Insider-Trading Regulations: SEBI Proposes Extending The List Of Connected Persons

The Securities and Exchange Board of India (SEBI), the market regulator, has suggested broadening the definition of “connected persons” under the SEBI (Prohibition of Insider Trading) Regulations (PIT Regulations) to include more relatives.

Connected persons are individuals likely to have direct or indirect access to unpublished price-sensitive information (UPSI) due to their employment, profession, or association with someone who does, including immediate relatives such as parents, siblings, and children. The market regulator has proposed adding new categories of relatives to this list.

In a consultation paper dated July 29, SEBI recommended amending regulation 2(1)(d) by replacing “immediate relative” with “relative” to define connected persons.

The proposed “relative” category of connected persons includes siblings of spouses, siblings of parents, any lineal ascendant or descendant, and all of their spouses.

The definition of “immediate relative” under 2(1)(f) would remain unchanged and be limited to disclosures and the code of conduct under PIT Regulations.