Out of 1.3 billion Indian population, the Indian Stock Markets are only catering approximately 2% – 4%. Among many reasons for such low participation, one of the main reason is that even today investors, feel that their investments are not safe in the Indian Stock Markets.
If an individual or firm defy/contravene rule of conduct, regulators take action. Since the society is dynamic, these rules (“preferably termed as laws / regulations”) are never perfect. Accordingly, regulators will always reshape those laws or will introduce new ones to maintain a stable environment.
Going with the same thought and further to improve governance, the watchdog of India Securities Market has decided to fortify its cage on ‘Insider Trading and Fraudulent Activities’. Securities and Exchange Board of India (“SEBI”) in its recent Board Meeting held on September 18, 2018 has decided to tighten up its norms pertaining to Unpublished Price Sensitive Information (“UPSI”) by amending SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”).
Decoding – Dissemination of UPSI:
It has now been aimed to bring in more clarity on what purposes UPSI can be shared be it for any reason including legitimate or due diligence, creation of database of persons with whom UPSI has been shared and implementation of new and additional defenses when trading in possession of UPSI.
The emphasis of above change when implemented would ultimately result in tighter control and more transparency in Companies which will benefit the society of investor and country as a whole.
Market institutions to formulate a Code of Conduct
Further along with, introducing additional defenses to aid SEBI in investigations, decision has also been taken for introduction of a framework to ensure that market institutions formulate a code of conduct to ensure compliance with PIT Regulations.
Hence to build a secure environment, it is now outlined that a code of conduct for the prevention of insider trading, similar to the one applicable to listed companies, should be applied to market infrastructure institutions such as stock exchanges and depositories as they also handle unpublished price-sensitive information of a listed entity.
Intercepting calls and communication
Further considering recommendations of the Committee on Fair Market Conduct, it is stated that SEBI may approach the government to seek powers to intercept calls and electronic communication of those suspected of serious economic offences, which makes it evident that SEBI is leaving no stone unturned to protect the general public and to penalize the defaulters.
However, it was also agreed that the code of conduct may not be applicable on employees / CEO of Associate Company. Since the present Corporate Structure runs on integrated structures wherein the first hand information is shared among various heads, heading various departments in different entities, this proposal if implemented fully may defeat the very own purpose of PIT Regulations, hence the eyes are on SEBI to see how much leverage they give in the upcoming amendments.
The role of Stock Market in Economic Development of a country is utmost important. They act as a financial engine and provide an economic boost through creation of liquidity. More the Stock Market booms, more the Country benefits. Investors only enter a market on which they can rely upon. The faith of the investors is directly proportional to the sound governance of the Company, hence your Company is not only bound to require to comply all the provisions of PIT Regulations but also to educate all the Directors and Employees who are not aware of technicalities and integrities relating to insider laws including concepts like, vicinity of insider laws, UPSI, materiality, closure and opening of trading window, trading plan, Pre-Clearance, restricted list of securities, contra trade, basis of forming code of conduct, trigger events for making disclosures etc.
HOW CAN WE ASSIST YOU:
We Corporate Professionals, has initiated conducting workshops, awareness cum roll out sessions for Corporates, analysts, consultants, auditors and every other person having fiduciary or contractual relation with the listed company. The sessions will aim to disseminate each and every aspect surrounding INSIDER LAWS covering from minute details to major mountains.
GET IN TOUCH:
For further clarifications or information, you can reach us @
Address: D-28, South Ex., Part-I, New Delhi-110049
Name: Ms. Mohini Varshneya
Mail:Mohini@indiacp.com
Phone: 91 11 40622231 / +91 9971673332