10 Things your organisation must know about SEBI UPSI

Data is the new oil, and UPSI is the critical and sensitive data; if leaked to the public, affects the value of existing shares and shares in the market if revealed to the public.

So what is UPSI as defined by SEBI?

The acronym stands for Unpublished Price Sensitive Information.

UPSI, as under the SEBI (Prohibition of Insider Trading) Regulations, 2015, includes information related to financial results, dividends, change in capital structure, mergers, de-mergers, acquisitions, delisting, disposals, and expansion of business and such other transactions, and also includes changes in key managerial personnel.

Although it is now imperative for businesses to be proactive in preventing insider trading and managing their information security, most companies still lack awareness of the challenges, threats and risks to which they are exposed.

To ensure businesses do not engage in INSIDER TRADING and MANIPULATING the market, SEBI (Securities and Exchange Board of India) has put in place a detailed policy on the regulation and communication of UPSI under SEBI's Prohibition of Insider Trading Act 2015 ("PIT Regulations")

10 Points you need to know about SEBI UPSI Regulations

Read below to know about SEBI's regulation on the communication of UPSI under SEBI's Prohibition of Insider Trading Act 2015 ("PIT Regulations")?

1. As per Regulation 3(1) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, no insider shall communicate, provide, or allow access to any unpublished price sensitive information, relating to a company or securities listed or proposed. To be listed to any person, including other insiders, except where such. Regulation 30 of SEBI regulation 2015 also inserts about disclosure of material events and information.
2. As per Section 15G of SEBI Act, 1992, and the subsequent amendment in 2010 and 2015, a minimum penalty of  ₹ 10 lakh, which may be up to ₹ 25 crore, or three times the amount of profits made out of insider trading, whichever is higher, can be levied. In addition, if any person contravenes or attempts to contravene or abets the contravention of the provisions of the SEBI Act or of any rules or regulations made thereunder, he shall be punishable with imprisonment for a term which may extend to 10 years, or with a fine, which may go up to ₹  25 crore, or with both.
3. SEBI USPSI policy is about tracking the flow of information and creating a process on how and when people are getting on board with sensitive transactions and the impact of their role and responsibility towards the audit committee and board.
4. All employees who have access to UPSI are identified as designated employees. No private person or non-employees, especially family members of the board of directors, should have access to the board meeting. 
5. All UPSI shall be identified, and its confidentiality shall be maintained as per the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015. Adequate restrictions shall be placed on the communication or procurement of UPSI, as required by the SEBI (Prohibition of Insider Trading) Regulations, 2015. 
6. A list of all employees and other persons with whom UPSI is shared shall be maintained digitally, technically as SDD ( Structured Digital Database), and confidentiality agreements shall be signed or notice shall be served to all such employees and persons.
7. A periodic process review shall be conducted to evaluate the effectiveness of such internal controls.
8. SEBI regulation is applicable to all the listed Companies such as Investment Banks, Merchant Banks, NBFCs, Rating Agencies, Audit firms, Practising Company Secretaries, Mutual Funds, Insurance Companies, Law Firms, Consultants, and all Intermediaries registered with SEBI under section 12 of SEBI Act Fiduciaries as per SEBI (Prohibition of Insider Trading) Regulations 2015.
9. You can make your company compliant by preparing a Code of conduct policy for the preservation of data for the preservation of insider trading and for its designated persons and their immediate relatives. 
10. The new regulation 3(6) has been added to the regulations, which specifies the handling of price-sensitive database information and the preservation of the database for not less than eight years after the completion of the relevant transactions. In addition, any information received from the board regarding any investigation or enforcement proceedings must be preserved in the digital database until such proceedings are completed.

On pondering over the above, you will note that in all the above-related information on SEBI's UPSI policy, the major stressing matter for all concerned organisations is how to automate the compliance process of SEBI's UPSI as per the requirement and what is the right way of doing it. 

This is where the expertise of Informatics comes into the picture. 

Can I automate SEBI UPSI compliance via insider trading software?

If you are finding solutions to become a SEBI-compliant organisation, you can consider Informatics' very own secure insider trading software i.e. Velox UPSI. It is capable of making your SEBI compliance easier for the committee designated to track and manage records as per SEBI UPSI policy.

Velox UPSI is a ready-to-use centralised platform for UPSI declaration and submission, integrated with external systems to secure insider information adhering to SEBI guidelines.

Takeaway:

In this current volatile economy, any threat to a company's assets needs to be treated seriously, and information is one such asset which requires handling with utmost care since Information security breaches can have a huge impact on an organisation's reputation. Companies must be proactive in securing their financial and economic assets. This will help them gain an edge over others in the market, stay compliant with SEBI and prevent insider trading from occurring on a grand scale.

Book a Demo to learn more about Velox UPSI.