Casting the Shadow: Investigating the Contemporary Development of Insider Trading

Abstract

The novel concept of “Insider Trading” was an attempt to safeguard the rights of investor through the provisions inserted by Indian Legislators. The concept of Insider Trading has evolved through several judicial pronouncements and circulars released by SEBI which has brought procedural irregularities under the ambit of this regulation. With a push towards a ‘Digital Economy’ there have been various instances where SEBI has come out with a proactive approach to mitigate the aftermath of the same. The recent developments in the Regime of Insider Trading has forced the market watchdog to implement some new regulations. In this paper we have analysed the approach of SEBI and Development of the Insider Trading regulation in parlance with the sheer volume of trading. We have also put forth, regulatory gap in the current regime and provided certain recommendations which the market regulator may act upon to reverse the effect of the same. The question of inclusion of government officials and public servants under the category of insider has been a moot issue, thus we have analysed their current position and also included the concept of Shadow Trading, which was used in the Courts of the USA and we have attempted to draw parallels with the Indian Regime.