Government servants and their family members cannot buy or sell stocks 'frequently' without doing this

economictimes.indiatimes.com:

stock market transactions by government servants upon whom Central Civil Services (Conduct) Rules, 1964 are applicable.

Rule 16 of Central Civil Services (Conduct) Rules states, «No Government servant shall speculate in any stock, share or other investment. Provided that nothing in this sub-rule shall apply to occasional investments made through stockbrokers or other persons duly authorised and licensed or who have obtained a certificate of registration under the relevant law.»

Also read: DA hiked to 50%: 6 things central government employees should know.

What does the rule say about government servants transacting in the stock market?

According to Manmeet Kaur, partner, Karanjawala & Co, a law firm, Rule 16 of Central Civil Services (Conduct) Rules puts a restraint on frequent and speculative stock trading including day trading. «Rule 16 puts a restraint on frequent and speculative trading which would include daily stock trading. However, the rule does not prescribe any standards for what constitutes frequent trading,» says Kaur.

According to Yashojit Mitra, Partner, Economic Laws Practice, a law firm., government servants need to watch what is called frequent trading. «What can be considered as frequent trading can also be fact or circumstance specific to the case. Further implications under the Insider trading Regulations and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the securities market) Regulations, will also need to be considered,» says Mitra.

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