Sebi Tightens Insider Trading Norms with New Trading Freeze for Relatives

Sebi has extended its automated trading window closure mechanism to include immediate relatives of designated persons in listed companies. The move aims to prevent non-compliance with insider trading norms, applying the restriction to immediate family members who may have access to price-sensitive information during specific periods.

The Securities and Exchange Board of India (Sebi) has announced a significant extension to its trading window closure mechanism, now including the immediate relatives of designated persons (DPs) in listed companies. This proactive measure is designed to prevent accidental breaches of insider trading regulations by individuals with indirect access to unpublished price-sensitive information.

Previously, the restriction applied solely to DPs. With this amendment, immediate family members, defined as those financially dependent on or consulting DPs in trading decisions, will also face trading restrictions. The phased implementation begins July 1, 2025, for the top-500 listed companies by market capitalization, with all remaining listed companies following suit by October 1, 2025.

To facilitate this rollout, a designated depository will manage portal access for companies to upload pertinent information. These companies must comply with deadlines for submitting data, ensuring an efficient execution of the trading freeze directive. Regular reporting and coordination will further ensure compliance and resolve any disputes.

(With inputs from agencies.)