At present, key managerial personnel or insiders are allowed to trade, provided they are not in possession of unpublished price sensitive information(UPSI).
The regulator said key managerial personnel (KMP) have a very small window for carrying out their trades, as they are in possession of unpublished price sensitive information most of the time, coupled with mandatory trading window closures for financial results.
However, these insiders may need to trade for purposes such as creeping acquisitions, compliance with minimum public shareholding norms, Sebi said.
Also, stock options are often a significant component of their compensation and they may wish to dispose of the shares acquired through exercising stock options, but by virtue of perpetually holding UPSI, may find it difficult to do so, it said said in a discussion paper on Friday.
Insider trading rules have the concept of ‘trading plans’ to enable persons, perpetually in possession of UPSI, to trade in securities.
In 2015, Sebi had introduced trading plans. It received feedback from the market that the current regulatory requirements in respect of trading plans are onerous and consequently, trading plans are not very popular.The regulator has proposed to reduce minimum cool- off period between disclosure and implementation of trading plan to four months from six months. Further, it has suggested to reduce the minimum coverage period requirement to two months from 12 months. Also, the requirement of black-out period for trading in trading plan may be done away with, it said.