PFRDA Streamlines NPS Rules: Sebi Insider Trading Norms Now Apply To Pension Funds

The Pension Fund Regulatory and Development Authority (PFRDA) has announced that all National Pension System (NPS) investment activities will now follow the Securities and Exchange Board of India (Sebi) regulations regarding activities, such as insider trading, self-dealing, and front running.

So far, PFRDA has operated under its own set of guidelines issued under the circular ‘Guidelines on Self-Dealing, Insider Trading and Front Running,’ dated July 25, 2019. But through the latest circular dated May 5, 2026, the regulator has superseded the 2019 circular, and made it clear that NPS investment will be executed within the Sebi guidelines for these matters. PFRDA has adopted the Sebi’s Prohibition of Insider Trading (PIT) Regulations, 2015, to ensure a uniform standard of conduct across the financial sector.

“All investments made under the NPS are undertaken in the securities market and form part of the SEBI-regulated market ecosystem,” PFRDA said in the circular.

The idea is also to remove the overlapping regulations for the same market activities, where different regulators might issue different instructions to prevent such practices.

The Sebi regulations (Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015) will apply mutatis mutandis (with the necessary changes), to Pension Funds, their directors, employees, and key managerial personnel (KMP).

New Responsibilities For Pension Funds

The transition phase puts the responsibility of compliance on the Pension Funds. PFRDA has mandated them to take these actions:

• Adopting Model Codes: Every Pension Fund needs to create a model code of conduct to prevent insider or personal trading among officers involved in investment operations.

• Board Approval: The internal model code of conduct must be submitted to the Fund’s Board of Directors for approval.

• Training of personnel: Pension Funds need to train the persons involved in the NPS investment process regarding their obligations under the Sebi framework.

• Monitoring: A robust system for monitoring, reporting, and escalating suspicious instances of any front running, insider trading, or self-dealing needs to be put in place.

PFRDA Will Retain Supervisory Oversight

PFRDA retains its supervisory powers, despite implementing the Pension Fund’s NPS investments under Sebi regulations. Notably, the changes have come into effect immediately from the date of the circular. It will continue performing the role of a watchdog, using its supervisory powers under the PFRDA Act, 2013, to check whether the Pension Funds have put in place adequate internal controls. In case it finds deficiencies in governance or compliance, PFRDA is empowered to take action under the regulatory framework.

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