SEBI plans to extend automated trading window restrictions to kin of designated persons

In a bid to tighten insider trading regulations, the Securities and Exchange Board of India (SEBI) has proposed extending the automated trading window closure to include the immediate relatives of designated persons in listed companies.

The move, detailed in a consultation paper released on Friday, aims to prevent inadvertent non-compliance with insider trading rules. SEBI has invited public comments on the proposal until 28 February.

Since August 2022, SEBI has implemented a framework that freezes the PAN at the security level during the trading window closure period to curb unauthorised trades. Initially applicable to Nifty 50 and Sensex-listed firms, the rule was later expanded in July 2023 to cover designated persons across all listed companies.

Given the effectiveness of the framework, SEBI now proposes to extend these restrictions to immediate relatives—spouses, parents, siblings, and children—who are financially dependent on or consult designated persons regarding securities trading.Under the insider trading rules, designated persons and their immediate relatives are barred from trading in securities when the trading window is closed. This restriction period extends from the end of every quarter until 48 hours after financial results are announced.

By broadening the scope of restrictions, SEBI seeks to strengthen compliance mechanisms and mitigate risks associated with unpublished price-sensitive information (UPSI) within the securities market.

(With PTI inputs)