Listed companies need to automate trading restrictions on insiders: Sebi

economictimes.indiatimes.com:

Sebi) has asked all the listed companies to introduce an automated system that would restrain trading in shares by key personnel that have access to unpublished price-sensitive information. Companies will lay down a framework for developing a system to restrict the trading by designated persons by freezing the permanent account numbers in the depository system and the stock exchanges. The market regulator will implement this in phases, it said in a circular.

This requirement currently applies to companies that are part of the Nifty 50 and Sensex. From October 1, it will be implemented for the top 1,000 companies in terms of market capitalisation as of June 30. From January 1, 2024, the next 1,000 companies in terms of market capitalisation will implement it.

For the remaining companies, the regulation will be in effect from April 1, 2024. In case of companies listing post this circular, the rule will be applicable from the first day of the second quarter from the quarter the company gets listed. The demat accounts will be identified by the depositories based on the PAN of the designated personnels.

Based on the demat accounts identified, the off-market transactions and creation of pledge will be restricted by the depositories with reason code as “trading window closure period.” Based on the data received from the depositories, stock exchanges will restrict the on-market transactions of the personnels in equity shares and derivatives contracts of the listed company from T day, i.e. commencement date of trading window closure period. There will be a provision in the system to specify details of such personnel who are exempted by the listed company from trading window restrictions.