Insider Trading Compliance (PIT)- Shared Cloud solution may not be in compliance with SEBI regulations

Unpublished Price-Sensitive Information (UPSIs) are truly confidential and any leakage to unauthorized people can create big reputational, financial and
governance loss to listed companies in India. Data on shared cloud is not in control of company and prone to hack, un-intentional sharing and may give access to many
unauthorized people. This can lead to non-compliance.

In December 2018, SEBI came up with new sets of regulations requiring all listed companies to maintain digital database of Unpublished Price Sensitive Information
sharing. In addition, there were lots of new compliance requirements came up and the responsibility is on Board of Directors to ensure complete compliance.
Here is link to SEBI updated regulations SEBI (Prohibition of Insider Trading) Regulations, 2015.

Applicability of SEBI (Prohibition of Insider Trading) Regulation is fairly vast and it is applicable to listed companies, banks, investment banks, NBFCs, Auditors, Rating
Agencies, mutual funds, insurance companies, investment companies, Internal Auditors, Merchant Banks & Practicing Company Secretaries.

We have analyzed SEBI regulations very carefully and based on our analysis and our interaction with Company Secretary community of high governed listed companies, we are of the view that a shared-cloud solution managed by a third party technology solution provider may not comply with SEBI regulations and we see following risk:

  • UPSI sharing info is not in your control. Its under control of cloud provider or technology solution company
  • Your UPSI data is always vulnerable to data breach, data theft and data hack.
  • At the time of SEBI inspection, as and when it happens, it may happen that the database does not have the required information SEBI is looking for.
  • Possibilities of your UPSI data getting merged with other company sharing the cloud platform
  • On-premise storage or dedicated private cloud solutions under management of IT team of company has better control on safety, security and back-up management

Why Insider Trading Regulations

SEBI, to protect the interest of all shareholders and specially minority shareholders, has set-out regulations wherein any person who is in possession of any unpublished
price sensitive information, cannot not take advantage and benefit by trading in public listed shares.

As per new amendment, SEBI has made additional compliances as below effective Apr 1, 2019:

  • All listed company and connected persons as defined under the regulation are required to maintain a structured digital database with adequate internal
    controls, containing name of person with whom UPSI is shared and nature of UPSI.
  • While sharing UPSI, listed company / intermediaries should serve a notice on, or sign a confidentiality/ non-disclosure agreement with, person with
    whom UPSI is shared, informing him/her that he/she has to ensure compliance of PIT Amendment Regulations while in possession of UPSI
    shared with him/her.
  • Maintaining a lists of all employees and other persons with whom unpublished price sensitive information is shared and confidentiality
    agreements shall be signed or notice shall be served to all such employees and persons

Volody’s Insider Trading Compliance Software (Volody PIT) is intelligent software designed for the company secretaries and compliance officers to monitor, track and
ensure all the compliances related to Insider Trading as prescribed by Securities and Exchange Board of India (SEBI).

Be it trading on your own company shares or trading on restricted shares, our Insider Trading Software help you manage everything and make your organization
fully compliant with SEBI Insider Trading Regulations.

Volody Insider Trading Compliance Software is designed to ensure complete compliance with SEBI regulations and gives complete peace to Board of Directors,
Management and Compliance Officers responsible for compliances.

Features includes:

  • Database of all employee and their dependents
  • Holding statement of all employees and dependents
  • Restricted shares list
  • Blackout period / no-trading windows
  • Trading plan
  • Systemic work-flow for all trading approvals, upload of broker notes
    and monthly demat statement
  • Escalation for non-compliances
  • Database with adequate internal controls, containing name of person
    and sharing of UPSI as required under SEBI regulation
  • Database of employees and other persons with whom UPSI is shared
    and confidentiality agreements signed
  • Centralized communication with all the users
  • Email & Notification alert
  • MIS, Dashboard
  • Audit trail and centralized data storage
  • Insider Trading regulations and internal policy

Please reach-out at connect@volody.in or call us at 8080809301 for demo.

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