What is Insider Trading, SDD for UPSI Management & SEBI Regulations for listed companies & IPOs
What is Insider Trading?
Insider trading is an activity where someone buys or sells the securities/shares of a company listed company registered under SEBI and trading on any stock exchange like NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) having non-public information of transactions happening in the company related to any means of financial results, dividends, orders, mergers/demergers, change in capital structure or acquisition as that information can directly or indirectly affect the prices of that security in financial markets.
Is Insider Trading Legal In India?
Insider Trading is illegal/not legal in India as per SEBI (Securities Exchange Board of India) regulations - 2015, under regulation 2 related to UPSI (Unpublished Price Sensitive Information). As per SEBI's regulation, a listed entity must have an SDD (Structured Digital Database) to manage UPSI.
As we all know, the Stock Market / Share Market plays one of the most important roles in any country's economy. The Indian Stock Market received great attention in the late 1990s.
What is SDD and UPSI Management Software?
SDD (Structured Digital Database) is a database maintained as per SEBI guidelines by the listed company containing the names of parties or entities who is aware of UPSI (Unpublished Price Sensitive Information) that can affect the price of securities in the financial markets by any mean. The UPSI includes financial results, dividends, orders, mergers/demergers, change in capital structure or acquisition, etc.
How SDD is helpful for the Compliance Officer and the Listed Company?
SDD helps compliance officers centrally manage and track all compliances. It also generates reports of Unpublished Price Sensitive Information as per SEBI guidelines. SDD also helps the compliance office with Trading Window, Trade Request Validation, Pre-Clearance Approvals, and post-trading updates along with Audit Trails.
SDD helps to manage UPSI that provides ease for the authority and company itself to prevent misleading activities such as insider trading.
What key features does a SDD provide to manage UPSI?
There is an SDD that is developed by NaapBooks Limited - a listed company itself in BSE, InsiderQ by NaapBooks Limited that ensures the fulfillment of every regulation related to the prohibition of insider trading by SEBI. It provides following features,
- Real-Time Alerts
InsiderQ provides all the alerts on real-time basis to keep the concerned person posted with required updates. With SMTP integrated it automatically sends the e-mails with the updates to all concerned parties to make sure timely notifications without human errors. - Connected Party Member Database
InsiderQ helps the compliance team to manage connected party member’s database. The compliance officer can view and download the statement as per the requirements and update it timely if there is any change. - Trading Window
Trading Window feature optimises the process and makes it easy for the compliance team to automate the trading window closures. - Pre-Clearance Request/ Approval
It allows the compliance office to check total number of Trading Requests - specifically pre-clearance requests submitted by designated individuals. - Request Validation
When a designated person submits a trading request. The compliance officer has the authority to approve or reject these requests. - Report Generation
InsiderQ helps the compliance officer or company secretary generate all reports following the regulation so that he/she can easily generate the reports and utilize it as and when required.
Insider helps the compliance officer or company secretary generate all reports following the regulation so that he/she can easily generate the reports and utilize it as and when required.
What are the Processes Covered in UPSI Management Software?
- User Creation:
Compliance officer can create users that include designated persons, PCS and connected persons. After creating the users, they can simply access the platform via their credentials created. - Detailed Dashboard
The dashboard of InsiderQ includes all the required details such as the total number of UPSIs recorded, Trading Requests submitted for pre-clearance by designated persons, Designated Persons Count, Connected Persons Count and charts/graphs with the analytics. - Detailed Trading Window
Trading Window Management feature enhances the process and makes it easy for the compliance team to automate the trading window closures, ensuring that there is no delay and also all the updates are thoroughly communicated. - Communication
With SMTP Integration InsiderQ makes the communication without any delay or errors. It sends the e-mail automatically every time including the BenPos. - Complete Audit Trails
InsiderQ allows the compliance users to generate and check the audit trails as and when required. It makes sure that every activity is tracked to mitigate any possible risks. - UPSI Reports
InsiderQ provides all the required reports with detailed information to the compliance officers to manage and utilize the information as and when required to share with the authorities.
Conclusion
To conclude, Any company whether coming up with an IPO (Initial Public Offering) or is already listed company on any of the stock exchanges, NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) is required to have an SDD to manage UPSI under SEBI (Securities Exchange Board of India) regulations related to insider trading to mitigate insider trading risks so that the stock market can perform seamlessly in a legit way, as financial markets are one of the key instruments for any countries in the economy. The Indian stock market has always been an attraction point for investors globally.
Note: Above mentioned details are just for the purpose of information related to the guidelines.
