New Delhi, Feb. 18 -- The market regulator has proposed linking trading accounts with SIM cards and making biometric authentication mandatory to enhance security in online trading and protect investors from unauthorized transactions.

The Securities and Exchange Board of India (Sebi) acknowledged that with the rapid evolution of technology and the increasing use of web-based and mobile platforms for trading, incidents of hacking, identity theft, and fraud have become more frequent. The regulator flagged a rise in cases of unauthorized access to accounts, SIM card spoofing to divert one-time passwords (OTPs), and other security breaches.

The regulator set up a working group to address these issues and came out with a consultation paper se...