India unveils tough trading rules

Market regulator comes up with proposals to check insider trading with view to curb securities fraud.

Indians watch a screen on the facade of the Bombay Stock Exchange in Mumbai.
Indians watch a screen on the facade of the Bombay Stock Exchange in Mumbai.

India’s financial market regulator has come up with proposals to curb insider trading, as part of efforts to clampdown on cases of securities fraud.

While earlier only senior executives were liable for trading violations including insider trading, the new proposals floated by the Securities and Exchanges Board of India (SEBI) expand the ambit of those who can be charged. 

These include company employees, directors, their immediate families and others involved in the business including founders, said media reports on Thursday quoting the proposals.

Interestingly, even ministers, bureaucrats, judges and officials in the possession of price-sensitive information are being made liable in the event of insider trading.

Cases of securities fraud are tending to undermine the integrity of India’s markets, analysts were quoted as saying, giving reasons for the tightening of regulations.

Earlier this year, Indian Prime Minister Manmohan Singh had reportedly called for eliminating what he called the disease of insider trading plaguing the securities market.

Market analysts, quoted by the media, point out that the real challenge is in pinning the charges of insider trading on individuals.  They expressed scepticism over whether this would be possible, but agreed that the new proposals would help.

Source: Al Jazeera

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