SEBI proposes expanded definition of 'connected persons' to strengthen insider trading regulations

SEBI insider trading rule: The Securities and Exchange Board of India (SEBI) has proposed new, stricter rules aimed at curbing insider trading by broadening the definition of "connected persons" who may have access to sensitive, non-public information about listed companies.

SEBI outlined these proposed changes in a discussion paper released on its website. According to SEBI, the expanded scope is designed to encompass individuals who, while not holding formal positions within a company, may still obtain unpublished information due to their close proximity or personal relationships with the firm.

Under the proposed regulations, the definition of "connected persons" could include:

• Firms sharing a partnership with the listed company.
• Individuals whose advice or directives are acted upon by the listed company.
• Individuals residing in the same household as company insiders.
• Individuals with significant financial relationships with insiders of the company.

SEBI is seeking feedback from market participants on these proposed changes. Comments are invited until August 18, after which the regulator will finalize the new rules. This move aims to enhance transparency and prevent misuse of confidential information in securities trading.

(With Reuters inputs.)