Sebi mulls exempting NCS deals from trading window restrictions

Markets regulator Sebi on Thursday proposed exempting transactions involving non-convertible securities (NCS) from trading window restrictions.

The move is aimed at simplifying such transactions and making it easier for market participants.

NCS includes non-convertible debentures, non-convertible redeemable preference shares, perpetual non-cumulative preference shares and perpetual debt instruments.

The Sebi's PIT (Prohibition of Insider Trading) norms restrict trading when someone has access to Unpublished Price Sensitive Information (UPSI).

To prevent unfair advantages, trading windows are closed for designated persons who might possess UPSI.

However, some transactions like rights issues or conversions of warrants are exempt from these restrictions, as they are pre-planned, regulated and subject to disclosures.

In its consultation paper, Sebi has proposed that "certain transactions such as subscription to Non-Convertible Debentures and similar other instruments...May be exempted from trading window restrictions".

These NCS transactions are pre-decided, regulated and subject to necessary disclosures, meeting the criteria for exemption, it added.

Data from April 2022 to August 2024 shows multiple NCS listings, both public and private, across different exchanges.

The Securities and Exchange Board of India (Sebi) has sought comments from public till October 17 on the proposal.