The Securities and Exchange Board of India (SEBI) has been consistently strengthening its regulatory framework to promote transparency, fairness, and accountability in the securities market. One such important step is the introduction of the Structured Digital Database (SDD) requirement under SEBI’s Prohibition of Insider Trading (PIT) Regulations. The circular on maintaining a structured digital database is aimed at ensuring that companies and intermediaries maintain accurate records of unpublished price-sensitive information (UPSI) and the individuals who have access to it.

Purpose of the Structured Digital Database

The central purpose of the SEBI circular is to minimize the risk of insider trading by creating an auditable and tamper-proof record system. The SDD acts as a digital repository, capturing details of every insider who has access to UPSI. This ensures that regulators can effectively trace and investigate cases of information misuse, if they arise. By mandating a structured and secure system, SEBI has brought more discipline and standardization into record-keeping.

Key Compliance Requirements

Under the SEBI circular, listed companies, intermediaries, and fiduciaries must establish and maintain a structured digital database with the following features:

Audit Trail – The database must contain a complete audit trail of entries, including the date, time stamp, and details of the person who entered or accessed information. Alterations or deletions should not be permitted, ensuring data integrity.
Confidentiality – The SDD must safeguard sensitive information with adequate security protocols, allowing access only to authorized personnel.
Coverage of Insiders – The database should record the names of persons with whom UPSI is shared, along with their Permanent Account Number (PAN) or other identification details.
Preservation of Records – The database must be preserved for at least eight years after the relevant transaction, or until completion of an investigation, whichever is later.

Implementation Challenges

While the intention of the SEBI circular is clear, companies often face challenges in practical implementation. Some of the common difficulties include:

Technological Adaptation – Many organizations need to invest in specialized software solutions to build a compliant SDD system.
Data Security Concerns – Since the database contains highly sensitive information, cybersecurity becomes a top priority.
Training and Awareness – Employees and compliance officers require adequate training to ensure accurate and consistent record-keeping.

Benefits of Compliance

Despite the challenges, the implementation of a structured digital database provides long-term benefits. It builds trust among investors by showing that the company is committed to transparency. It also strengthens internal governance and reduces the likelihood of regulatory penalties. Moreover, maintaining such a database simplifies the audit process, as regulators can quickly access detailed records when needed.

Conclusion

The SEBI circular on structured digital database is a critical development in the fight against insider trading. By making it mandatory for listed entities and intermediaries to maintain an electronic, tamper-proof record of information sharing, SEBI has enhanced market integrity and investor confidence. Organizations that view this not just as a compliance requirement but as an opportunity to strengthen governance practices, will be better positioned to thrive in a regulated market environment.

Understanding SEBI Circular on Structured Digital Database: Compliance and Implementation Insights

It helps in identifying links between confidential information and trading behaviour, ensuring compliance with securities regulations. By enabling timely alerts