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NSE employs strict market surveillance methods to protect the integrity of the exchange by monitoring that trading is fair and transparent.
Trade Surveillance
NSE believes that fairness of commodity trading and adequate protection for its members is essential for a quality market and prerequisite for price discovery. The main activities of NSE market surveillance operations are to preserve the integrity of price discovery process by monitoring the market to detect and deter the following:
- Market manipulation practices – an act by a market participant or a group to deceive in prices or volume of a commodity.
Insider trading – commodity trading made by NSE employee or affiliate based on insider information.
- Misstatement – rumors or false information to mislead the public in making a commodity trading decision.
- NSE uses software models for generating real time price, volume, alerts for each clearing member’s unusual trade activities. The software has the ability to link transaction prices and trades volumes in each commodity traded in real time and in the past and if there are any unusual changes in trading pattern, alert the market surveillance team.
- Market surveillance team investigates all unusual trading pattern and pass on evidence in a report to the NSE Compliance Department for further action if there was sufficient evidence that the exchanges rules have been bridged.
Warehouse Surveillance
NSE also undertakes warehouse surveillance to minimize risk to the exchange and its members in sampling, grading and storage of commodities.
NSE warehouse surveillance will comprise the following elements:
- Verification, sampling and grading process at all NSE warehouses,
- Spot tests of sampling ,weighing process ,and the grading process,
- NSE Spot tests at loading and unloading of commodities,
- NSE Verification of laboratory tests on commodities.
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