Circular No. SEBI/HO/ISD/ISD-PoD-2/P/CIR/2023/124, Dated: 19.07.2023
SEBI has extended the framework to freeze the permanent account number (PAN) of Designated Persons (DPs) during the “trading window closure” for financial results at the security level for all listed companies in a phased manner.
This amendment outlines the provisions of Clause 4 of Schedule B read with Regulation 9 of SEBI (Prohibition of Insider Trading) Regulations, 2015, which govern the trading activities of DPs.
Clause 4(1) of Schedule B read with Regulation 9 of PIT Regulations states that the trading window should be closed when the compliance officer determines that a designated person or class of designated persons can be expected to have possession of Unpublished Price Sensitive Information (UPSI).
Such closure shall be imposed in relation to such securities to which such UPSI relates. Designated persons and their immediate relatives should not trade in securities when the trading window is closed.
Additionally, Clause 4 (2) of Schedule B read with Regulation 9 of PIT Regulations states that
“Trading restriction period shall be made applicable from the end of every quarter till 48 hours after the declaration of financial results”.
In order to improve ease of doing business and to prevent inadvertent non-compliances of provisions of the PIT Regulations by DPs, the SEBI vide Circular SEBI/HO/ISD/ISD-SEC-4/P/CIR/2022/107 dated August 05, 2022, laid down a framework for developing a system to restrict the trading activities by Designated Persons (DPs) by freezing their PAN at the security level during the trading window closure period.
Presently, this framework applies only to listed companies that are part of benchmark indices like NIFTY 50 & SENSEX. However, from October 1, 2023, the framework will be extended to the top 1000 companies in terms of BSE Market Capitalization, and then to the next 1000 companies from 01.01.2024 & remaining companies from 01.04.2024.
This move aimed at preventing inadvertent trading by designated persons during the trading window period, ensuring fair and compliant practices in the Indian stock market.
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