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Indian markets regulator proposes to ease select insider trading provisions

November 24, 2023

The Indian markets regulator on Friday proposed to ease certain provisions of the insider trading law, which will make it easier for management to trade in company shares without running afoul of the law, according to a discussion paper on the regulator's website.

The Securities and Exchange Board of India (SEBI) currently allows management to trade in the shares of their companies under so-called duly disclosed "trading plans". This enables executives, who are frequently in possession of unpublished price-sensitive information, to trade without violating rules meant to prevent insider trading.

The provision of trading plans was introduced in 2015, but since then a majority of companies and their management have not opted for them due to onerous requirements.

In the discussion paper, SEBI proposed to relax rules around the cooling-off period between the announcement and implementation of trading plans to four months from the current six months.

It further proposed that trades following a trading plan can be executed within two months rather the present requirement of a year, and that such plans should be disclosed to stock exchanges within two days of approval.

The regulator also explored the possibility of masking the details of individuals filing trading plans, with caveats. It has asked for market feedback till Dec. 15.


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