SEBI Seeks To Extend Trading Window Closure Restrictions to Relatives of Designated Persons
Moneylife Digital Team 10 February 2025
In its ongoing efforts to combat insider trading and improve market transparency, the Securities and Exchange Board of India (SEBI) has proposed to extend the automated closure of the trading window before the declaration of financial results to the immediate relatives of designated persons of listed companies.
 
According to a SEBI consultation paper, these restrictions will now extend to the immediate family members of designated persons in listed companies, including spouses, parents, children and siblings who are financially dependent on or consult with them regarding securities trading.
 
This proposal, outlined in the consultation paper, seeks to enhance compliance with insider trading regulations further and prevent inadvertent violations. 
 
Since August 2022, SEBI has implemented an automated system that freezes the permanent account number (PAN) at the security level during trading window closures to block unauthorised trades. Initially limited to Nifty 50 and Sensex-listed companies, in July 2023, this rule was extended to designated persons across all listed companies. 
 
Recognising the success of this approach, SEBI now aims to expand the restrictions to include the immediate relatives of designated persons. By doing so, SEBI seeks to minimise the risks associated with misusing unpublished price-sensitive information (UPSI) in the market and bolster the overall integrity of trading activities.
 
Under the current insider trading rules, designated persons and their immediate relatives are prohibited from engaging in securities trading during the closure of trading windows which, typically, occurs after each financial quarter until 48 hours after the announcement of financial results.
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