Capital market regulators worldwide are increasingly using social media sites for their supervisory activities as well as for gathering general information, says a global report.
Though social media adoption is yet to catch up in many parts of the world, the findings by global grouping of capital market watchdogs IOSCO has found that Facebook, Twitter and LinkedIn are being used more by them.
“Increasingly, regulators are using social media sites in conducting their supervisory activities of firms to identify personal relationships between parties and as a source of general information,” IOSCO said.
The International Organisation of Securities Commissions (IOSCO) is a global grouping of capital markets regulators, including the Securities and Exchange Board of India (Sebi), in different countries.
Going by findings, the most commonly used social media sites by the regulators are Facebook, Twitter and LinkedIn.
Interestingly, IOSCO noted that regulators have neither defined the term social media, nor prohibited its use by intermediary firms.
“The use of social media by intermediaries is in its nascent stages, but across the globe, firms permitting its use prohibit their staff from making recommendations or providing investment advice,” the report.
The observations are part of ‘Report on the IOSCO Social Media and Automation of Advice Tools Surveys’ released recently. It has been prepared after taking into consideration four surveys including one to regulators addressing the supervision of social media.
Nearly 200 intermediaries and 21 regulators from 20 jurisdictions participated in the surveys.
Noting that social media presents regulators with numerous challenges, IOSCO said widespread use of social media for business communications, such as blogs and social networking sites, has impacted how market intermediaries interact with investors.
According to IOSCO, another cause for concern is the growing use of personal mobile devices by employees of intermediaries to access business applications and to engage in business communications with customers.
“This trend highlights the need for both market intermediaries and regulators to be able to identify and distinguish communications that are subject to securities regulation from personal communications,” the report said.
Meanwhile, Sebi has put in place new software tools to help in its investigations and surveillance activities.
The new tools would help the watchdog in keeping a close watch on possible manipulative activities in the stock markets by monitoring suspicious trades as also by analysing the information available in the public domain such as on social media and other Internet platforms.