The Securities and Exchange Board of India (SEBI) has notified 1 November 2024 as the effective date for the implementation of insider trading rules.
The main object of insider trading rules is enhancing the integrity and transparency within asset management companies.
“In exercise of the powers conferred by section 30 read with clause (g) of sub-section (2) of section 11 and clauses (d) and (e) of section 12A of Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby appoints the 1st day of November, 2024 as the date on which the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 shall come into force,” the notification read.
Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2022 aim to align the definition of ‘relative’ in ‘connected persons’ with the Income Tax Act of 1961 to include lineal ascendants and descendants. Expanding the definition of connected persons to encompass more categories, such as firm partners, employees, and individuals with a significant financial relationship with a connected person.
As per the notification, an insider cannot trade in the units of a mutual fund scheme while in possession of unpublished price-sensitive information (UPSI), which may have a material impact on the net asset value of a scheme or on the interest of the unit holders of the scheme.
Notification No. SEBI/LAD-NRO/GN/2024/195