The capital market regulator, the Securities and Exchange Board of India (SEBI) has introduced a significant update to its insider trading regulations. The recent amendment allows the subscription to non-convertible securities when the trading window is closed. This adjustment aims to provide market participants with greater flexibility while maintaining investor protection mechanisms.
The update builds upon the existing exemptions within SEBI’s (Prohibition of Insider Trading) Regulations, 2015. Certain specific transactions, such as rights issues, warrant or debenture conversions, and tendering shares in buy-back offers, were already exempted from trading window restrictions. With the latest amendment, subscriptions to non-convertible securities are now also excluded from the restrictions imposed during the trading window closure.
Previously, SEBI’s circular dated July 23, 2020, had extended the exemptions to include Offer for Sale (OFS) and Rights Entitlement transactions. This earlier change paved the way for broader flexibility for market participants, and now with the latest update, the scope has been further expanded to include non-convertible securities as well.
In September 2024, SEBI also streamlined the nomination norms to enhance the insider trading regulatory framework. One of the key changes was the expansion of the definition of ‘connected person’ to encompass partners and individuals who share a household under this category. Additionally, the term ‘immediate relative’ was replaced with a broader definition of ‘relative,’ allowing for a more inclusive understanding of relationships that could potentially influence insider trading activities.
Further reinforcing its commitment to transparency, SEBI introduced updated insider trading rules for asset management companies, which came into effect on November 1, 2024. The amended rules require these companies to maintain lists of employees and individuals who have access to unpublished price-sensitive information. Additionally, individuals in these lists must either sign confidentiality agreements or serve notices, thereby ensuring stronger safeguards against insider trading.
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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.
Investments in securities market are subject to market risks, read all the related documents carefully before investing.
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