The Securities and Exchange Board of India (SEBI) has issued Circular SEBI/HO/ISD/ISD-POD-2/P/CIR/2025/55, dated April 21, 2025, significantly expanding the scope of automated Trading Window Closure under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“SEBI PIT Regulations 2015”) on Immediate Relatives. This move stems from SEBI’s Consultation Paper released on February 07, 2025.
This circular, applicable exclusively to Listed Entities, mandates that not only Designated Persons (DPs) but now also their Immediate Relatives are brought under the umbrella of system-enforced trading restrictions during declaration of financial results.
The Journey of Trading Window Compliance
Under the SEBI PIT Regulations 2015, companies are required to close the trading window for Designated Persons and their Immediate Relatives during periods when Unpublished Price Sensitive Information (UPSI) is likely to exist—such as prior to the  declaration of financial results.
The automated trading restrictions for Designated Persons (DPs) were first introduced in 2020, but a critical compliance gap remained w.r.t. Immediate Relatives as they were not covered under the automation. With this amendment, SEBI has now extended this automation to include Immediate Relatives as well, effectively closing that gap.
Earlier, the process was manual, Compliance Officers had to send individual emails to DPs, notifying them of the trading window closure for themselves and their Immediate Relatives. The onus was on the DPs to ensure their immediate relatives refrained from trading, which placed Compliance Officers in a supervisory role dependent on internal declarations and voluntary adherence.
Under the new framework, once a DP declares the PAN of their Immediate Relatives, those PANs are automatically frozen during closure period. This removes the need for manual intervention and significantly enhances enforcement. Importantly, it also allows Compliance Officers to shift their focus from routine reminders to more strategic compliance areas such as UPSI tracking, policy reviews, and proactive risk mitigation.
The amendment aims to-
- Minimizes human dependency by automating critical compliance activities.
- Reduces indirect trading risks through Immediate Relatives.
- Improves traceability with real-time monitoring and audit trails.
- Facilitates better oversight by Compliance Officers.
- Strengthens investor confidence in corporate governance mechanisms.
 What has Changed?
Previously, the automated Trading Window Closure was enforced only on Designated Persons, with responsibility placed on them to ensure their immediate relatives do not trade during closure periods.
With the circular, this responsibility relating to Immediate Relatives has been systematized- once their PANs are declared, they are now automatically brought under the trading window restrictions. This marks a shift from a declaration-based process to a system-driven one, enhancing enforcement and plugging key regulatory gaps.
Who are "Immediate Relatives"?
Under the Regulation 2(1)(f) of SEBI PIT Regulations 2015, “immediate relative” means a spouse of a person, and includes parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person, or consults such person in taking decisions relating to trading in securities.
Key Highlights of the Updated Framework
- PAN-Level Security Freeze
- Phased Implementation
- Â Real-Time Integration
- Trading Restrictions
- Exemptions
PANs of both DPs and their Immediate Relatives will be frozen at the security level during the Trading Window Closure period.
|
 Phase |
Companies to be Covered |
PAN-ISIN freeze start date |
|
 Phase-1 |
Top 500 companies based on BSE market capitalization as of March 31, 2025, listed on BSE, NSE and MSEI. |
July 01, 2025 |
|
 Phase-2 |
All the remaining companies listed on BSE, NSE, and MSEI, as well as companies that get listed on stock exchanges after the issuance of this circular. |
October 01, 2025 |
Listed entities are required to submit accurate and timely information including PAN, demat account details, and Trading Window Closure dates to the Designated Depository, which in turn shares this data with the Stock Exchanges and the other Depository, ensuring daily synchronization for effective enforcement.
All trades (on-market and off-market), including pledges and encumbrances, by Immediate Relatives will be restricted during the Trading Window Closure period.
Companies can apply for specific exemptions under Regulation 9, provided valid justification is recorded and shared through the system.
 What this means for Listed Entities?
The shift to a system-driven approach necessitates immediate action from listed companies. Key responsibilities include:
- Keep PAN details updated every Quarter for Designated Persons (DPs) and their Immediate Relatives.
- Work closely with the depositories to make sure all details are correctly linked and updated.
- Plan and manage the trading window closure dates for each quarter so that no one trades when they shouldn’t.
- Regularly update internal policies and systems, like the Code of Conduct, policies, and structured digital database  (SDD), to stay in line with SEBI’s latest regulations.
Why it Matters?
SEBI’s latest move not only strengthens enforcement but also brings much-needed clarity and consistency to insider trading compliance. By automating trading window closures for Immediate Relatives, the risk of inadvertent non-compliance, often due to lack of awareness or delayed communication shall not happen. Once the Designated Person (DP) submits accurate PAN details of their immediate relatives, the system ensures automatic restrictions during closure periods. Ultimately, it reinforces market transparency, protects investor trust, and upholds the fairness of India’s securities markets.
Looking Ahead
However, one key area still awaiting clarity is the treatment of notional trading window closures instances, where the closure is not triggered through the system. In such cases, the responsibility to restrict trading by Immediate Relatives continues to rest with the Designated Person and, ultimately, the Compliance Officer.
Clear regulatory guidance on this front will be essential to ensure consistent enforcement and close remaining compliance gaps.
In Conclusion
SEBI’s update is an important step toward making insider trading rules stricter and easier to follow. While there’s still some uncertainty about notional closures. This move of SEBI shows that it is moving towards smarter, more reliable ways of ensuring fair trading in the market.
