SEBI SPECIFIED THE TIMELINE/FRAMEWORK FOR RESTRICTING TRADING BY

DESIGNATED PERSONS
The Securities and Exchange Board of India (“SEBI”) on July 19, 2023 has issued a circular regarding
extended the framework to freeze the permanent account number (“ PAN”) of Designated
Persons (“DPs”) during the “trading window closure” at the security level for all listed
companies in a phased manner. The provisions of Clause 4 of Schedule B read together with
Regulation 9 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“ PIT
Regulation”), which control the trading operations of DPs, are described in this amendment.
1. The SEBI established a framework for developing a system to restrict the trading activities of
Designated Persons (DPs) by freezing their PAN at the security level during the trading window
closure period in Circular dated August 5, 2022. This was done to increase ease of doing business and
prevent unintentional non-compliances with the PIT Regulations by DPs.
2. The framework is now applicable to listed companies that are a component of the Nifty 50 and
Sensex benchmark indices.
3. The aforementioned framework is hereby extended to all listed firms in light of the framework's
successful implementation for the listed companies that are components of benchmark indices and the
consultations performed with the Stock Exchanges and Depositories.
4. The SEBI stated in a circular that the regulator has prescribed a glide path to ensure the framework's
implementation went smoothly. Accordingly, starting on October 1, the top 1,000 BSE-listed
companies will be subject to the new regulations, followed by the next 1,000 companies on January 1,
2024, and the remaining companies on April 1, 2024.The rule will take effect for newly listed firms
on stock exchanges beginning on the first day of the second quarter following the quarter in which the
company is listed.
5. The procedure for implementation of the system is enclosed at Annexure-A. The flowchart for the
same is enclosed at Annexure-B which says:
a. In order to establish the trading window closure duration, the DP must grant a listed company
access to a portal as part of the system installation process.
b. The portal automatically fills in DP data such PAN and name.
c. The listed company updates "start and end date" of the trading window closure period as well
as PAN of DPs to be frozen.
d. Furthermore, at least two trading days before the beginning of the trading window closure
period, the company picks or de-selects PANs of DPs.
e. The designated depository then sends pertinent information to stock exchanges and other
depositories by the following trading day (T-1 day), as well as every day for any updates to
DPs made during the trading window closure period.
f. From T day, depositories and stock exchanges restrict trading of the DP concerned till the end
of the trading window closure period.
g. Within two trading days of the company's notification, any modification or exemption to a DP
during the trading window closing period must be implemented.