Achintya Raj Pandey, UPES
INTRODUCTION:
Insider trading in the Indian context involves the buying or selling of securities by individuals who possess unpublished, price-sensitive information about a listed company. The Securities and Exchange Board of India (SEBI) is the regulatory authority responsible for overseeing and enforcing insider trading regulations in the country. The significance of insider trading regulations in India lies in the protection of market integrity and investor confidence. By prohibiting the misuse of privileged information, these regulations ensure a level playing field for all market participants and foster transparency.
SEBI's Insider Trading Regulations, first introduced in 1992, have undergone amendments to align with global standards. The regulations prescribe stringent norms for disclosure of trades, prohibition of fraudulent and unfair trade practices, and establishment of internal codes of conduct within companies. In recent years, SEBI has increased its focus on enforcement, conducting investigations and imposing penalties to deter insider trading activities. This commitment reflects the broader objective of maintaining the credibility of India's capital markets and safeguarding the interests of investors.
The historical development of insider trading regulations in India has been a gradual process aimed at aligning the country's financial markets with international standards. The initial steps were taken with the Securities and Exchange Board of India, which granted SEBI the authority to regulate insider trading. However, it was only in 2002 that SEBI framed comprehensive regulations specifically addressing insider trading.
Over the years, amendments were made to strengthen these regulations. These regulations clarified definitions, expanded the scope of insider trading violations, and introduced measures such as the establishment of a structured code of conduct and the creation of a designated compliance officer within companies.
