UPSI – It May Not Be What You Think


You’re sipping your morning coffee, and a friend casually mentions a groundbreaking deal about to be sealed by his employer, a listed company. You realize they have exclusive information that could send stock prices soaring and have the opportunity to buy before it does. You just received Unpublished Price Sensitive Information (UPSI). And trading based on UPSI is Insider Trading at its most basic sense. And Insider Trading is illegal. But What is UPSI?

UPSI is akin to having the answers leaked to you before the actual exams. It provides an unfair advantage, just as having the exam answers, right before the exam, would give you an unfair advantage.  

Most understand the ‘leaked answer paper’ concept clearly, however UPSI is not as well understood outside the circles of those who deal with it. In this article we explore more about UPSI. 

What is UPSI? 

UPSI refers to any information about a company or its securities that isn’t generally available to the public. However, once this information does become widely known, it’s likely to have a significant impact on stock prices. The definition of UPSI covers a range of aspects, including financial results, dividends, changes in capital structure, mergers, acquisitions, key personnel changes, and material events. Keep in mind that this list isn’t exhaustive—other types of information can also be considered UPSI if they have the potential to greatly affect stock prices. 

Understanding UPSI is crucial for several reasons: 

  1. Avoid Insider Trading: Trading on non-public information is illegal and can result in serious legal consequences. By understanding UPSI, you can avoid the pitfalls of insider trading and protect yourself from legal trouble. 
  2. Safeguard Against Fraud: Recognizing the boundaries between legal information and sensitive, non-public data protects you from falling prey to fraudulent schemes. Understanding UPSI ensures that your investments remain secure, and your financial well-being is preserved. 
  3. Foster Fair and Efficient Markets: Upholding market integrity and fairness is paramount. By preventing the exploitation of undisclosed information, understanding UPSI helps create a level playing field for all market participants, fostering transparency and trust. 

What kind of Information is UPSI? 

Determining whether a piece of information qualifies as UPSI requires careful examination of the circumstances surrounding it. Factors like the nature of the transaction, progress of discussions, outcome of negotiations, and the likelihood of the transaction going through can help identify UPSI. Remember, it’s crucial to assess these factors without focusing too much on any single aspect to ensure a fair determination of UPSI. Detecting UPSI requires a keen eye for the following factors: 

1. Source of Information: Information obtained from individuals with access to confidential company details, such as employees or board members, is more likely to be UPSI. Be aware of the source and its credibility. 

2. Nature of Information: Material information that can significantly impact the price of a security, such as upcoming earnings reports, mergers and acquisitions, or changes in management, is more likely to be UPSI. Pay attention to the potential impact of the information. 

3. Timing of Information: Information received before its public release is a strong indicator of UPSI. Early access to critical data can provide an unfair advantage, so exercise caution when dealing with non-public information. 

What is not Unpublished Price Sensitive Information? 

In the realm of UPSI, not everything you come across falls within its realm. Understanding what information doesn’t classify as UPSI is just as important as identifying what does 

So, let’s shed some light on the matter.  

Generally, information that is already available to the public, such as news articles, press releases, or publicly disclosed financial statements, does not fall under the umbrella of UPSI. These sources are widely accessible and do not provide any unfair advantage to individuals who possess them.  

Similarly, market rumors or mere speculations that are not substantiated by concrete facts or official announcements do not meet the criteria for UPSI. It is crucial to differentiate between regular information and UPSI to ensure compliance with regulations and maintain the integrity of the market. By understanding what doesn’t qualify as UPSI, you can navigate the landscape more effectively and make informed decisions. 

Are UPSI and MNPI the same thing? 

When it comes to the world of price sensitive information, two terms often pop up: UPSI and MNPI. 

At first, they may seem interchangeable. Depending on circumstances, they often are. But a deep dive reveals some critical distinction between them in terms of context. 

Imagine you work for a Tech Company, XYZ Inc., which is secretly developing a groundbreaking device, set to take over all the market and revolutionize the industry. As an employee you have access to certain confidential information about the project. Now, here is how the concepts of UPSI (Unpublished Price Sensitive Information) and MNPI ((Material Non-Public Information) come into play:  

As an employee, you have insider knowledge about the upcoming device and the impact it will have on the company’s stock prices. This confidential information can be considered UPSI because it directly relates to the company’s securities and hasn’t been made public yet. 

Now consider XYZ Inc’s negotiations with a renowned Tech giant for a significant partnership. As an employee, you are privy to the ongoing discussions, terms and conditions. This non-public information is classified as MNPI because it is material to the company but may not directly impact its stock prices. MNPI can include any critical information that affects a company’s decision-making, operations or financial health. 

However, one may argue that this ‘MNPI’ is equally ‘UPSI’ since it has the potential to impact share price, just over a different time horizon. 

It is generally recommended that the strictest version of the term be applied in all cases, i.e., UPSI being any information about a company or its securities that isn’t generally available to the public and, when made public, is likely to have a significant impact on stock prices. 

How does SEBI regulate UPSI? 

To protect investors and maintain market integrity, the Securities Exchange Board of India (SEBI) introduced the SEBI (Prohibition of Insider Trading) Regulations in 2015. These regulations establish a framework to prevent insider trading and outline obligations regarding the communication of UPSI. 

Communication of UPSI: Insiders, according to Regulation 3 of the SEBI (PIT) Regulations 2015, are forbidden from sharing or providing access to UPSI about a company or its securities unless it’s for legitimate purposes, the performance of duties, or the discharge of legal obligations.  

Keeping Things Organized: Structured Digital Database: Listed companies must maintain a structured digital database containing the names of all designated persons and those brought inside the company. The compliance officer usually handles this task, entering names based on information received from other departments. 

When Secrets Must Be Disclosed – Disclosure of Material Events and Information: Listed companies must disclose material events or information as per Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Companies must carefully consider which events or information should be classified as UPSI, as they are likely to impact stock prices. 

How to safeguard UPSI? 

Controlling UPSI within the Company: To prevent the informal sharing of UPSI within the company, some measures should be taken: 

  1. Conduct educational sessions for employees to minimize unauthorized sharing of UPSI. 
  2. Require the compliance officer to immediately report any unauthorized sharing of UPSI to SEBI. 

Cracking the Exceptions: Permitted Communication or Procurement of UPSI – There are exceptions under Regulation 3(3) of the SEBI (PIT) Regulations 2015 that allow for the communication or procurement of UPSI in connection with certain transactions. These exceptions apply when the sharing of UPSI is believed to be in the best interests of the company and when certain conditions are met. Confidentiality and non-disclosure obligations must be maintained by all parties involved in these transactions. 

Don’t Cross the Line: Trading While in Possession of UPSI – Trading while in possession of UPSI is generally prohibited. However, insiders who trade, can, in certain instances, be considered innocent if they can demonstrate specific circumstances, such as off-market transfers between insiders possessing the same UPSI, transactions carried out through the block deal mechanism, or transactions undertaken pursuant to statutory or regulatory obligations. 

Companies have a set of important responsibilities when it comes to UPSI, including:

  • Identifying educating and imposing higher controls on employees who have access to UPSI and preventing insider trading (Designated Persons in Indian regulations). (see  
  • Maintaining a structured digital database with details of persons or entities with whom UPSI is shared (see  
  • Closing the trading window and reviewing and pre-approving employee trades in line with their other businesses and lists to verify that Insider Trading is not involved (see  

Understanding and handling UPSI is crucial for companies and compliance officers to ensure market integrity and protect investors. By adhering to the SEBI (Prohibition of Insider Trading) Regulations 2015 and maintaining robust internal controls, companies can prevent insider trading and fulfill their responsibilities in managing UPSI. So, there you have it—an insightful journey through the realm of UPSI. Remember, when it comes to secrets that can move markets, handling them responsibly is the key. Stay informed, stay compliant