India’s insider trading rules send mixed M&A messages

Author: Ashley Lee | Published: 20 May 2015

New insider trading regulations in the country came into force on May 15. Their stricter approach will boost market integrity, but may have an adverse effect on deal-making.

The new rules are part of the Securities and Exchange Board of India’s (Sebi) attempt to fix what IFLR sources have described as one of the leakiest markets in Asia.

They make several changes, including broadening the scope of insiders and connected partners, as well as what constitutes unpublished price sensitive information (UPSI). Now, merely communicating UPSI – even without trading on it – is a violation of the regulations.

These rules may have a decidedly mixed effect on M&A deals, for which sellers must give buyers UPSI so that they can complete due diligence. It could limit future private investment in public equity (Pipe) deals and secondary sales.

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India’s new insider trading...