Sebi eases trading process for company insiders

27 Jun 2024 , 10:57 AM

The Securities and Exchange Board of India (Sebi) has granted senior executives of listed businesses latitude in their trading plans under insider trading regulations. The regulator has shortened the minimum cooling off period between trading plan declaration and implementation from six to four months.

It has allowed for greater flexibility in the creation of trading plans by establishing price restrictions – upper price limits for buy trades and lower price limits for sell trades.

The regulator has set a 20% price range for purchasing or selling shares under the trading plan.

“Insider may make adjustments, with the approval of the compliance officer, in the number of securities and price limit in the event of corporate actions related to bonus issue and stock split occurring after the approval of trading plan and the same shall be notified on the stock exchanges on which securities are listed,” according to Sebi.

Sebi stated that if a trading plan is not implemented, the insider must notify the compliance officer within two trading days, along with the reasons why.

The regulator proposed adjustments to trading plans after receiving feedback from the market that the current regulations were onerous and unpopular. It stated that senior executives or key managerial personnel have a very narrow window for carrying out their transactions because they usually have inside information, along with required trading window closures for financial results.

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