A senior executive knows the quarterly numbers will beat the market's expectations. Results go public on Friday; on Wednesday she buys shares, telling herself she'd have bought anyway. That intent doesn't matter. She traded while holding unpublished price-sensitive information, and under the PIT Regulations the penalty can reach the higher of ₹25 crore or three times her gain — before any criminal exposure.
The bottom line
The PIT Regulations ban trading in a listed company's securities while you possess unpublished price-sensitive information (UPSI), and ban passing that information to others except for a legitimate purpose.
A 2025 amendment (effective 10 June 2025) widened UPSI to roughly 16 categories aligned with LODR's material events; companies must log UPSI in a structured digital database and close the trading window when insiders may hold it.
Penalties run to the higher of ₹25 crore or three times the profit, plus imprisonment of up to 10 years.
What do the PIT Regulations actually prohibit?
The SEBI (Prohibition of Insider Trading) Regulations, 2015 — in force since 15 May 2015 — do two core things.
First, Regulation 4 bars an insider from trading in a company's listed securities when in possession of UPSI. Second, Regulation 3 bars an insider from communicating or procuring UPSI, except where it's needed for a legitimate purpose, the performance of duties, or a legal obligation. Both apply to on-market and off-market trades.
The logic is simple: anyone who can see the cards shouldn't get to bet before the rest of the table.
What is UPSI — and what changed in 2025?
📌 The definition (Reg 2(1)(n))
UPSI is any information relating to a company or its securities, directly or indirectly, that is not generally available and that, on becoming generally available, is likely to materially affect the price. The regulation gives an illustrative list — and that list just got much longer.
For years, the definition leaned on five illustrative categories (financial results, dividends, mergers, capital changes, key personnel), and companies treated anything outside them as fair game. SEBI closed that gap.
🆕 The 2025 amendment (effective 10 June 2025)
SEBI expanded UPSI to roughly 16 categories, aligning it with the material events in Schedule III of LODR. New entries include award/termination of significant contracts outside the ordinary course, rating changes, fundraising, agreements affecting management or control, fraud and defaults, insolvency proceedings, forensic audits, regulatory or legal actions, and certain KMP changes.
Two flexibilities came with it: UPSI originating outside the company can be entered in the database within 2 calendar days, and the trading window need not close for such externally-sourced UPSI.
The practical effect: far more events now ring-fence insiders from trading, so compliance officers have to track a wider universe of information — but the external-UPSI relief stops the trading window from slamming shut over things the company didn't generate.
Who is an "insider" and a "connected person"?
An insider is either a connected person, or anyone in possession of or with access to UPSI — note that the second limb catches people with no formal link to the company at all.
A connected person is anyone associated with the company in any capacity — contractual, fiduciary, employment, or otherwise — that gives access to UPSI, plus a list of deemed connected persons (immediate relatives, officials, bankers, advisers and the like).
⚠️ The presumption that bites
For a connected person, there's a rebuttable presumption that they possessed UPSI. The burden flips to them to show they didn't — a meaningful evidentiary disadvantage in any SEBI proceeding.
What is the trading window, and when does it close?
The trading window is the period during which designated persons may deal in the company's securities. It closes when the compliance officer determines that designated persons can reasonably be expected to hold UPSI — classically, from the end of each quarter until 48 hours after the financial results are made public.
Two related restrictions live in the Code of Conduct (Schedule B): a contra-trade bar (no opposite transaction within six months), and pre-clearance of trades above a set threshold. After the 2025 amendment, the window need not close for UPSI that originates externally — a relief that requires the compliance officer to distinguish internal from external information.
What is the structured digital database?
📋 The SDD (Reg 3(5))
Every listed entity must maintain a structured digital database recording the nature of UPSI and the names and PAN/identifier of everyone with whom it was shared. It must be non-tamperable, time-stamped, carry an audit trail, and be preserved for at least eight years. Post-2025, externally-sourced UPSI must be entered within 2 calendar days.
SEBI treats the SDD as the spine of enforcement — a gap or a back-dated entry is itself a serious violation, separate from any trade.
What is a trading plan — and the 2024 easing?
Insiders who are perpetually in possession of UPSI — a CEO, a CFO — can rarely find an open window. The answer is a trading plan under Regulation 5: a pre-committed, publicly disclosed schedule of trades, formulated when the person holds no UPSI, that can then execute even if UPSI later arises.
🆕 The September 2024 easing
SEBI made trading plans more usable: a shorter cool-off period before trades begin (cut from six months to 120 days), a shorter minimum coverage period, and optional price limits (with trade parameters still mandatory). The reform came before the UPSI expansion, deliberately — so insiders could navigate the wider UPSI net without being frozen out.
What's the penalty?
🚫 The exposure
Civil (Section 15G, SEBI Act): penalty of not less than ₹10 lakh, up to ₹25 crore, or three times the profit made — whichever is higher.
Criminal (Section 24, SEBI Act): imprisonment up to 10 years, or fine up to ₹25 crore, or both.
Plus disgorgement of gains and debarment from the securities market.
That "three times the profit" multiplier is the part insiders underestimate. On a large gain, it dwarfs the ₹25 crore floor — and intent or after-the-fact rationalisation is no defence once possession and trading coincide.
A worked example
Verdant Pharma Ltd is about to receive a major regulatory approval — clearly UPSI, and now squarely inside the expanded definition. Its compliance officer logs the information in the SDD and closes the trading window for designated persons.
A product head, on the designated-persons list, buys 5,000 shares two days before the announcement. He insists he acted on "general optimism." Under PIT, that's irrelevant: he's a connected person (presumed to have UPSI), he traded while the window was closed, and the approval was UPSI. SEBI can impose the higher of ₹25 crore or three times his profit, disgorge the gain, and debar him — quite apart from the company's own exposure if its SDD or window controls were weak.
Had the price-sensitive information instead come from outside Verdant — say a third party's filing — the 2025 relief means the window need not have closed for it, and the SDD entry could be made within two days.
Common mistakes
- Treating only the "classic five" events as UPSI. The 2025 list is far broader — contracts, ratings, fundraising, KMP changes and more.
- Trusting intent as a defence. Possession plus trading is the test; "I'd have traded anyway" doesn't help.
- A weak or back-dated SDD. The database's integrity is itself enforced; gaps are violations.
- Forgetting contra-trade and pre-clearance. A profitable opposite trade within six months is barred regardless of UPSI.
- Mishandling external UPSI. The 2025 relief applies only to externally-sourced UPSI — misclassify it and you either over-restrict or, worse, under-restrict.
Compliance checklist
- [ ] Update the insider-trading policy and fair-disclosure code to the expanded UPSI list (post-10 June 2025).
- [ ] Maintain a non-tamperable, time-stamped SDD; enter external UPSI within 2 days; preserve 8 years.
- [ ] Operate trading-window closures, contra-trade bars and pre-clearance, distinguishing internal vs external UPSI.
- [ ] Offer trading plans to perpetually-exposed insiders, using the 2024 flexibilities.
- [ ] File initial and continual disclosures (e.g., on dealings above the prescribed value).
- [ ] Train designated persons and their immediate relatives on the presumption that connected persons hold UPSI.
FAQ
Is it insider trading if I'd have bought the shares anyway? Yes. The test is whether you traded while in possession of UPSI, not your motive. Intent is not a defence.
What changed about UPSI in 2025? From 10 June 2025, UPSI was expanded to roughly 16 categories aligned with LODR's material events, with deferred database entry and no mandatory window closure for externally-sourced UPSI.
When is the trading window normally closed? Typically from the end of a quarter until 48 hours after the financial results are published — and whenever the compliance officer determines designated persons may hold UPSI.
What is a trading plan, and who needs one? A pre-committed, disclosed schedule of trades for insiders perpetually in possession of UPSI (like a CEO/CFO), eased in September 2024 with a shorter cool-off and optional price limits.
What's the maximum penalty for insider trading? Civilly, the higher of ₹25 crore or three times the profit (minimum ₹10 lakh); criminally, up to 10 years' imprisonment and/or a fine up to ₹25 crore, plus disgorgement and debarment.
This piece reflects the SEBI (PIT) Regulations, 2015 as amended through 2025 (including the amendment effective 10 June 2025), and is general information, not advice on your specific situation.
Primary sources - SEBI (Prohibition of Insider Trading) Regulations, 2015 — SEBI - SEBI (PIT) (Amendment) Regulations, 2025 dated 11 March 2025 (effective 10 June 2025); trading-plan amendment dated 24 September 2024 - Sections 15G and 24, SEBI Act, 1992