SEBI Expands Insider Trading Curbs: Immediate Relatives Now Barred During Window Closure

In a significant step to reinforce transparency and fairness in the securities market, the Securities and Exchange Board of India (SEBI) has introduced stricter controls on insider trading. A new directive extended trading restrictions during sensitive financial periods to include the immediate relatives of designated persons (DPs) within listed companies.

What Is the Trading Window Closure Period?

The trading window closure period refers to a block of time during which individuals with potential access to unpublished price-sensitive information (UPSI) are prohibited from trading in the company’s securities. This window typically shuts ahead of major financial disclosures—like quarterly results, and reopens only after the information has been made public and absorbed by the market.

Until now, these rules applied primarily to insiders such as directors, senior executives, and other key managerial personnel. However, SEBI has now broadened the scope of restrictions.

What Has Changed Under SEBI’s New Rule?

The core amendment lies in the inclusion of immediate relatives of insiders within the ambit of trading restrictions. Immediate family members—such as spouses, parents, and children—of designated persons are now explicitly prohibited from engaging in trading during the window closure period.

This move is grounded in the understanding that UPSI can easily be shared informally within families, potentially leading to unfair trading advantages. By bringing immediate relatives under the purview of these regulations, SEBI aims to plug potential loopholes and foster equitable participation in the markets.

How Will This Be Enforced?

To enforce these new norms effectively, SEBI has directed stock exchanges and depositories to implement automated controls over trading accounts. Specifically, the demat accounts linked with PANs of immediate relatives will be automatically frozen for on-market and off-market transactions during the restricted periods.

The responsibility for sharing the required data, such as PAN and demat account details of designated persons and their immediate family members, rests with the listed companies. This data will be passed on to the designated depositories, who will coordinate with exchanges to impose the trade freeze.

Implementation Timeline

The rollout of this regulation will take place in two distinct phases:

Phase 1:

Effective from July 1, 2025 – Applicable to the top 500 listed companies by market capitalisation.

Phase 2:

Effective from October 1, 2025 – Applicable to all other listed companies in India.

This phased approach gives companies sufficient time to collate, validate, and submit the necessary details to ensure smooth compliance.

Read More: Check Out The SEBI’s Recent Investor Protection Measures

The Broader Objective: Market Integrity

These amendments are not merely administrative. They align with SEBI’s broader vision of enhancing investor confidence and ensuring a level playing field in capital markets. By pre-emptively closing the doors to potential information leaks, even through familial channels, SEBI is reinforcing its commitment to safeguarding market integrity.

Conclusion

SEBI’s expanded scope of insider trading restrictions marks a decisive evolution in regulatory oversight. By including the immediate relatives of insiders, the regulator underscores the principle that market fairness must extend beyond formal designations and into areas where informal information flows may exist. These proactive measures reflect a maturing capital market where transparency, accountability, and investor protection remain paramount.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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