SEBI Issues Updated Master Circular on Securities Market Surveillance

The Securities and Exchange Board of India (SEBI) has issued an updated Master Circular on Surveillance of Securities Market consolidating and updating various circulars, directions and regulatory instructions relating to market surveillance, insider trading compliance and trading restrictions.

The Master Circular aims to streamline the regulatory framework by consolidating multiple surveillance-related circulars into a single comprehensive reference document.

1. Consolidation of Surveillance and Insider Trading Framework

The updated Master Circular incorporates provisions covering:

• Market surveillance mechanisms
• Insider trading compliance requirements
• Disclosure obligations
• Trading restrictions and monitoring systems
• Enforcement measures applicable to Market Infrastructure Institutions (MIIs), intermediaries and listed entities

The circular also rescinds earlier surveillance-related circulars to the extent they are consolidated within the updated framework.

2. Financial Disincentives for Surveillance-Related Lapses by MIIs

The circular includes provisions relating to financial disincentives for surveillance-related lapses committed by Market Infrastructure Institutions (MIIs).

The framework seeks to strengthen accountability and ensure effective surveillance systems and compliance standards among stock exchanges, clearing corporations and depositories.

3. Monitoring of Unauthenticated News by Intermediaries

SEBI has also incorporated provisions relating to monitoring of unauthenticated news circulated by intermediaries.

The framework is aimed at preventing dissemination of unverified market-sensitive information that may impact market integrity, investor confidence and price discovery mechanisms.

4. Insider Trading Disclosure Reporting Requirements

The Master Circular consolidates disclosure reporting requirements under the SEBI (Prohibition of Insider Trading) Regulations, 2015.

The provisions include obligations relating to:

• Disclosure of trades by designated persons and insiders
• Monitoring of trading activities
• Compliance reporting by listed entities
• Submission of disclosures through system-driven mechanisms

5. System-Driven Disclosures for Promoters and Directors

The circular further covers system-driven disclosure mechanisms applicable to:

• Promoters
• Designated persons
• Directors
• Immediate relatives of designated persons

The system-driven framework is intended to improve accuracy, automation and regulatory monitoring of disclosures under insider trading regulations.

6. Framework for Trading Window Closure

The Master Circular also consolidates provisions relating to trading window closure norms under insider trading regulations.

The framework addresses restrictions applicable during sensitive periods when unpublished price sensitive information (UPSI) may exist.

7. Freezing of PAN at Security Level

The circular includes provisions relating to freezing of PAN of designated persons and their immediate relatives at the security level during trading window closure periods.

This mechanism is intended to strengthen compliance monitoring and prevent prohibited trades during restricted periods.

8. Permitted Transactions During Trading Window Closure

SEBI has clarified the permissibility of certain transactions during trading window closure periods, including:

• Subscription to Non-Convertible Securities
• Offer for Sale (OFS) transactions
• Rights Entitlement transactions

The provisions specify circumstances and conditions under which such transactions may be permitted notwithstanding trading window restrictions.

9. Objective of the Master Circular

The updated Master Circular aims to strengthen surveillance mechanisms, improve insider trading compliance and enhance market integrity through a consolidated and technology-driven regulatory framework.

The circular also seeks to improve ease of reference, regulatory clarity and uniform implementation of surveillance and compliance requirements across securities market participants.