Sebi  bans  insider trading but allows senior  executives  to trade in  their company’s  shares  under  a  trading  scheme  introduced in 2015.  

 The Securities and Exchange Board of India (Sebi)  on  Friday proposed relaxations to  allow  company insiders, who are in possession of unpublished  price sensitive  information, to trade in securities.  contract.  

 Sebi  bans  insider trading but allows senior  executives  to trade in  their company’s  shares  under  a  trading  scheme  introduced in 2015.

However,  data and market feedback suggest  that these  trading  schemes  are not very popular as the regulatory requirements are  complex,  Sebi said in a consultation paper  on  Friday.  

 The regulator  recommends some flexibility  in  trading  plans,  including reducing the minimum  consideration  period between  announcement  and implementation of  trading  plans  from six months to four months,  removing  the  ban consideration time  and  reduced  minimum  insurance  period.  Company  insiders,  such as senior management or key  management  personnel, who  often  possess price-sensitive information, have  little opportunity to trade  for purposes such as  incremental buybacks. gradually  and  comply  with minimum public shareholding  standards.  

 To facilitate  the application  of trading plans, the  market  regulator  recommends reducing  the minimum  response time from the announcement  of the plan  to  its implementation from six  to four months. 

  When planning  a  transaction, insiders must  plan for at least 18 months,  including  a mandatory  consideration  period  of 6 months  before  making a transaction  and  a  minimum  hedging  period of 12 months. The regulator has proposed reducing the minimum  insurance  period requirement  from 12 months  to  2  months. 

  Additionally, he  suggested  eliminating  the  blackout  period requirement. The  trading plan cannot  include transactions  between the 20th trading day  preceding  the last day of any financial  year the results of  which  will  be announced by the  securities  issuer  and the  20th  trading  day. two  after the  release  of  these  financial results. This period  of time  is  called the  blackout period. 

  The insider  will  have  the  option, when formulating a  trading plan, to  set an  upper price  limit  for buy  transactions  and  a  lower price  limit  for sell  transactions.  Sebi  has  suggested that  this  price limit should be within  +/- 20%  of the closing price on the date of  filing  of the trading plan. 

Other recommendations include  publishing  trading plans to stock exchanges  within  two days  of approval and  applying trading regulations to transactions carried out according to  the  plans transaction. Regarding the  disclosure of personal  information  of  insiders  in  trading  plans,  the regulator  recommends  that  insiders disclose it separately to  the  exchange (with personal  information)  and  to  the public (without  information). individual).

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