Latest News | Sebi Extends Automated Trading Window Framework to Immediate Relatives of Designated Persons

New Delhi, Apr 21 (PTI) Markets regulator Sebi on Monday extended its automated trading window closure mechanism to include immediate relatives of designated persons (DPs) in listed companies, ahead of the declaration of financial results.

This move aims to prevent inadvertent non-compliance with insider trading norms by ensuring that those who may have access to unpublished price-sensitive information (UPSI) such as quarterly results are prohibited from trading during specific periods.

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Earlier, the restriction applied only to DPs.

Now, Sebi has extended the scope to cover their immediate relatives as well, according to its circular.

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As per Sebi's definition, an immediate relative includes a spouse, and also a parent, sibling, or child (of the person or the spouse), provided they are financially dependent or consult the person in decisions related to trading in securities.

This move follows a system already in place for DPs, which uses PAN-based trading freeze.

To ensure a smooth rollout, the implementation will be carried out in two phases. The first phase begins on July 1, 2025, and applies to the top-500 listed companies based on market capitalisation. The second phase, starting from October 1, 2025, will cover all remaining listed companies.

Explaining the procedure, Sebi said a designated depository (DD) will provide portal access to listed companies. These companies are required to upload details such as PAN, names, and demat account numbers of both DPs and their immediate relatives.

Additionally, they are required to input the start and end dates of the trading window closure.

To maintain timely execution, companies are required to confirm the submitted data at least two trading days before the trading window closure begins. Thereafter, DD will share this information with the stock exchanges and the other depository at least one day prior to the closure period.

Based on this data, the depositories and stock exchanges will implement the trading freeze for DPs' immediate relatives in their equity and derivative holdings. Any updates or changes are required to be acted upon within two trading days.

Additionally, exemptions, where allowed under Sebi rules, can be granted and will be automatically reversed once the exemption period ends.

To ensure consistency, standardized formats and timelines for data submission will be issued by the depositories. Any disputes or discrepancies will be resolved through coordination among the depositories, stock exchanges, and the listed company involved, Sebi said.

For monitoring purposes, depositories are required to submit a quarterly report to Sebi detailing how many companies are covered, the number of immediate relatives affected, PANs frozen, and exemptions granted during the period.

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