SEBI Extends Trading Window Closure to Relatives of Designated Persons

SEBI has extended the automated trading window closure mechanism to the immediate relatives of designated persons in listed companies to prevent insider trading during periods when unpublished price sensitive information (UPSI) is likely to be in their possession, particularly around the declaration of financial results. This builds upon the existing system that restricts trading by designated persons themselves. Stock exchanges and depositories are now required to implement systems to freeze the PANs of these immediate relatives at the security level during the trading window closure period. The implementation will be phased, starting with the top 500 companies by market capitalization on July 1, 2025, and extending to all remaining listed companies by October 1, 2025. Listed companies will be responsible for providing the details of their designated persons’ immediate relatives to the designated depository, which will then share this information with the stock exchanges and other depositories. Depositories will also be required to submit quarterly reports to SEBI on the implementation.

Securities and Exchange Board of India

Circular No.SEBI/HO/ISD/ISD-PoD-2/P/CIR/2025/55 Dated: April 21, 2025

To
All Recognized Stock Exchanges
All Depositories
All Listed Companies

Dear Sir/Madam,

Sub: Trading Window closure period under Clause 4 of Schedule B read with Regulation 9 of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) – Extension of automated implementation of trading window closure to Immediate Relatives of Designated Persons, on account of declaration of financial results.

1. Clause 4 (1) of Schedule B read with Regulation 9 of PIT Regulations, interalia, states that “Designated persons may execute trades subject to compliance with these regula­tions. Towards this end, a notional trading window shall be used as an instrument of monitoring the trading by the designated persons. The trading window shall be closed when the compliance officer determines that a designated person or class of designated persons can reasonably be expected to have possession of UPSI. Such closure shall be imposed in relation to such securities to which such UPSI relates. Designated per­sons and their immediate relatives shall not trade in securities when the trading window is closed”.

2. One of the instances of closure of trading window is provided in clause 4 (2) of Schedule B read with regulation 9 of PIT Regulations, which inter alia states that “trading re­striction period shall be made applicable from the end of every quarter till 48 hours after the declaration of financial results……”.

3. In order to ease the compliance with Clause 4 of Schedule B read with Regulation 9 of PIT Regulations and to prevent inadvertent non-compliances of provisions of PIT Reg­ulations by designated persons (“DPs”), clause 3.4.2 of the Master Circular on Surveil­lance of Securities Market¹ dated September 23, 2024 requires the Stock Exchanges and Depositories to develop a system to restrict trading by DPs of listed companies during trading window closure period by freezing of PAN of DPs at security level. The Circular provides the procedure for implementation of the system and flow chart depict­ing the process to be followed by the listed companies, Depositories and the Stock Exchanges.

4. Considering the effective implementation of the framework to DPs of listed companies and the consultations held with the Stock Exchanges and Depositories, the above framework is hereby extended to immediate relatives of DPs for listed companies.

5. The procedure for implementation of the system is enclosed at Annexure- A. The flowchart for the same is enclosed at Annexure- B.

6. To ensure ease of implementation of the framework, phase wise implementation is be-ing prescribed as under:

Table 1: Timelines for phase wise implementation of the framework

7. The Depositories and Stock Exchanges are directed to:

a. take necessary steps to implement this circular;

b. bring the provisions of this circular to the notice of all listed companies and also disseminate the same on their websites.

8. The Depositories shall submit the quarterly report to SEBI in the format placed at An-nexure- C.

9. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulations 4(3) and 11 of the PIT Regulations, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

10. A copy of this circular is available on SEBI website at www.sebi.gov.in under the Cate­gory “Legal→ Circulars”.

Yours faithfully,

A Vijayan
Deputy General Manager
+91-22-26449631
vijayan@sebi.gov.in

Enclosures:

1. Procedure for implementation of the system – Annexure A.

2. Process flow chart – Annexure B.

3. Quarterly reporting format by the Depositories – Annexure C

Annexure – A

Trading Window closure period under Clause 4 of Schedule B read with Regulation 9 of SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) – Extension of automated implementation of trading window closure to Immediate Relatives of Designated Persons.

Process for implementation of the system:

1. The Designated Depository (“DD”) appointed by the listed company pursuant to the SEBI Circular No. SEBI/HO/CFD/DCR1/CIR/P/2018/85 dated May 28, 2018 shall enable access to the respective listed company on the portal/ plat­form.

2. Upon login, DD shall auto-populate PAN and name of the DPs and their demat account number / DP ID and client ID (only in case of PAN exempt cases) as per the last updated or available information under system-driven disclosure uploaded by the listed company with DD in terms of SEBI Circular No. SEBI/HO/ISD/ISD/CIR/P/2020/168² dated September 09, 2020. Listed com­pany to provide details of Immediate Relatives of respective DPs as per format prescribed by DD.

3. The listed company shall confirm to the DD details with respect to listed ISIN of equity share of the company, Name, PAN, and confirm the demat account number viz. DP ID and client ID (in case of PAN exempted cases) of DPs and their immediate relatives. In the event any updation is required to the afore­mentioned details, the listed company shall take necessary steps as per para 10 below.

4. DD shall provide a facility to the listed company to specify the ‘Trading Window Closure Period’ i.e. ‘Commencement Date’ and ‘End Date’ on portal/platform.

4.1. With respect to financial results, the listed company shall specify the 1st day (T- day) immediately after the end of every quarter for which results are to be announced, as ‘Trading Window Closure commencement date’ and the date on which 48 hours ends post disclosure of financial results, as ‘Trading Window Closure End date’ in the portal/platform.

5. The listed company shall provide the aforesaid details atleast 2 trading days prior to the commencement of trading window closure date (T-2 days). For ex­ample, for financial results for the quarter ending June 30, 2025, the listed com­pany shall confirm the details by June 29, 2025.

6. DD shall provide the details received from the listed company (i.e. Commence­ment Date and End Date of the trading window closure period, Name and PAN of DPs and their immediate relatives, ISIN, etc.) to the Stock Exchanges and other Depository atleast 1 trading day prior to the commencement of trading window closure commencement date (T-1 day). For example, for financial re­sults for the quarter ending June 30, 2025, the DD shall provide the details by June 29, 2025. Further, during the trading window closure period, DD shall also provide the aforesaid details and changes therein, if any, to the Stock Ex­changes and other Depository on a daily basis.

7. The demat accounts shall be identified by the Depositories based on the PAN of the immediate relatives of DP as sole / joint holder.

8. Based on demat accounts identified as per para 7 above and instruction given by listed company as per paras 3 and 4 above, the off-market transactions and creation of pledge includes all types of encumbrances shall be restricted by the Depositories with reason code as “Trading Window Closure Period”.

9. On the basis of data received from the Depositories, the Stock Exchanges shall restrict the on-market transactions of immediate relatives of DP in equity shares and equity derivatives contracts of the listed company from T day i.e. Com- mencement Date of trading window closure period. As per the example men­tioned above, Commencement Date of trading window closure period shall be July 01, 2025, for the quarter ending June 30, 2025.

10. In case of any addition/deletion/updation pertaining to the details of DP and their immediate relatives, the listed company has to follow the procedure spec­ified in terms of SEBI Circular No. SEBI/HO/ISD/ISD/CIR/P/2020/168³ dated September 09, 2020 and shall be required to separately provide the details as mentioned at paras 3 and 4 above. Such instances shall be effected within 2 trading days of receipt of intimation from the listed company. For example, as­suming the trading window closure period is July 01-15, 2025 and if the listed company adds any DP and their immediate relatives on July 8, 2025, then the change, i.e. freeze shall be effected on or before July 10, 2025.

11. There shall be provision in the system to specify the details of DP and their immediate relatives to be exempted by listed company from Trading Window restriction in terms of Clause 4 (3) of Schedule B read with regulation 9 of PIT Regulations. In such cases, the restriction shall be removed within 2 trading days from the date of receipt of request from the listed company. As per the example given at para 10 above, if the listed company provides exemption to any DP and their immediate relatives on July 09, 2025, then the change i.e. de-freeze shall be effected on or before July 11, 2025. The restriction shall be re­introduced automatically post lapse of the exemption period or completion of the transaction by the DP and their immediate relatives.

12. The freezing/de-freezing of PAN at the security level on account of changes due to addition or deletion will be effected post market hours.

13. Pay-in and pay-out obligations in respect of transactions, if any, taken place prior to freezing the PAN of immediate relatives of DP at the security level, may be permitted to be settled, squared off or closed out, as the case may be.

14. The formats and timelines for sharing of data shall be standardized, as agreed upon by the Depositories and Stock Exchanges. Further, operational guidelines for listed companies shall be issued by the Depositories.

15. In case of any discrepancy, the issue shall be resolved by the Depositories, in coordination with Stock Exchanges and listed company.

Annexure – B

Process Flow Chart

Annexure – C

Report by Depositories for implementation of framework for automated trading window closure to immediate relatives of Designated Persons.

Depositories shall be required to separately provide the details as mentioned above in the quarterly report submitted to SEBI.

*****************

Notes:

¹ SEBI/HO/ISD/ISD-PoD-2/P/CIR/2024/126

² Circular was rescinded and superseded vide section 3.4.2 of Master Circular on Surveillance of Securities Market SEBI/HO/ISD/ISD-PoD-2/P/CIR/2024/126 dated September 23, 2024.

³ Circular was rescinded and superseded vide section 3.4.2 of Master Circular on Surveillance of Securities Market SEBI/HO/ISD/ISD-PoD-2/P/CIR/2024/126 dated September 23, 2024.