Structured Digital Database under SEBI (Prohibition of Insider Trading) Regulations, 2015

A Structured Digital Database (SDD) is a mandatory requirement under Regulation 3(5) of the SEBI (Prohibition of Insider Trading) Regulations, 2015. It is designed to ensure proper recording and maintenance of sensitive information to prevent insider trading.

The purpose of an SDD is to maintain a secure and detailed record of persons who have access to Unpublished Price Sensitive Information (UPSI). This database is crucial for tracking and preventing insider trading by enabling companies to maintain a comprehensive log of how and with whom UPSI is shared.

Details to be maintained in the SDD include a description of the specific UPSI shared and the names and details of persons with whom it is shared. Records must account for both direct and indirect access to UPSI, ensuring a complete and accurate trail of information flow.

The database must be maintained electronically, ensuring it has adequate internal controls to guarantee data integrity and security. This electronic format allows for efficient handling and storage of sensitive information.

Time-stamping of all entries in the SDD is required to establish the sequence of events. This ensures that the timeline of access and sharing of UPSI is accurately documented and cannot be disputed.

The system used for maintaining the SDD should ensure that data once entered cannot be modified or tampered with. This non-tamperability feature is essential to uphold the credibility and reliability of the database.

Access controls must be implemented to restrict the database to authorized personnel only. This ensures that sensitive information is not accessible to unauthorized individuals, thereby reducing the risk of misuse.

The SDD must be preserved for a minimum of eight years or until any legal proceeding involving the UPSI is resolved, whichever is later. This extended preservation period ensures that data is available for review or investigation if needed.

The SDD should be auditable, enabling organizations and regulators to verify compliance with the PIT Regulations. The auditability feature ensures that the database can be examined thoroughly for any irregularities or breaches.

The Structured Digital Database ensures transparency and accountability in handling UPSI

By creating a clear trail of information flow, it acts as a deterrent to insider trading and provides a reliable mechanism for companies to demonstrate compliance with SEBI regulations. Moreover, it aids regulators like SEBI in conducting investigations effectively and efficiently.

Failure to maintain a proper SDD or ensure its integrity can result in penalties under SEBI regulations. These penalties may include fines and other enforcement actions, emphasizing the importance of adhering to the requirements.

Many organizations, especially listed entities, use Insider Trading software to maintain an SDD. Such software solutions help ensure adherence to SEBI regulations while minimizing manual errors and enhancing the efficiency of compliance processes.