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Conflicts of interest in securities markets arise when professional positions are exploited for gain, manifesting as actual, potential, or perceived situations. SEBI regulations require intermediaries to establish systematic frameworks for identification, avoidance, and prevention. Identification involves recognizing misaligned incentives, while avoidance relies on Board oversight and disclosure. Prevention depends on structural safeguards such as "Chinese Walls," role segregation, and ethical codes. Ultimately, maintaining market integrity requires a shift towards a principle-driven governance culture, where client interests are consistently prioritized over revenue-driven considerations to ensure long-term investor confidence.
DEFINING CONFLICT OF INTEREST
Conflicts of Interest may be defined in several ways, including any situation in which an individual or entity is in a position to exploit a professional or official role for personal or corporate benefit. This is a manifestation of the moral hazard problem, particularly in institutions operating in the financial sector (or related areas), that provide multiple services, where potentially competing interests may lead to concealment of information or dissemination of misleading information. A conflict
