The group also suggested allowing insiders to set a price limit during the formulation of the TP.
Company insiders may be allowed to mask their personal details, such as name and designation, while notifying their trading plan (TP) to the public. They may be asked to make full disclosure only to the exchanges, according to a new consultation paper put out by the market regulator.
They may also be allowed to set price limits during the formulation of the TP, such as an upper limit for buy trades and lower limit for sell trades.
In a consultation paper dated November 24, the Securities and Exchange Board of India (SEBI) have suggested provisions to give more flexibility to trading plans under the Sebi (Prohibition of Insider Trading) Regulations 2015.
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TPs were introduced to help people who are constantly in possession of unpublished price-sensitive information (UPSI). But since the introduction of the TPs, the market feedback has been that the requirements are onerous to meet and therefore TPs weren't popular, according to the consultation paper.
Subsequently, Sebi set up a Working Group to review the TP provisions.
One of the suggestions was on the disclosure of personal details of insiders in TP.
The consultation paper said: "As per Reg 5(5) of PIT Regulations, upon approval of the trading plan, the compliance officer shall notify the TP to the stock exchanges on which the securities of the Company are listed. Such disclosure of TP enables investors in the market at large to take informed decision. While there is no prescribed format for disclosure of the TP, it typically contains the personal details (Name and Designation) of the insider along with the trades planned to be undertaken."
To strike a balance between respecting the privacy of the insider and preventing misuse by the insider, the group has suggested that the insider makes two separate disclosures of the TP. One will will have all the details and that will be filed confidentially with the exchanges. The other will be disclosure without the personal details to the public through the stock exchange.
The. group has submitted various proposals such as reducing the minimum cool-off period between disclosure of TP and implementation of TP to four months from six months; reducing the minimum coverage period to two months from twelve months; and doing away with the black-out period for trading in TP.
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On allowing insiders to set price limits for their trading plans, the consultation paper explained, "If price of the security, during execution, is outside the price limit set by the insider, the trade shall not be executed. If no price limit is opted for, the trade has to be undertaken irrespective of the prevailing price."
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Trading Plans Review: Sebi proposes 2 different disclosure formats, setting of price limits - Moneycontrol
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