Trading Windows, Approvals, and Quick Reversals

6. Trading windows, approvals and quick reversals

A trading window is an internal control indicating when covered people may trade, subject to the wider rules. The compliance officer closes it for affected securities when designated persons can reasonably be expected to hold UPSI. Designated persons and immediate relatives then cannot trade unless an applicable exception permits it.

For financial results, closure runs from each quarter-end until 48 hours after results are declared. Audit-committee clearance and the board meeting should be close together, preferably on the same day, to reduce leaks.

For other company information, reopening depends on publication and the market’s ability to absorb it, and cannot occur earlier than 48 hours after publication. Under the June 2025 amendment, UPSI originating outside the company may not require closure. The underlying trading ban still applies.

Window exceptions cover specified same-information transactions, mandatory transactions, predetermined-price option exercises and approved plans. Genuine pledges may qualify with pre-clearance and regulatory compliance. Specified conversions, rights or public or preferential issues, buybacks, open offers, delisting offers and other SEBI mechanisms also receive particular treatment. Each exception has conditions.

When the window is open, designated persons need pre-clearance, or advance approval, above board-set thresholds. The officer may request a no-UPSI declaration and assess its reliability. Approval lasts for the code’s stated period, at most seven trading days. A trade not completed in time needs fresh approval.

A contra trade is an opposite-direction trade, such as buying and then selling. Company codes must set a restriction lasting at least six months. The compliance officer may be empowered to grant relaxation for written reasons, provided it complies with the regulations. Even an accidental breach requires surrender of the resulting profits to SEBI’s Investor Protection and Education Fund. Stock-option exercises are excluded.

Intermediaries and fiduciaries have related Schedule C controls, including a confidential restricted-securities list and mandatory no-UPSI declarations. Approvals last at most seven trading days. Designated persons connected to the relevant company face a minimum six-month contra-trade period; those connected to the relevant mutual fund, AMC or trustees face a minimum two-month period for those units. Written compliant relaxations are possible.