Here is an important update for the market enthusiast as the market regulator has proposed to ease trading plans for company insiders. The Securities and Exchange Board of India is working to provide more flexibility to company insiders to trade their company shares. In a bid to do so, the market regulator has proposed a significant revamp of the framework of a trading plan. With this development, the company insiders will be able to trade company shares with greater flexibility. You must be thinking about what changes the Securities and Exchange Board of India will bring with this proposal. If yes, the following sections are waiting for you. Kindly stick with this page and go through the article till the end.
This proposal of the maker regulatory body comes with an aim to provide promoters more flexibility while dealing in company shares. Meanwhile, the regulatory body is thinking of eliminating the black-out period, relatively lenient price limits, and a reduction in the cool-off period. Company insiders who are typically key managerial personnel and senior management who have access to unpublish price-sensitive information, will have an advantage of using a small window to carry out trades. They are needed to submit a trading plan to detail the company shares such as share price, transaction date, and quantity in advance. Scroll down the page for more details.
Securities and Exchange Board of India posted a discussion paper on its website, which reads, “Since the introduction of trading plans in 2015, data and market feedback suggest that the current regulatory requirements in respect of trading plans are onerous and consequently, trading plans are not very popular,” SEBI’s proposal includes lowering the minimum cool-off period between the implementation and disclosure of the trading plan from four months to six months. Shift to the next section and read more details.
SEBI ruled, “Such price limit shall be within +/-20 percent of the closing price on the date of submission of TP. If the price of the security, during execution, is outside the price limit set by the insider, the trade shall not be executed. If no price limit is opted for, the trade has to be undertaken irrespective of the prevailing price,” The marker regulator recommended shortening the coverage period to two months from 12 months, fixing a 20 percent price range for buying or selling trades in the trading plan (TP), and removal of the black-out period.