AMENDMENT TO THE INSIDER TRADING REGULATIONS: INCENTIVE TO THE TRADERS VERSUS TIGHTENING THE LOOP
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DOI:
https://doi.org/10.55662/Abstract
It is a well-known notion that utmost good faith, good corporate governance and transparency form the core of capital markets. Insider trading is one such heinous crime which disrupts the normal functioning of capital markets and the flow of information to the market participants thus effecting their decision making capabilities and also affecting the fair play in the whole system. The main goal of insider trading regulations is to create a fair and leveled field so that the information is obtainable by all the market participants and stakeholders. The enforcement of insider trading laws increases market liquidity and decreases the cost of equity.
In common parlance insider trading is dealing in securities of a company based on some price sensitive information which is not available to the general public. This gives an edge to the insider who has material price sensitive information over and above the other investors in the market giving that insider a significant advantage. Insider trading in India has seen a tremendous change when a new set of regulations were formed in 2015 which made mere possession of such price sensitive information as a violation of insider trading norms. However, several changes have been recently made that have provided some incentives to the traders by introducing some more measures and exceptions as well as tightened the noose by increasing the burden of proof and the need for disclosures. This has been introduced keeping in the mind the current scenario and an attempt has been made to solve the confusion regarding interpretation of the terms that form a part of the legislation. This research article will deal with insider trading regime in detail in India along with a critical analysis of recent developments or amendments specially focusing on the amendment on 31st December, 2018 after the recommendations of the FMC committee.
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