Fifteen-day rule

Imagine an adviser tells a client to buy a stock, then quietly sells the same stock from their own account the very next day. The client would have no way of knowing the adviser's own view had already changed — a clear conflict of interest.

SEBI's fifteen-day rule closes this gap. An Investment Adviser cannot trade on their own account in a way that contradicts advice already given to a client, for fifteen days from the day that advice was given.

The rule is not absolute. If the adviser genuinely believes the situation has changed within those fifteen days, they may still trade — but only after telling the client the revised view, and only after giving the client at least 24 hours' notice before doing so.

The regulation reads: an investment adviser "shall not enter into transactions on its own account which is contrary to its advice given to clients for a period of fifteen days from the day of such advice." The proviso: during those fifteen days, if the adviser's opinion changes, a transaction is still permitted, but only after giving the client the revised assessment at least 24 hours in advance of the adviser's own transaction.

This sits within the wider set of code-of-conduct obligations in the same chapter — alongside the arm's-length requirement between advisory and other activities, and the ban on knowingly buying securities from, or selling to, a client on the adviser's own account.

On 1 June, an adviser recommends a client buy shares of a mid-cap company. Under the fifteen-day rule, the adviser cannot sell that same stock from their own account, contrary to the advice, until 16 June.

If fresh information emerges on 5 June that genuinely changes the adviser's view, they may still sell earlier than 16 June — but only after informing the client of the revised view, and only after waiting at least 24 hours from that disclosure before executing the trade on their own account.

Chapter 18 (Key Regulations), in the code-of-conduct and general obligations section, states the fifteen-day rule and its 24-hour proviso together as a single regulation. Expect a question giving a date of advice and a date of the adviser's own trade, asking whether the rule was breached, or one testing the 24-hour disclosure condition specifically.

• Fifteen days runs from the day advice is given to the client, not from any other date.
• The 24-hour notice is a separate condition from the fifteen-day window — both must be satisfied for an adviser to trade against their own advice early; meeting one without the other still breaches the rule.
• This rule concerns the adviser's own account, not a client's account — it does not restrict what advice the adviser gives to different clients.