance at Groww, who shared how Groww implemented the FIU RFI circular using TrackWizz’s platform. He detailed:

How automation reduced manual errors and processing time.
The benefits of an integrated platform that connects alert generation, investigations, and reporting workflows.
The importance of building a zero-friction compliance environment to reduce operational risks.

His real-world insights demonstrated how technology can turn regulatory challenges into operational advantages.

Institutions That Joined the Dialogue

Beyond Groww, firms like Edelweiss, HDFC Securities, Sharekhan, and others contributed their experiences and perspectives, underscoring a shared industry resolve to adopt technology and collaborative frameworks in meeting compliance goals.

What Should Brokers Do Now?

Given the rigorous mandates and lessons from the event, brokers must act decisively:

Build or upgrade surveillance frameworks that align with exchanges’ compliance mandates. This includes configuring dynamic thresholds and risk scoring tailored to their operations.
Automate alert and escalation processes: Automation ensures timely detection and consistent application of SOPs, reducing human error and latency.
Assign clear roles and accountability: Defining ownership at each stage — from surveillance monitoring to final closure — is critical.
Invest in continuous training and E-certification for staff to maintain compliance readiness.
Strengthen whistleblower policies and conduct regular internal awareness to encourage early reporting.
Leverage technology platforms like TrackWizz. Such platforms streamline compliance workflows, facilitate real-time screening, and integrate with regulatory filings, helping you stay compliant.

This roadmap helps brokers turn compliance from a routine requirement into a useful strategy and position themselves for sustainable growth amid evolving market risks.

Conclusion: Compliance Without Compromise Isn’t Optional

The regulatory landscape for India’s capital markets is clearly moving towards more stringent, technology-driven compliance frameworks. NSE’s Circular No. 428/2024 and the FIU’s RFI mandates exemplify this shift — demanding not just vigilance, but a holistic, proactive approach involving people, processes, and technology.

The March 20 TrackWizz event highlighted the path forward: collaboration, innovation, and shared commitment are key to navigating this new compliance era successfully.

At TrackWizz, our mission is to empower intermediaries with scalable, user-friendly compliance solutions that simplify meeting regulatory mandates — allowing brokers to focus on their core business while staying audit-ready.

In today’s market, compliance without compromise is not an option — it is a strategic imperative that will define the future of capital market intermediaries.