SEBI extends automated trading restrictions to immediate relatives of designated persons – Are you prepared?
The Securities and Exchange Board of India (SEBI) has issued a critical circular (SEBI/HO/ISD/ISD-PoD-2/P/CIR/2025/55) dated April 21, 2025, that significantly expands the scope of automated trading window closure compliance beyond designated persons to include their immediate relatives, on account of declaration of financial results. If your company is among India’s top 500 listed entities by market capitalization, immediate action is required.
What’s Changed: Key Updates to SEBI PIT Regulations
Extension to Immediate Relatives
Previously, automated trading window closure (freezing of PAN) applied only to Designated Persons (DPs). The new framework now extends these restrictions to immediate relatives of DPs, creating a broader compliance net that companies must manage.
Phased Implementation Timeline
SEBI has mandated a two-phase rollout:
Phase 1 (July 1, 2025) [Urgent]: Top 500 companies by BSE market cap as of March 31, 2025, listed on BSE, NSE, and MSEI
Phase 2 (October 1, 2025): All remaining listed companies and newly listed entities
Who Must Comply Immediately?
If your company ranks among the top 500 by BSE market capitalization as of March 31, 2025, and is listed on BSE, NSE, or MSEI, you have less than a month to ensure full compliance.
Who Are Immediate Relatives Under SEBI PIT Regulations?
According to SEBI Prohibition of Insider Trading Regulations 2015, immediate relatives include:
- Spouse of the designated person (mandatory)
- Any of the following who is either dependent financially on designated person or consults such person in taking decisions relating to trading in securities:
- Parent of the designated person
- Sibling of the designated person
- Child of the designated person or of spouse
Critical Compliance Requirements
1. PAN-ISIN Freeze Implementation
Companies must work with their Designated Depository (DD) to implement automated PAN-ISIN freezing for:
- All Designated Persons
- Immediate relatives of Designated Persons (NEW requirement)
2. Enhanced Data Management
Listed companies must provide:
- Complete details of immediate relatives of DPs
- PAN numbers and demat account information (in case of PAN exempt cases)
- Regular updates for additions, deletions, or modifications
3. Trading Window Closure Specifications
Companies must specify:
- Commencement date (T-day): First day after quarter-end
- End date: 48 hours post financial results disclosure
- All details must be submitted at least 2 trading days prior (T-2)
Listed entities can submit any date for the end of the trading window closure and can provide the final board meeting date once it’s confirmed. It’s advised to choose a date that is 45 days from the end of the quarter.
Step-by-Step Compliance Checklist
Before July 1, 2025:
- Identify all Designated Persons and their immediate relatives
- Collect complete PAN and demat account details (only in case of PAN exempt cases)
- Coordinate with your Designated Depository and update the details with them
- Train compliance teams on new procedures
- Update internal policies and procedures
Ongoing Requirements:
- Submit trading window closure details T-2 days before each quarter-end
- Monitor and update DP and immediate relative information
- Handle exemption requests as per PIT Regulations
Penalties and Risks of Non-Compliance
Non-compliance with SEBI PIT Regulations can result in:
- Monetary penalties
- Regulatory action against the company
- Personal liability for compliance officers
- Reputational damage
Technical Implementation Framework
The new system involves:
- Depositories: Restricting off-market transactions and pledge creation
- Stock Exchanges: Blocking on-market equity and derivative transactions
- Listed Companies: Providing accurate, timely data updates
- Real-time coordination between all parties
Industry Impact: What This Means
This expanded framework represents SEBI’s commitment to:
- Preventing insider trading more effectively
- Closing compliance loopholes
- Enhancing market integrity
- Protecting retail investor interests
Immediate action items for Compliance Officers
Audit current DP database for completeness
- Identify immediate relatives of all DPs
- Update the details with Designated Depository to ensure compliance
Conclusion: Time to Act is Now
With July 1, 2025, fast approaching, top 500 listed companies cannot afford delays in implementing this expanded compliance framework. The automated trading window closure for immediate relatives of Designated Persons represents a significant operational change that requires careful planning and execution.
Companies that proactively address these SEBI PIT Regulation requirements will not only ensure regulatory compliance but also demonstrate strong corporate governance standards to stakeholders and investors.
Take Action Today – Don’t Risk Non-Compliance!
Don’t wait until the last minute. Start your compliance journey today.
Frequently Asked Questions (FAQs)
Q1: Is freezing of PAN applicable on every trading window closure?
A: No. The automated trading window closure i.e., freezing of PAN is required to be done only on account of declaration of financial results.
Q2: Is the details of spouse required to be mandatorily given?
A: Yes. The details of spouse is mandatorily required to be given irrespective of him/ her being dependent financially on the designated person.
Q3: Do we need to freeze trading for immediate relatives during every quarter-end?
A: Yes, the automated trading window closure will apply from the end of every quarter until 48 hours after the declaration of financial results, just like it currently applies to Designated Persons.
Q4: Can immediate relatives get exemptions from trading window restrictions?
A: Yes, exemptions can be provided as per Clause 4(3) of Schedule B of PIT Regulations. Companies must specify exemption details in the system, and restrictions will be removed within 2 trading days of the request.
Q5: What if an immediate relative’s PAN is not available?
A: In PAN-exempt cases, companies must provide the DP ID and Client ID of the demat account. However, having PAN details is preferred for smoother implementation.
Q6: How often do we need to update the list of Designated Persons and their immediate relatives?
A: Updates must be provided whenever there are additions, deletions, or modifications. Changes will be effected within 2 trading days of receipt of intimation from the listed company.
Q7: Do we need separate systems for BSE, NSE, and MSEI listings?
A: No, the Designated Depository will coordinate with all relevant Stock Exchanges and Depositories. Companies need to work through their Designated Depository for unified implementation.
Q8: What reports do we need to submit under this framework?
A: Companies don’t directly submit reports under this circular. However, Depositories will submit quarterly reports to SEBI. Companies must ensure accurate data provision to their DD for proper reporting.
For detailed implementation procedures, refer to SEBI Circular SEBI/HO/ISD/ISD-PoD-2/P/CIR/2025/55 dated April 21, 2025, available on the SEBI website.
DISCLAIMER: This blog provides general information about SEBI regulations. For specific compliance advice, consult qualified professionals. Regulations may change, and this content should not be considered as legal advice.
Keywords: SEBI trading window closure, PIT Regulations compliance, designated persons immediate relatives, top 500 listed companies, insider trading prevention, SEBI circular 2025, automated trading restrictions, compliance deadline July 2025
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