Unveiling The Past: A Historical Exploration Of Insider Trading In India And Its Implications On Securities Markets And National Economies

Suraj Prakash, The NorthCap University (NCU), Gurugram.

ABSTRACT

Insider trading, a practice where individuals trade stocks based on non- public, material information, has long been a concern in financial markets worldwide. In the context of India, understanding the historical evolution and implications of insider trading is paramount for safeguarding market integrity and investor confidence. This research paper delves into the intricate tapestry of insider trading in India, tracing its roots from early instances to contemporary regulatory responses.

Through an exploration of historical precedents, regulatory developments, and their impacts on securities markets, this paper sheds light on the multifaceted nature of insider trading. The analysis reveals the detrimental effects of insider trading on market integrity, fairness, and efficiency. Moreover, it elucidates the erosion of investor confidence and trust, which undermines the functioning of capital markets and impedes economic growth. Beyond its immediate market ramifications, insider trading perpetuates wealth inequality and hampers broader economic development. By distorting the allocation of resources and perpetuating unfair advantages, insider trading exacerbates societal disparities and poses challenges to sustainable economic progress.

Examining the existing regulatory framework and enforcement mechanisms, this paper identifies gaps and challenges in curbing insider trading practices effectively. Furthermore, it compares these measures with international standards, highlighting areas for improvement and alignment with global best practices. Recognizing the pivotal role of investor education and awareness, this paper proposes strategies for promoting transparency and accountability in financial markets. By empowering investors with knowledge and tools to identify and report insider trading, a culture of vigilance can be fostered, bolstering market integrity and resilience.