The Securities and Exchange Board of India extended a framework that allows exchanges and depositors to freeze the PAN of designated persons in order to restrict trade during the trading window closure period to all listed companies.
So far, the framework has only been applicable to companies in the Nifty 50 and Sensex since its introduction in 2022.
The framework would be implemented in a phased manner in order to ensure smooth implementation, the regulator said on Wednesday.
The top 1,000 companies by BSE market capitalisation would fall under the framework starting Oct. 1. The next 1,000 would be subject to the framework from Jan. 1, 2024, and the rest of the companies in the NSE, BSE, and MSEI would be subject to the framework from April 1, 2024.
The companies that get listed after the circular would fall under the rules from the first day of the second quarter, from the quarter in which they got listed.
According to the SEBI insider trading regulations, a designated person is not allowed to trade during the trading window closure period. A designated person could include persons so identified by the company, including promoters, directors, key managerial personnel, and even employees of the company.
These individuals are not allowed to trade during the 48 hours after the declaration of the financial results at the end of every quarter. However, there is inadvertent non-compliance in some cases. Therefore, in order to prevent such situations and improve the ease of doing business, SEBI has extended the above framework to all listed companies.
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