Source: BS
Context:
The Securities and Exchange Board of India (SEBI) barred eight individuals from the securities market and impounded ₹173.14 crore in alleged illegal gains from trades in Indian Energy Exchange (IEX).
What is Insider Trading?
Insider trading refers to:
- Buying or selling of securities by a person who has access to unpublished price-sensitive information (UPSI).
- UPSI is confidential information that could materially affect the price of a security once made public.
- Illegal insider trading undermines market integrity and investor confidence.
Key Elements of Insider Trading:
- Insider: Directors, officers, employees, or connected persons of a listed company.
- Unpublished Price Sensitive Information (UPSI): Any info not yet in the public domain that can influence the security price.
- Trading/Tip-Off: Using UPSI for personal gain or passing it to others who trade.
SEBI Regulations to Curb Insider Trading
- SEBI (Prohibition of Insider Trading) Regulations, 2015:
- Defines insider trading and roles of insiders.
- Mandates disclosure of holdings and trades by promoters and directors.
- Prohibits trading based on UPSI.
- Regulates communication or procurement of UPSI.
- Key Provisions:
- Trading Window: Insiders can only trade in designated periods.
- Pre-clearance: Required for trades above a threshold.
- Penalties: Monetary fines and market bans; disgorgement of profits.
- Monitoring & Enforcement:
- SEBI uses trading data analytics, digital evidence, and surveillance tools.
- Encourages whistleblowing and cooperation with other authorities.
