SEBI Eases Insider Trading Norms: See Updated Rule

In a major update to its insider trading regulations, the Securities and Exchange Board of India ( SEBI ) on Monday granted permission for market participants to subscribe to non-convertible securities (NCS) during trading window closures. This move aims to enhance flexibility in the market and streamline the subscription process for NCS, a significant financing tool for companies.

The decision builds on exemptions previously extended in 2020, including rights entitlements and offer-for-sale (OFS) transactions. SEBI clarified that while trading window restrictions will still apply to certain transactions like acquisitions through the conversion of warrants or debentures, the new exemption will apply to NCS subscriptions.

"It has been decided that in addition to the transactions mentioned in PIT (Prohibition of Insider Trading) regulations, the trading window restrictions shall also not apply to subscription to the issue of non-convertible securities, carried out in accordance with the framework specified by the Board from time to time," SEBI said in a circular.

SEBI also directed all stock exchanges to notify listed companies about the provisions and ensure that the information is made accessible on their websites.

‘Stock Exchanges are advised to bring the provisions of this circular to the notice of all listed companies and also disseminate the same on their websites,’ as SEBI mentioned.

The updated norms are effective immediately and are expected to bolster investor confidence, making the subscription process more efficient and transparent.
By easing these restrictions, SEBI is aiming to make non-convertible securities more attractive to investors, ultimately enhancing their role in corporate financing.