Sebi offers flexibility, relaxes 'trading plan' norms for insiders

In a breather to senior executives of listed companies, the Securities and Exchange Board of India (Sebi) has amended Prohibition of Insider Trading (PIT) regulations to provide flexibility in the “trading plan” that allows insiders to deal in their shares.

Senior management and key officials who usually have access to unpublished price-sensitive information (UPSI) are considered to be insiders. According to regulations, they have a narrow window to carry out trades to avoid insider trading.

These insiders have to give a ‘trading plan’ specifying the share price, amount, and transaction date in advance.

Sebi has reduced the minimum cool-off period between disclosure and implementation of the trading plan from six months to four months. The market regulator has also introduced a 20 per cent price range for buying or selling shares in the trading plan.

The market regulator has provided the flexibility to insiders to not execute the trades if the execution price is outside the limit set by them in the trading plan.

However, on non-implementation, they will have to inform the company’s compliance officer within two trading days of the end of the trading plan with reasons and supporting documents.

“Insider may make adjustments, with the approval of the compliance officer, in the number of securities and price limit in the event of corporate actions related to bonus issue and stock split occurring after the approval of the trading plan and the same shall be notified on the stock exchanges on which securities are listed,” said Sebi.

The amended norms will come into effect after three months.

The amendments were first proposed in November last year. 

Sigh of relief 
 

Markets regulator amends Prohibition of Insider Trading Regulations 
 

Cuts minimum cool-off period between disclosure and execution of the trading plan from six months to four months
 

Introduces 20% price range for buying or selling shares in the trading plan
 

Allows insiders to not execute the trades if the execution price is outside the limit set by them in the trading plan