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ARTICLE · 04 AUGUST 2022

Applicability Of PIT Regulations To Mutual Funds

Khaitan & Co.
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The Securities Exchange Board of India (SEBI) released a consultation paper on 8 July 2022 proposing applicability of SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations)...

IndiaFinance and Banking
Nikhilesh Panchal
Nikhilesh Panchal
Rakshitha Naik
Rakshitha Naik
Dnyaneshwari Chincholikar
Dnyaneshwari Chincholikar
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Introduction

The Securities Exchange Board of India (SEBI) released a consultation paper on 8 July 2022 proposing applicability of SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) to ‘units of a mutual fund' (hereinafter “the Consultation Paper”). The PIT Regulations currently apply to dealings in ‘securities' of listed / to be listed entities. It will be recalled that the definition of ‘securities' in the PIT Regulations specifically excludes ‘units of a mutual fund'. This proposed extension of the PIT Regulations will be a major development in the securities laws.

Rationale

The Consultation Paper states that the need for the amendment to the PIT Regulations has emerged from specific incidences of misuse of Unpublished Price Sensitive Information (UPSI) by certain key personnel / registrar and transfer agents who as insiders holding the units of the scheme redeemed them before information was communicated to the other unitholders by

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