Question 1

The automated PAN freeze prevents the relatives of insiders from trading any stocks in the share market during the closure period.

Accepted Answer

The PAN freeze is implemented strictly at the 'security level' (based on the company's ISIN). The relatives can freely trade shares of other, unrelated companies.

Question 2

Under SEBI rules, an 'immediate relative' automatically includes all parents, siblings, and children of the designated person.

Accepted Answer

Except for the spouse, these relatives are only included if they are financially dependent on the designated person or consult them for trading decisions.

Question 3

Consider the following statements regarding SEBI's April 2025 circular on automated trading window closures:
1. The automated framework has been extended to include Real Estate Investment Trusts (REITs) and purely debt-listed entities.
2. The PAN freeze for immediate relatives is implemented at the security level rather than freezing the entire demat account.
3. The Phase 1 rollout begins in July 2025 exclusively for the top 500 companies based on NSE market capitalization as of March 31, 2025.
How many of the above statements are correct?

Accepted Answer

(a) Only one — Statement 1 is incorrect because InvITs, REITs, and debt-listed entities are excluded. Statement 2 is correct; the freeze is ISIN-specific (security level). Statement 3 is incorrect because the Phase 1 top 500 criteria is based on BSE market capitalization, not NSE.

Question 4

Match the SEBI regulatory concepts (List I) with their specific features under the PIT Regulations, 2015 (List II):
List I:
A. Designated Person
B. Immediate Relative
C. UPSI
D. Automated Window Closure

List II:
1. Includes a sibling only if financially dependent or consults for trading decisions
2. Financial results or mergers before they are made public
3. Implemented by depositories freezing PAN at the security level
4. Executives identified by the board as having regular access to sensitive data

Select the correct code:

Accepted Answer

(a) A-4, B-1, C-2, D-3 — Designated Persons (A) are insiders with access to data (4). Immediate Relatives (B) are defined by financial dependency/consultation under Regulation 2(1)(f) (1). UPSI (C) refers to unpublished price-sensitive information like financials (2). Automated Window Closure (D) is enforced via security-level PAN freezes by depositories (3).

Question 5

Assertion (A): Under SEBI's updated automated trading window framework, an insider's parents are not automatically subjected to the PAN freeze unless specific conditions are met.
Reason (R): Under SEBI PIT Regulations, 2015, parents are considered 'immediate relatives' only if they are financially dependent on the designated person or consult them for securities trading decisions.
Select the correct answer:

Accepted Answer

(a) Both A and R are true and R is the correct explanation of A. — Both statements are true. SEBI's definition of an immediate relative (Regulation 2(1)(f)) explicitly requires financial dependency or trading consultation for parents, siblings, and children. Because of this definition (Reason), their PANs are not automatically frozen simply by blood relation (Assertion).

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