Generally available information
Also written Generally available · Publicly available information
Information accessible to the public on a non-discriminatory basis — the opposite pole of unpublished price sensitive information, and expressly not including unverified media reports.
In plain language
The insider trading rules rest on one split. Some information everybody can get. Other information only some people can get. Generally available information is the first kind.
Regulation 2(e) defines it as information that is accessible to the public on a non-discriminatory basis. In simple words, anyone can get it on the same terms.
The rule adds one limit. It shall not include an unverified event or information reported in print or electronic media. So a news story that no one has confirmed does not count.
Why define it at all? The workbook says it makes it easier to see what counts as unpublished price sensitive information. UPSI is price-sensitive information that is not generally available. Once you pin down one side clearly, the other side falls into place.
How it works
Two words carry the definition.
"Non-discriminatory" is about access, not effort. Information published on the website of a stock exchange would ordinarily be considered generally available — anybody may go and read it, whether or not they do. A number read out on an analyst call to twenty selected institutions is not generally available, however many people were on the call, because the public could not have joined it.
"Unverified" is the exclusion that catches newspaper speculation. A report in a financial daily that a company is in talks to sell a division, sourced to unnamed persons and not confirmed by the company, is an unverified event reported in electronic media. It does not make the information generally available, and a connected person who reads it and trades is not protected by the fact that "it was in the papers".
The practical consequence for a compliance officer is a sequence, not a judgement call. UPSI stays UPSI until the company or the fund house itself puts it into the public domain on a non-discriminatory basis — an exchange filing, a press release, a scheme addendum. Only then does the trading window reopen, and only then may an approved trading plan that was blocked on this ground begin.
A worked example
Meridian AMC decides on 6 March to restrict redemptions in one of its debt schemes from 10 March. That is UPSI for the scheme: restrictions on redemptions is on the list of mutual fund UPSI.
| Date and event | Generally available? |
|---|---|
| 7 March — a business channel runs "sources say Meridian may gate a debt scheme", unconfirmed | No. Unverified event reported in electronic media; expressly excluded |
| 8 March — three large distributors are briefed on a call so they can prepare clients | No. Selective, therefore discriminatory |
| 9 March, 9:40 am — the fund files an addendum and posts it on its website and AMFI's | Yes. Accessible to the public on a non-discriminatory basis |
Mr Sharma, a fund operations employee and therefore a designated person, redeems Rs 12 lakh of the scheme on the afternoon of 7 March, pointing to the television report. It does not help him. The information was not generally available on 7 March, he was in possession of UPSI, and the trade is caught.
His colleague redeems Rs 12 lakh on 10 March, the day after the addendum. Same amount, same scheme, no violation — subject to the trading window having reopened and pre-clearance having been obtained, which are separate requirements of the code of conduct and are not satisfied merely because the information went public.
Why NISM asks about it
Chapter 7 introduces Regulation 2(e) immediately before the UPSI definition, because the two are read together and one is the negative of the other.
The examinable points are exact and short: "accessible to the public on a non-discriminatory basis"; the express exclusion of an unverified event or information reported in print or electronic media; and the workbook's own example that information on a stock exchange website would ordinarily be considered generally available. Questions often present a media rumour and ask whether the information has become generally available. It has not.
Common exam traps
- A media report does not make information generally available if it is unverified. This is written into the definition and is the most-tested half of it.
- "Non-discriminatory" is about who could access it, not who did. An exchange filing nobody read is generally available; a briefing everyone in the room heard is not.
- Generally available information is not the same as information that is not price sensitive. A published quarterly result is generally available and was price sensitive an hour earlier. The categories are about timing, not importance.
- Publication does not lift the trading window or the pre-clearance requirement. Those come from the code of conduct and have their own triggers.
- For mutual fund units, the price-sensitive list is scheme-level — change in accounting policy, material change in valuation methodology, restrictions on redemptions, winding up, creation of a segregated portfolio, triggering of swing pricing, material changes in liquidity, default in underlying securities. Do not answer with the listed-company list of financial results and dividends.
- The onus of showing a person was in possession of UPSI lies on whoever levels the charge; the exonerating circumstances then lie with the person accused.
Where this is taught
Free preparation for NISM Series III-ARelated terms
- Chinese WallAn enforced separation inside a firm between departments holding confidential price-sensitive information and those dealing with clients, sales or public research.
- Connected personA person whose association with a company in the six months before the act put them, or could reasonably be expected to put them, in a position to access unpublished price sensitive information.
- InsiderAnyone who is a connected person, or who simply possesses or has access to unpublished price sensitive information — possession alone is enough, with no relationship to the company required.
- Unpublished price sensitive informationInformation about a company or its securities that is not generally available and that would, on becoming available, be likely to materially affect the price of the security.
- Segregated portfolioA ring-fenced sub-portfolio holding the debt instrument hit by a credit event, split out of a scheme so that the good assets stay liquid and exiting investors cannot leave the damaged paper behind.
- Deemed connected personsCategories of people the insider trading rules treat as connected automatically — relatives, group companies, trustees, bankers, auditors — unless the person proves the contrary.
- Immediate relativeA spouse, plus any parent, sibling or child of the person or of the spouse who is either financially dependent on them or consults them on securities trading decisions.
- Trading windowA notional window used to monitor trading by designated persons — closed by the compliance officer whenever they can reasonably be expected to possess unpublished price sensitive information.
- Trading plans — regulation 5A pre-announced, irrevocable schedule of trades an insider files with the compliance officer, which may not begin for 120 calendar days and then executes without pre-clearance or trading window limits.
- InformantAn individual who voluntarily files a Voluntary Information Disclosure Form with SEBI about an alleged insider trading violation — protected from retaliation, and an informant whether or not any reward follows.