What is Insider Trading?
Insider Trading involves company insiders, such as key employees, promoters, or directors, buying or selling the company’s stocks or securities and reporting these transactions to the exchange. This practice is legal when properly disclosed, adhering to the SEC's Prohibition of Insider Trading regulations. Trendlyne’s ‘Insider Trading & SAST’ feature tracks these disclosed transactions.
Key terms related to insider trades are:
- Exercise or Conversion of Derivative Security: When an insider converts options or other derivative securities into stock, it's termed 'Exercise' or 'Conversion.'
- Gift of Securities: The transfer of stock without payment between insiders or charities is labeled as a 'Gift.'
- Grant, Award, or Other Acquisition of Securities: Receiving stocks through grants or awards from the company is termed an 'Acquisition.'
- Other Type of Transaction: Any insider transactions not classified under common categories are labeled 'Other.'
- Payment of Exercise Price or Tax Liability: Insiders covering exercise prices or taxes by surrendering part of their stock engage in 'Payment' transactions.
- Purchase of Securities: Insiders buying stocks on the open market or privately is known as a 'Purchase.'
- Sale of Securities: When insiders sell their stocks on the market or privately, it is considered a 'Sale.'
- Sale or Transfer of Securities Back to the Company: Insiders returning stock to the company, often in buyback scenarios, is termed a 'Sale or Transfer.'
What is a ‘Bulk Block Deal’?
A bulk deal is generally defined as a deal where the total shares traded are greater than 0.5% of the share capital of the company. Block deal refers to a transaction of 5 lakh shares or Rs 5 crore between two parties.
‘Bulk Block Deals’ show large trades carried out by promoters, banks, financial institutions, foreign institutional investors, and others. Block deals take place during morning hours while Bulk deals can take place at any time during the day.
