Top Stories SEBI Revises Insider Trading Regulations, Clarifies ‘Relative’ and Expands Connected Persons List [Read Notification] The Securities and Exchange Board of India ( SEBI ), through the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024, has introduced amendments to bring the clarity and scope of its insider trading regulations. By Navasree A.M – On December 8, 2024 2:00 pm – 2 mins read The Securities and Exchange Board of India ( SEBI ), through the Securities and Exchange Board of India (Prohibition of Insider Trading) (Third Amendment) Regulations, 2024, has introduced amendments to bring the clarity and scope of its insider trading regulations. These changes, enacted under the powers conferred by the SEBI Act, 1992, primarily focus on redefining the terms “connected person” and “relative” while emphasizing measures to curb insider trading. Complete Draft Replies of GST ITC Related Notices, Click Here SEBI has revised the criteria for identifying a “connected person.”

The new amendment has added two more to the list. Partners or employees of a firm in which a connected person is also a partner. Persons sharing a household or residence with a connected person. This expansion ensures greater accountability for individuals closely associated with those having direct access to UPSI. In Regulation 2, sub-clause (ii), after item (j) and before the Note, the following items shall be inserted, namely: “(k). a firm or its partner or its employee in which a connected person specified in sub-clause (i) of clause (d) is also a partner; or (l). a person sharing household or residence with a connected person specified in sub-clause (i) of clause (d);” The Sub-clause 2 deals with the lists of connected persons otherwise is proven. Clarification on Relatives: The new clause (hc) is added by the SEBI to list out the relatives for the purpose of insider trading. The term “relative” includes: (i) spouse of the person; (ii) parent of the person and parent of its spouse; (iii) sibling of the person and sibling of its spouse; (iv) child of the person and child of its spouse; (v) spouse of the person listed at sub-clause (iii); and (vi) spouse of the person listed at sub-clause (iv). It is intended that the relatives of a “connected person” too become connected persons for the purpose of these regulations. It is a rebuttable presumption that a connected person had UPSI.”

The other procedural adjustment was the term “immediate relative” has been replaced with “relative,” broadening the scope of applicability. That is in clause (d), in the Note, (a) after the words and symbol “price sensitive information.” the word “Immediate relatives” shall be substituted with the word “Relatives”; The updated regulations are a decisive step towards preventing insider trading by expanding the definition of connected persons and relatives while addressing loopholes.