Role of SDD; Facilitating Compliance with SEBI Insider Trading Regulations


Maintenance of Structured Digital Database (SDD), is a legal requirement introduced to track Unpublished Price Sensitive Information (UPSI) communications of listed entities, and to nip the practice of insider trading in the bud.

SEBI has mandated every entity to maintain an SDD (be it internally or through \ third-party vendor softwares, installed on the entity’s database / server). This includes maintaining and tracking all up-to-date UPSI records, Audit Trails, Annual Audits and Compliance Certificates Submissions.

The maintenance of SDD aids in tracking both, the movement of Insider data, and other compliances mandated under the SEBI (Prohibition of Insider Trading) Regulations, 2015, such as:

  1. Enforcement of the Code of Conduct
  2. Every UPSI transfer shall be updated in the SDD. This is beneficial to know the following details.
  3. Identifying Designated Persons (DPs)
  4. Identifying Insiders
  5. Details of the Sender (person sharing the UPSI)
  6. Details of Recipient, individual or entity receiving the UPSI.
  7. Date and Time of Sharing
  8. Nature of UPSI
  9. Mode of Sharing
  10. Purpose of Sharing UPSI

Collation of Designated Persons (DPs) Data

SDD, in compliance with the SEBI Regulations, helps to collect, store and track the following Designated Persons data:

  1. Name of DPs, as written in the Govt. recognised ID Proof.
  2. Government recognised ID Proofs
  3. Current residential address and valid contact number.
  4. Educational institute names, graduated by the DP.
  5. Immediate relatives
  6. All persons sharing a financial relationship with the DP.

Additional benefits

Additional benefits that aid in identifying conflict of interests, and complying with SEBI mandates. are as follows:

  1. Execution of confidentiality agreement
  2. SDD aids in Identifying all Insiders and executing confidentiality agreements with them.
  3. UPSI Transfer Notifications:
  4. Emails are to be sent to the sender and receiver, whenever a UPSI is added, binding them to comply with the laws, code of conduct and confidentiality agreements.

Supervision and Investigation:

SDD helps the board, audit committee, compliance officer, stock exchange and SEBI to monitor compliance with SEBI(Prohibition of Insider Trading) Regulations, 2015 and to investigate any allegation of insider trading.

Reporting to authorities: Promptly tracking the UPSI using SDD enables listed companies to provide such information requested by authorities including stock exchanges and SEBI for regulatory, investigation or adjudication purposes.

Author: Adv Alby Stephan, Legal Executive at Legality Simplified

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