Insider Trading Rules
SEBI’s crackdown on insider trading is set to intensify with new rules coming into effect on November 1st.
New insider trading rules to increase transparency in mutual funds will come into effect from November 1. The new rules will also improve the functioning of asset management companies (AMC). According to the new rules, special attention will have to be paid to employees who keep sensitive information. Apart from this, such employees will also have to sign a contract.
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SEBI has expanded the scope of ‘connected persons’ in insider trading rules to bring more transparency. It states that a ‘connected person’ is a person who has confidential and sensitive information. Consulting firms have also been brought under this purview.
Relatives will also be ‘connected persons’
Under the new rules, a list of employees and other persons who access sensitive information will have to be maintained. All of them have to sign a confidentiality agreement. With its help, SEBI will help to stop insider trading.
Relatives will also come under insider trading rules. Family members like spouse, siblings, spouse’s siblings will also be involved.
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In a notification issued on July 26, Sebi had said that the new insider trading rules will come into effect from November 1, 2024. According to the new rules, asset management companies will have to periodically evaluate their performance.
As per the new rules, AMCs will have to declare details of their holdings in mutual fund schemes to stock exchanges of AMCs, trustees and their relatives. Apart from this, the information about the transactions done by the nominated person will also have to be given within two days.
#SEBI‘s New Insider Trading Regulations: Here’s what will come to effect under the new regulations.
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— NDTV Profit (@NDTVProfitIndia) July 31, 2024
In July 2022, SEBI had issued an advisory regarding insider trading in mutual fund companies. However, market insiders say the implementation of the new rules is being delayed due to opposition from industry groups.
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