Market Abuse Regulation (Indian Framework)
India's market abuse regulatory framework comprises three interlocking SEBI regulations — the PFUTP Regulations, the PIT Regulations and the SAST Regulations — that collectively prohibit manipulative trading, insider dealing and coercive takeover conduct in Indian securities markets.
Unlike the European Union, which has a single Market Abuse Regulation (EU MAR), India's framework for combating market abuse is distributed across three separate but interconnected regulatory instruments administered by the Securities and Exchange Board of India.
The SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP) form the broad anti-manipulation pillar. They prohibit any form of market manipulation including wash trades, price manipulation through false information, front-running by intermediaries, mis-selling of securities and creating artificial volumes. SEBI uses PFUTP as the primary framework for action against price rigging, circular trading, layering, spoofing and syndicate-driven manipulation. Penalties can include debarment, disgorgement of profits and monetary sanctions.
The SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT) address the misuse of unpublished price sensitive information (UPSI). Insiders — persons connected with a listed company who possess UPSI — are prohibited from trading on that information or communicating it to others. The PIT Regulations prescribe structured disclosures for promoters and designated persons, mandatory trading plans, trading window closures around financial results and board meeting dates, and the maintenance of a Structured Digital Database to log all persons who have had access to UPSI.
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST) govern the acquisition of large stakes in listed companies. Beyond threshold levels, an acquirer must make a mandatory open offer to minority shareholders, ensuring they have an exit opportunity. This prevents covert change of control that disadvantages ordinary shareholders. While primarily a corporate governance and M&A regulation, SAST intersects with market abuse prevention by ensuring that large accumulations of shares are transparently disclosed and do not proceed through secret coordinated action.
The three frameworks are enforced through SEBI's quasi-judicial enforcement orders, adjudication proceedings and settlement mechanisms. Increasingly, SEBI uses algorithmic surveillance of trading data, call data records, bank account trails and digital communication metadata to detect market abuse patterns, representing a significant evolution from the manual surveillance methods of earlier decades.