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No work from home for brokerages MFs

Even as several new-age companies as well as manufacturing players have asked employees to work remotely to limit the spread of coronavirus, regulatory, infrastructure and compliance constraints are holding back brokerages, mutual funds and other stock market participants to recommend work-from-home to traders and dealers. Some, however, have worked out ways to keep their operations running with a minimal in-office staff.


For brokerages, among the main hurdles is the imposition of the no-cellphones rule during market hours for traders if they work from a remote location. This is done to stop leakage in trading data and client positions, which could be used for insider trading or front-running, both illegal acts under Sebi rules.


According to Ashish Pyasi, associate partner of law firm Dhir and Dhir Associates, “It will be challenging to maintain the record of transactions and recordings if employees work from home. Unless a system, which will cover these situations, is put in place immediately, it will be hard for regulators and stock exchanges to keep a check.”


Also, financial intermediaries depend on trading terminals for price updates and feeds in order to place bets, and to have similar infrastructure at home is difficult.


Pradeep Gupta, co-founder & VC, Anand Rathi Group, said that it had looked at a work-from-home solution and bifurcated work basis on what is possible and what it may face in terms of regulatory or compliance challenges. “Trading cannot happen from home as it requires terminals and has to be done from office, from the designated desk and by the designated person according to compliance.”


At Centrum Capital, dealers and traders, who punch orders on BOLT, have not been allowed to work from home, while its sales and research analysts have been advised to work remotely. However, Motilal Oswal Group has put up secondary facilities so that business critical employees could work either from office or from another place so that they could avoid public transport, Sudhir Dhar, its ED & head of HR, said.


Sebi regulations for mutual funds and market intermediaries do not expressly prohibit remote connectivity for employees. “The stipulations mandate data localisation while ensuring data security and integrity,” said Arka Mookerjee, partner, J Sagar Associates. “Given the nature of cloud-based connectivity that the world has been moving towards, this is a good opportunity to test preparedness, especially for smaller players. However information management, including unpublished price-sensitive information, have to be carefully managed by the employee concerned to avoid leakage of information.”



Interestingly, insider-trading violations were one of the most investigated cases by Sebi in fiscal 2019. The markets regulator probed 70 cases in 2018-19, a fourfold jump in cases it investigated in fiscal 2018.


Neil Parikh, chairman, PPFAS Mutual Fund, said “We have asked staff to work from home for at least two weeks as a precautionary measure to prevent the spread of the coronavirus. However, for critical functions like fund management, NAV calculations, we will have some staff coming to office for the next two-three days until we are comfortable that these can be managed from home without any delay.”

Source: TOI