Starting October, immediate relatives of company insiders to be under trading window closure

The rollout has been implemented in two phases: the top 500 companies by market capitalisation adopted the system from July 1, 2025, while all remaining listed entities will follow from October 1, 2025.

Capital market regulator Sebi has expanded the scope of its trading window closure framework, to now include immediate relatives of Designated Persons (DPs) in all equity listed entities.

The new rule, which comes into effect from October 1, 2025, will apply to over 3,000 listed companies.

First introduced in September 2022 for Sensex and Nifty companies, the trading window closure mechanism was later extended to DPs of all listed entities. Following successful implementation, Sebi has now brought immediate relatives of DPs under the same framework.

Trading Window Closure - How it Works?

The system works by freezing PAN-linked accounts of DPs during the trading window closure period - typically from the end of each quarter until 48 hours after the declaration of financial results - thereby preventing inadvertent insider trades. By extending the freeze to immediate relatives, Sebi aims to further tighten compliance under the Prohibition of Insider Trading (PIT) Regulations, 2015.

Under the new framework, DPs will be required to keep information relating to their immediate relatives updated with the company on a regular basis.

The rollout has been implemented in two phases - the top 500 companies by market capitalisation adopted the system from July 1, 2025, while all remaining listed entities will follow from October 1, 2025.

Makarand M Joshi, Founder MMJC & Associates and a corporate compliance officer reacted by saying the PAN freezing mechanism has reduced inadvertent trades during financial results and significantly eased the tracking burden on compliance officers. "The next step will be to see if Sebi extends this framework of PAN freezing to cover Unpublished Price Sensitive Information (UPSI) beyond financial results and for fiduciaries DPs and their immediate relatives as well," Joshi added.

Also effective from today will be UPI Valid and SEBI Check. The regulator had introduced a unique and secure UPI payment mechanism called ‘Valid’ to prevent fraud and enhance transparency in market transactions. Under this system, all market intermediaries - including brokers, mutual funds, research analysts, and investment advisers - will receive a verified UPI ID ending with ‘@valid’ issued by their bank. The handle name will be combined with the bank name, along with a green thumbs-up icon, to make it easy for investors to identify genuine Sebi-registered entities.

To further strengthen investor protection, Sebi has also launched the ‘SEBI Check’ tool, allowing investors to verify the authenticity of UPI IDs by scanning a QR code or entering the ID to confirm bank account details and IFSC of a registered intermediary. While adoption of the structured UPI mechanism is optional for investors, it is mandatory for intermediaries to provide and actively promote it to clients.

The mechanism sets a daily transaction limit of Rs 5 lakh per capital market transaction through UPI, ensuring controlled and secure fund transfers. Developed in consultation with NPCI, banks, and market intermediaries, this initiative safeguards investors against unauthorized collections, enables faster payments to genuine entities, and strengthens overall trust in the financial ecosystem.

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