Sebi proposes flexibility in framework relating to 'trading plans' under insider rules
Capital markets regulator Sebi on Friday came out with a proposal to provide flexibility in adopting trading plans by persons, who are perpetually in possession of unpublished price sensitive information. Under the rule, 'Trading Plans' (TP) enable persons like senior management or Key Managerial Personnel (KMP), who are perpetually in possession of Unpublished Price Sensitive Information (UPSI), to trade in securities in a compliant manner.
«Since the introduction of trading plans in 2015, data and market feedback suggest that the current regulatory requirements in respect of trading plans are onerous and consequently, trading plans are not very popular,» Sebi said in its consultation paper.
Accordingly, Sebi constituted a working group that was mandated to review provisions of TP under the insider trading rules.
As per the consultation paper, the working group has recommended that a minimum cool-off period between disclosure of TP and implementation of TP should be reduced to four months from six months at present.
In addition, the minimum coverage period requirement should be slashed to two months from the current twelve months.
It has also been suggested that the requirement of black-out period for trading in TP should be done away with.
«The insider shall have flexibility, during formulation of TP, to provide price limits i.e. upper price limits for buy trades and lower price limits for sell trades.
Such price limit shall be within ±20 per cent of the closing price on date of submission of TP.
»If price of the security, during execution, is outside the price limit set by the insider, the trade shall not be executed. If no price limit is opted for, the trade has to be undertaken irrespective of the prevailing
