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SYNOPSIS

CAPITAL MARKETS AND SECURITY LAW (2019 – 2020)

TOPIC –  INSIDER TRADING LAWS IN INDIA IN COMPARISION WITH

LAWS IN UK AND USA.

I. STATEMENT OF PROBLEM

The purpose of the project is to do a comparative study of the Indian insider trading laws with
the laws in the U.K. and the U.S., specifically in respect of the foregoing issues and
amendments, to analyze the far-reaching scope of their application.

II. HYPOTHESIS

The insider trading regulations of India are comprehensive and, with some assistance from the
legislature and judiciary, it is well posed to tackle future threats to investor confidence, market
integrity, and the Indian economy.

III. RESEARCH QUESTIONS

1. Whether India would benefit from assimilating certain features from the legal system of the
USA and UK?
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2. Is the recent amendment to the Indian regulation comprehensive enough in comparison to

the laws in UK and USA?

3. Whether India’s insider trading regulations cover such multi-faceted theories as seen under
the UK and USA regulations?

IV. RESEARCH OBJECTIVE

The objective of this project is to study the insider trading laws in India, US and UK and compare
the extent of their application.

V. REVIEW OF LITERATURE

‘Prohibition on Insider Trading: A Toothless Law, by Vaibhav Sharma.’; SSRN id 1400824.

The author of the paper demonstrates and analyses various aspects of Insider trading, and
evaluates the effect of this practice on the fidelity of a company towards the securities market
and the common investor. The main focus is on insider trading in the securities market of
United States, United Kingdom and India. The purpose of such a comparison is to observe the
international trends and issues with this legally deplorable practice because USA was the first
jurisdiction to enact insider trading regulation and today it continues to lead the world in the
regulation and enforcement, UK takes into consideration Directive of the European Parliament
too that represent EC legal regime on insider dealing, India being the country whose statutory
provisions on insider trading does not have a long history nevertheless amendments are being
made to make this offence more punitive and preventive. Indian securities market is studied by
the author because despite there being regulation against insider trading, the enforcement rate
is equivalent to nil. So as to attract foreign investment and to retain the confidence of the
domestic investor, India needs to bring its securities market at par with the securities market of
these two developed economies. The particular emphasis is on the legal and economic
consequences of such practice, with a comparative aspect of rules and regulation that are being
made in the above mentioned jurisdictions. And also to see as to why there is lack of
enforcement of these regulations against this practice. Finally, the author focuses upon the
harmonization of regulations against insider trading globally, by providing a unified regulation
against this.