Summary of this article
India’s pension regulator, PFRDA has scrapped its 2019 rules on insider trading, self‑dealing, and front running in NPS investments and adopted Sebi’s 2015 Prohibition of Insider Trading Regulations.
All NPS market investment activities must now follow Sebi’s framework, aiming to remove overlapping rules.
PFRDA retains supervisory powers to ensure pension funds build strong internal controls and compliance systems.
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 But through the latest circular dated May 5, 2026, the regulator has superseded the 2019 circular, and made it clear that NPS investment will be executed within the Sebi guidelines for these matters.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.
FAQs
What is Insider trading, self-dealing, and front running?
These are unethical practices where people having confidential information of a company use it for their personal gain. Insider trading uses confidential company information, whereas self-dealing means acting in one's own interest instead of the client's. Front running means trading (placing a personal order) ahead of a large order by the client, expecting price movement.
Who will be covered under the new compliance requirements?
The regulations are applicable to Pension Funds, their directors, employees, Key Managerial Personnel (KMP), and any other persons associated with NPS investment activities.
What happens to the PFRDA’s 2019 circular on Guidelines on Self-Dealing, Insider Trading and Front Running?
The 2019 circular and all subsequent clarifications regarding insider trading, self-dealing, and front running are now superseded and replaced by Sebi regulations (Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015) with immediate effect.
