Tag Archives: insider trading

disclosure format under insider trading code

SEBI has revised its disclosure formats under the SEBI (Prohibition of Insider Trading) Regulations, 2015 or the Insider Trading Code. The revised formats are given in the SEBI circular as per link below.


The disclosure formats are

Form D – disclosure on becoming a key managerial personnel/ director/ promoter/ member of the promoter group

Form C – continual disclosures

Form D – transactions by other connected persons as identified by the company.

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Liar’s Poker

Brutal biography of one of the premier investment banks to work with in the 1980s, the Saloman Brothers. Michael Lewis joined the firm fresh out of London School of Economics and spent the next three years from a downright rookie to a bond salesman raking in millions for the firm and while at the same time enriching himself with bonuses from the firm. Its an inside look at the frenzy of an investment bank, the cutthroat business where deception is the name of the game, and ethics is kept in the waste basket. Michael has shredded Saloman Brothers like no one has done before to any firm in which he was first employed. Mortgage bond market was created by Saloman Brothers themselves out of nothing. Housing loans were bundled into attractive lots and sold as bonds in the market. Equity, government bonds, municipal bonds etc. were frowned upon, whereas bond traders were the stars. Corporate equity markets i.e. the stock markets were considered as anathema in Saloman Brothers because bond markets is where the monies lie and where you can play the game of deception better. Michael has dwelt a lot on junk bonds created by Micheal Milken of the Drexel Burnham Lambert fame while giving passing reference to Ivan Boesky of the insider trading shame. People don’t stay in investment banks for long time if the firm does not pay them enough, so there’s no loyalty involved and there are enough raiders for your talent ready to pay unheard of amounts and promised bonuses. Quite a devastating look at the insides of a greedy enterprise. I guess if someone were to write about the other investment banks of that era, they would have come up with a similar effort. Goodreads 5/5

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revised FAQs on insider trading

Vide SEBI circular dated 8th October, 2020

FAQs on SEBI (PIT) Regulations 2015
Whether requirement of pre-clearance is applicable for exercise of employee stock options?
Employee stock options being issued under SEBI (Share Based Employee Benefits) Regulations, 2014, the exercise of such stock options is covered under clause 4(3)(b) of Schedule B of the SEBI (PIT) Regulations, 2015. However, sale of shares by employees obtained after exercise of options shall not be covered under the aforesaid Clause. Thus, no pre-clearance is required for exercise of stock options.
Whether trading in ADRs and GDRs by employees of Indian companies who are foreign nationals is covered under provisions of PIT Regulations on code of conduct?
Yes, trading in ADRs and GDRs of listed companies is covered under relevant provisions of PIT Regulations. Employees of such companies, including foreign nationals, who are designated persons, shall be required to follow the code of conduct for trading in ADRs and GDRs. For such disclosures by such designated persons, a unique identifier analogous to PAN may be used.
What information should a listed Company maintain in its structured digital database under Regulation 3(5), in case the designated person is a fiduciary or intermediary?
1[The listed company should maintain structured digital database internally, which shall contain information including the following:

(i). Details of the Unpublished Price Sensitive Information (UPSI);
(ii). Details of persons with whom such UPSI is shared (along with their PANs/other unique identifier) and details of persons who have shared the information.
Similarly, another structured digital database should be maintained internally by fiduciary or intermediary, capturing information as mentioned above at point (i) and (ii), in accordance with Regulation 9A (2)(d) and as required under Schedule C.
For example: The listed company (X) has appointed a Law firm or Merchant Banker (Y) in respect of fund raising activity and (A) from listed company has shared the said UPSI with (B) of Law firm or Merchant Banker.
The structured digital database of (X) should capture the nature of UPSI shared, details of (A), (Y) and (B), along with their PAN or other unique identifier (in case PAN is not available).
The Law firm or the Merchant Banker (Y) shall in turn maintain another structured digital database internally capturing the nature of UPSI received/shared, details of (X), (A) and (B) along with their PAN or other unique identifier (in case PAN is not available), in accordance with Regulation 9A(2)(d) and as required under Schedule C.]
In case a designated person resigns, what information should be collected by the company/ intermediary/ fiduciary under PIT Regulations?
All information which is required to be collected from designated persons, should be collected till date of service of such employees with the company. Upon resignation from service of designated person, a company/ intermediary/ fiduciary should maintain the updated address and contact details of such designated person. The company/intermediary/ fiduciary should make efforts to maintain updated address and contact details of such persons for one year after resignation from service. Such data
should be preserved by the company/ intermediary/ fiduciary for a period of 5 years.

1 Substituted pursuant to amendment in SEBI PIT Regulations, 2015 dated July 17, 2020. (Erstwhile FAQ read as follows- The listed company
should maintain the names of the fiduciary or intermediary with whom they have shared information along with the Permanent Account Number
(PAN) or other unique identifier authorized by law, in case PAN is not available. The fiduciary / intermediary, shall at their end, be required to
maintain details as required under the Schedule C in respect of persons having access to UPSI. For example: If the listed company has appointed
a law firm or Merchant Banker in respect of fund raising activity, it should obtain the name of the entity, so appointed, along with the PAN or
other identifier, in case PAN is not available. The law firm or the Merchant Banker would in turn maintain its list of persons along with PAN or
other unique identifier (in case PAN is not available), in accordance with Regulation 9A(2)(d) and as required under Schedule C, with whom
they have shared the unpublished price sensitive information.)

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continuous disclosures

SEBI circular dated 9th September, 2020 regarding automation of continuous disclosures under the insider trading regime. Gist of SEBI circular follows:

  1. Vide Gazette Notification No. SEBI/LAD-NRO/GN/2020/23 dated July 17, 2020, Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) have been further amended.
  2. SEBI, vide circular no. CIR/CFD/DCR/17/2015 dated December 01, 2015,
    CFD/DCR/CIR/2016/139 dated December 21, 2016 and SEBI/ HO/ CFD/ DCR1/CIR/P/2018/85 dated May 28, 2018, implemented the system driven disclosures in phases, under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and PIT Regulations.
  3. Pursuant to the aforesaid amendment of PIT Regulations and discussions held with the Stock Exchanges and Depositories, it has now been decided to implement the system driven disclosures for member(s) of promoter group and designated person(s) in addition to the promoter(s) and director(s) of company (hereinafter collectively referred to as entities) under Regulation 7(2) of PIT Regulations.
  4. To begin with, the system driven disclosures shall pertain to trading in equity shares and equity derivative instruments i.e. Futures and Options of the listed company (wherever applicable) by the entities.
  5. The procedure for implementation of the system driven disclosures is provided at Annexure-A.
  6. The Depositories and Stock Exchanges shall make necessary arrangements such that the disclosures pertaining to PIT Regulations are disseminated on the websites of respective stock exchanges with effect from October 01, 2020.
  7. The system would continue to run parallel with the existing system i.e. entities shall continue to independently comply with the disclosure obligations under PIT Regulations as applicable to them till March 31, 2021.
  8. As currently done, the disclosures generated through the system shall be displayed separately from the regular disclosures filed with the exchanges.
  9. This circular supersedes the earlier circulars dated December 01, 2015, December 21, 2016 and May 28, 2018 with respect to implementation of System driven disclosures under PIT Regulations.


  1. Steps/process required to be taken for implementation:
  2. The various formats and timelines for sharing of data shall be standardized, as agreed upon by the depositories and exchanges.
  3. Listed company shall provide the information including PAN number of Promoter(s) including member(s) of the promoter group, designated person(s) and director(s) (hereinafter collectively referred to as entities) as per PIT Regulations to the designated depository (selected in terms of SEBI circular ref. no. SEBI/HO/CFD/DCR1/CIR/P/2018/85 dated May 28, 2018) in the format and manner prescribed by the Depositories. For PAN exempt entities, the Investor’s Demat account number(s) shall be specified by the listed company. The information shall be provided within 10 days from the date of this circular.
  4. The designated depository shall share the information received from the listed company with other depository.
  5. In case of any subsequent update in the details of the entities, the listed
    company shall update the information with the designated depository on the same day. The designated depository shall share the incremental changes with the other depository on the day of receipt from the listed company.
  6. Based on the PAN of First holder/Demat account number(s), the depositories shall tag such Demat accounts in their depository systems at ISIN level.
  7. The designated depository shall also share with the stock exchanges,
    company-wise details of entities. In case of PAN exempt entity, respective
    depository shall share the Demat account number(s) details with the stock exchanges. Any update (additions or deletions) in this information by listed company shall be updated by the designated depositories with the stock exchanges on a daily basis. The information shall be shared via system interface established between the depositories and stock exchanges.
  8. The depositories shall provide the following data pertaining to the tagged
    Demat account(s) separately to the stock exchanges on daily basis:
    · Details of transactions for pledge/revocation/invocation of shares and
    other encumbrances such as NDU etc. of the entities.
    · Details of off market transactions of the entities.
    · Details of transmission of shares of the entities.
    · Details of corporate actions such as ESOPs, Bonus, Rights, etc. of
    the entities
    · Additionally, details of market transfers in case of PAN Exempt
  9. Based on the PAN information provided by the depositories, on daily basis, stock exchanges will identify the transactions carried out on their trading system by the entities in the equities and equity derivative instruments (wherever applicable) of the listed company/permitted to trade on the stock exchange(s).
  10. Such identified trades shall be shared by the stock exchange with all other stock exchanges where the company is listed on daily basis.
  11. Each stock exchange shall consolidate the information of the transactions identified by them as well as received from other stock exchanges and the depositories. On consolidation of the transactions, if the disclosure is triggered under Regulation 7(2) of PIT Regulations, the stock exchanges shall disseminate the same on their websites. The transaction(s) carried out on T day shall be disseminated on T+2 day basis.
  12. In case of any discrepancy, the issue shall be resolved by listed company,
    stock exchanges and depositories in coordination with one another.


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Insider Trading Regulations 2014

SEBI has at its Board meeting held on 19th November, 2014 proposed new regulation to update the Insider Trading Regulations of 1992. Salient features of the new SEBI (Prohibition of Insider Trading) Regulations are as follows:


(i) The definition of Insider has been made wider by including persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such person access to unpublished price sensitive information (UPSI). However directors, employees and all other persons in the deeming category covered under 1992 regulations would continue to be covered. Insider will also include a person who is in possession or has access to UPSI. Now, immediate relatives will be presumed to be connected persons, with a right to rebut the presumption. In 1992 regulations, definition of connected person was largely position based.

(ii) In the case of connected persons the onus of establishing, that they were not in possession of UPSI, shall be on such connected persons.

(iii) Clear prohibition on communication of unpublished price sensitive information (UPSI) has been provided except legitimate purposes, performance of duties or discharge of legal obligations.

(iv) Considering every investor’s interest in securities market, advance disclosure of UPSI at least 2 days prior to trading has been made mandatory in case of permitted communication of UPSI.

(v) UPSI has been defined as information not generally available and which may impact the price. The definition of UPSI has been strengthened by providing a test to identify price sensitive information, aligning it with listing agreement and providing platform of disclosure. Earlier, the definition of price sensitive information had reference to company only; now it has reference to both a company and securities.

(vi) Generally Available Information will be the information that is accessible to the public on a non-discriminatory platform which would ordinarily be stock exchange platform.

(vii) Companies by law would be entitled to require third-party connected persons to disclose their trading and holdings in securities of the company.

(viii) In line with Companies Act, 2013, prohibition on derivative trading by directors and KMPs on securities of the company has been provided.


(i) The requirement of communication of UPSI in the case of legitimate business transaction has been recognized in law and a carve-out with safeguards has been provided. [Reference to A (iii) and (iv) above]

(ii) Disclosure of UPSI in public domain has been made mandatory before trading, so as to rule out asymmetry of information in the market, as prevalent in other jurisdictions. [Reference to A (iv) above]

(iii) A provision of Trading Plans on the lines of U.S. has been introduced for insiders with necessary safeguards. Such a plan has to be for bona fide transactions and has to be disclosed on stock exchange platform in  advance.


(i) With important provisions, clarificatory notes have been inserted in the regulations itself.

(ii) Clarity has been brought to the definition of UPSI by aligning it with listing agreement and making the definition inclusive.

(iii) To provide clarity, Generally Available Information has been defined as information that is accessible to public on a non-discriminatory platform such as stock exchange. [Reference to A (vi) above]

(iv) Clarity about timing of disclosure of UPSI has been provided and the trading window norms have been made uniform to other connected persons.


(i) To facilitate legitimate business transactions, unpublished price sensitive information (UPSI) can be communicated with safeguards. [reference to A (iii) & (iv) above]

(ii) Insiders who are liable to possess UPSI all round the year would have the option to formulate prescheduled trading plans. Trading plans would, however, to be disclosed on the stock exchanges and have to be strictly adhered to. Trading plans shall be available for bona fide transactions.

(iii) Principle based Code of Fair Disclosure and Code of Conduct has been prescribed.

(iv) In given cases, certain circumstances which can be demonstrated by an insider to prove his innocence have been provided.

(v) Repeated disclosures have been removed so as to ease compliance burden and to align with Takeover Code. Disclosure of any change of 2% for persons holding more than 5% shares or voting rights has been removed as they are prescribed under Takeover Code.

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Justice Sodhi Committee recommendations on insider trading

SEBI has put out a press release announcing the submission of Justice Sodhi Committee recommendations on insider trading in listed companies. The salient features of the proposed regulations based on his recommendations are also given. From a cursory glance at the recommendations, there is nothing new in that which is not already covered by the existing Insider Trading Regulations. The only point of interest or rather concern is in para 5 of the press release which states as follows:

5- Insiders who are liable to possess UPSI all round the year would have the option to formulate pre-scheduled trading plans. In such cases, the new UPSI that may come into their possession without having been with them when formulating the plan would not impede their ability to trade. Trading plans would, however, be required to be disclosed to the stock exchanges and have to be strictly adhered to.

It is not clear what this means – that insiders who are likely to possess UPSI all the time are required to formulate their buying and selling plans in advance. I don’t know which investor would have that kind of clairvoyance to formulate their trading plans in advance. Anyways the devil is in the details, so let us wait for the detailed regulations based on the recommendations. 

A copy of the press release is given in this link.




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