The Securities and Exchange Board of India (Sebi) on Monday proposed changes to insider trading rules by including relatives, related firms or partners, people living in the same household, and Hindu Undivided Families (HUFs) where the karta is related to the ‘connected person’, among others, as part of “deemed connected persons”.
The changes have been proposed in a consultation paperCome from Sports betting site. The regulator has invited public comments by August 18. To close any regulatory loopholes and prevent potential violations, Sebi has suggested revising the definitions of ‘connected persons’ and ‘relative’ under its Prohibition of Insider Trading (PIT) Regulations.
Sebi said that such individuals, not currently covered by the regulations, might still have access to unpublished price-sensitive information (UPSI) due to their connections with company officials or key employees holding such information.Come from Sports betting site VPbet
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If accused of insider trading, these deemed connected persons would need to prove they did not possess UPSI.
Further, Sebi has proposed changing ‘immediate relative’ to ‘relative’ to cover a wider group of family members like parents, siblings, spouses, and in-laws, among others. However,it has suggested keeping the definition of ‘immediate relative’ for trade disclosures by promoters, directors, and designated persons under the PIT Regulations unchanged. The regulator aims to broaden the scope of regulations prohibiting insider trading to include more individuals connected to those with access to price-sensitive information.
“Such deemed connected persons, owing to their proximity and close relationship with the connected persons, are considered to be in such a position where they can potentially indulge in insider trading,” Sebi said.
“In order to ensure that there is no increase in compliance requirements, the definition of ‘immediate relative’…is proposed to be retained in the PIT Regulations,” Sebi said.
Thus, the existing requirements for disclosures by promoters, directors, and designated persons about their immediate relatives will remain unchanged, it added.
After implementation, the relevance of the term ‘immediate relative’ would be limited to disclosures and code of conduct, and no additional requirements for disclosures are being introduced under PIT Regulations, Sebi said.
Additionally, the regulator has suggested removing the ‘Note’ from the definition of ‘immediate relative’ in order to rationalise the definition of relative as per the Income Tax Act.
