Market regulator Sebi devices framework to curb insider trading

Market regulator Sebi has come up with a new framework that will prevent company insiders from dealing in shares during the closure of the trading window. Under Sebi’s prevention of insider trading (PIT) regulations, the trading window is closed when the compliance officer determines that a designated person or class of designated persons are in possession of unpublished price sensitive information.

During this time, they and their immediate relatives are not allowed to deal in securities of the company to prevent misuse. However, often company insiders inadvertently trade in stocks without fully knowing the restrictions. “Improve ease of doing business and prevent inadvertent non-compliances of provisions of PIT Regulations by DPs, after having deliberations with bourse and Depositories and listed companies, it has been decided that Stock Exchanges and Depositories shall develop a system to restrict trading by DPs of listed company during trading window closure period,” Sebi said in a circular. 

Initially, the new system will be applicable only for companies that are part of Sensex and the Nifty.