Initially implemented for Sensex and Nifty businesses in September 2022, the trading window closing mechanism was then expanded to include DPs of all listed organizations. SEBI has now included DPs’ direct relatives under the same framework after its effective implementation.
In order to cover the immediate family members of Designated Persons (DPs) in all equity listed companies, capital market regulator Sebi has broadened the scope of its trading window closure mechanism.
When the new regulation takes effect on October 1, 2025, it will affect more than 3,000 publicly traded corporations.
The trading window closure procedure, which was first implemented for Sensex and Nifty businesses in September 2022, was subsequently expanded to include DPs of all listed organizations. Sebi has now included DPs’ direct relatives within the same framework after its effective deployment.
How Does Trading Window Closure Operate?
By blocking DPs’ PAN-linked accounts during the trading window closure period, which usually lasts from the end of each quarter until 48 hours after the release of financial results, the method prevents unintentional insider trading. Sebi hopes to strengthen adherence to the 2015 Prohibition of Insider Trading (PIT) Regulations by expanding the freeze to immediate family members.
Under the new system, DPs would have to regularly supply the employer with information on their near relatives.
The system was adopted by the top 500 corporations by market capitalization on July 1, 2025, and the remaining listed organizations will follow on October 1, 2025. The implementation has been executed in two stages.
In response, corporate compliance officer Makarand M. Joshi, founder of MMJC & Associates, said that the PAN freezing method has greatly reduced the monitoring load on compliance officers and decreased unintentional transactions during financial results. “The next stage is to examine whether Sebi expands this PAN freezing mechanism to include Unpublished Price Sensitive Information (UPSI) for fiduciaries DPs and their close family members in addition to financial performance,” Joshi said.
SEBI Check and UPI Valid will also be in force as of today. To combat fraud and improve market transparency, the regulator established “Valid,” a special and safe UPI payment method. All market intermediaries, such as brokers, mutual funds, research analysts, and investment counselors, will be provided with a validated UPI ID that ends in “@valid” by their bank under this scheme. Investors will be able to quickly identify legitimate Sebi-registered businesses by combining the handle name with the bank name and a green thumbs-up mark.
In an effort to further enhance investor security, Sebi also introduced the “SEBI Check” tool, which enables investors to authenticate bank account information and a registered intermediary’s IFSC by either scanning a QR code or inputting the ID. Investors are free to choose whether or not to use the structured UPI mechanism, but intermediaries are required to provide and aggressively market it to customers.
The method ensures regulated and safe financial transfers by imposing a daily transaction restriction of Rs 5 lakh per capital market transaction using UPI. Created in collaboration with banks, market intermediaries, and the NPCI, this program protects investors from illegal collections, facilitates quicker payments to legitimate businesses, and boosts confidence in the financial system as a whole.