The Securities and Exchange Board of India has stepped up its surveillance system to check insider trading in the future.

Sebi had recently levelled insider trading charges against high profile fund manager Samir Arora while taking investment decisions for Alliance Capital Mutual Fund.

According to sources, Sebi Chairman G N Bajpai has taken a keen interest in this initiative. Bajpai was not available for comment.

The regulator is keeping a tab on investment bankers and mutual funds, which are generally privy to price sensitive information.

"If, for instance, a merchant banker is undertaking a deal and the broking house attached to him invests in the stock of the company concerned before the deal takes place, it would be considered a case of insider trading," said a source familiar with development.

The regulator is closely monitoring price movements in scrips and obtaining information about the major player in the stock concerned.

"We then link up the concerned broker or the broking house with the client or the entity concerned. If there is any deal happening or any corporate announcements, then we try to find out the connection with that," said a source close to Sebi.

Sources said that a special team has been created which has been vested with the sole responsibility of undertaking market surveillance and tracking companies.