SEBI Revises Company Insider Trading Rules

The Securities and Exchange Board of India (SEBI), the security market regulator, has introduced greater flexibility for senior executives of listed companies regarding their trading plans under insider trading regulations.

SEBI has shortened the minimum cool-off period between the disclosure and implementation of a trading plan from six months to four months. The regulator has also allowed more flexibility in the formulation of trading plans by enabling the inclusion of price limits—specifying upper price limits for buy trades and lower price limits for sell trades.

They have set a 20% price range for buying or selling shares within the trading plan.

An insider may make adjustments, with the approval of the compliance officer, to the number of securities and price limits if corporate actions such as bonus issues and stock splits occur after the trading plan’s approval. These changes must be reported to the stock exchanges where the securities are listed, Sebi stated.

Furthermore, if a trading plan is not implemented, the insider must inform the compliance officer within two trading days, providing the reasons for non-implementation.

Regulator proposed these changes to trading plans in response to market feedback that the existing rules were burdensome and unpopular, and they also pointed out that senior executives or key managerial personnel often have limited opportunities to execute trades due to frequently possessing inside information and the mandatory closure of trading windows around financial results announcements.