The comment follows a recent case on the issue where the tribunal, SAT, set aside a Sebi order.

"Front-running is an offence and we need to make a lot of improvement... Regulations on insider-trading are different, and we have to have a serious re-look at regulations," Securities and Exchange Board Chairman Upendra Kumar Sinha told reporters at a media workshop organised by the regulator on securities market here yesterday.

Front-running is an illegal practise where a stockbroker executes orders on a security for his/her own account, taking advantage of advance knowledge of pending orders.

Front-runners use confidential information for buying or selling securities ahead of a large order with the objective of benefiting from the subsequent price movement.

Earlier this month, the Securities Appellate Tribunal (SAT) set aside a Sebi order penalising three persons for front-running -- it was the first case involving individuals -- which raised questions about the efficacy of the law.

The Sebi had barred the trio from the market, and imposed a fine of Rs 1.13 crore on two of them. They had allegedly made a profit of Rs 1.56 crore from 557 synchronised trades on the NSE and 50 on the BSE between January 2007 and March 2009.

But setting aside the Sebi order, SAT said the existing prohibition of fraudulent and unfair trade practises (FUTP) regulations of 2003 do not clearly define "front-running", and even if a particular fraudulent transaction could be construed as front running, the regulations applied only to market intermediaries and not individuals.

Traders Kanaiyalal Baldevbhai Patel and Anandkumar Baldevbhai Patel were in the dock for executing orders on the information received from cousin Dipak Patel, who was a portfolio manager at Passport India Investment Mauritius.

Sebi alleged that Dipak Patel tipped them off about forthcoming trading activity of Passport India, and Kanaiyalal Patel traded ahead of Passport's orders, making a huge profit. Trades were executed using a phone number registered in Anandkumar Patel's name.

One of the handicaps suffered by Sebi while regulating front-running is it is not empowered to tap phones. It had sought a notification to get this power under the Telegraph Act.