Can a govt employee do intraday future and option trading

267 votes

1. Yes, an Indian Government Employee working in a Public Sector Utility (PSU) can invest in stocks, subject to certain conditions and restrictions.
   
   In the case of investing in stocks, it may depend on the specific circumstances and nature of the investment. If the investment is made in a personal capacity and does not involve any conflict of interest with the employee's official duties, then it may be permissible.
   
   However, government employees, including those working in public sector utilities, are expected to exercise caution and prudence while investing in stocks. They should avoid any investment that may potentially compromise their position or duties, or may create a conflict of interest with their official duties.
    

2. In general, government employees in India are expected to follow certain ethical and professional standards, which includes avoiding conflicts of interest and not engaging in activities that may compromise their position or duties.
   
   As per the Central Civil Services (Conduct) Rules, 1964 for Central Government Servants, public servants are prohibited from speculative activity, including futures and options trading. Furthermore, the Model Code of Conduct for Public Servants issued by the Central Vigilance Commission (CVC) also prohibits public servants from indulging in speculative activity that may compromise their integrity and reputation.
   
   As a PSU is a government-owned corporation, it is expected that the employees of PSU follow similar rules and regulations as that of government employees. Therefore, it is advisable for a government employee working in a PSU to consult with their employer and/or a legal professional to understand the specific rules and regulations applicable to them before engaging in any kind of trading activity, including intraday futures and options trading.

LawRato LawRato

630 votes

There is no absolute ban on investing in stocks however speculative trading (may include derivative trading) is not allowed. Also, it depends on the rules and regulations of the Organization.
As per CCS (Central Civil Services) conduct rules 1964, investments in shares, debentures and mutual funds can be made by the Government servant. However "frequent buying and selling" of these are considered as "speculation" and is banned. Also for transactions above certain value, the government officers have to inform prescribed authorities.

Here is the excerpt of the rules:

(32) Transactions in sale and purchase of shares and debentures etc.
The provisions of sub-rule (4) of Rule 18 of the CCS (Conduct) Rules, 1964 provides that the Government or the prescribed authority may, at any time, by general or special order, require a Government servant to furnish within a period specified in the order, a full and complete statement of such movable or immovable property held or acquired by him or on his behalf or by any member of his family as may be specified in the order. Such statement shall, if so required by the Government or by prescribed authority, include the details of the means by which or the source from which, such property was acquired.
2. Sub-rule (1) of Rule 16 also provides that no Government servant shall speculate in any stock, share or other investment. It has also been explained that frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.
3. It has been brought to the notice of the Government that a number of employees are investing in shares, securities and debentures etc. frequently. With a view to enable the administrative authorities to keep a watch over such transactions, it has been decided that an intimation may be sent in the enclosed proforma to the prescribed authority in the following cases :-
(i) Group ‘A’ and ‘B’ Officers – If the total transaction in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 50,000/- during the calendar year.
(ii) Group ‘C’ & ‘D’ Officers – If the total transactions in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 25,000/- during the calendar year.
4. It is clarified that since shares, securities, debentures etc. are treated as movable property for the purpose of Rule 18 (3) of the CCS (Conduct) Rules, 1964 if an individual transaction exceeds the amount prescribed in Rule 18 (3), the intimation to the prescribed authority would still be necessary. The intimation prescribed in para 3 will be in addition to this, where cumulative transaction(s) i.e. sale, purchase or both in shares, securities, debentures or mutual funds etc. in a year exceed the limits indicated in para 3.

Advocate Krati Joshi LawRato

568 votes

Please consult lawyer with your applicable service rules governing conduct of the PSU employees.

As far as my knowledge goes, government employees cannot do intraday trading. However, you can surely invests in stocks, MFs, ULIPs, etc.

Advocate Rishi Raj Sharma LawRato

581 votes

There is no absolute ban on investing in stocks however speculative trading (may include derivative trading) is not allowed. As per CCS (Central Civil Services) conduct rules 1964, investments in shares, debentures and mutual funds can be made by the Government servant. However "frequent buying and selling" of these are considered as "speculation" and is banned. Also for transactions above certain value, the government officers have to inform prescribed authorities.

Here is the excerpt of the rules:

(32) Transactions in sale and purchase of shares and debentures etc.
The provisions of sub-rule (4) of Rule 18 of the CCS (Conduct) Rules, 1964 provides that the Government or the prescribed authority may, at any time, by general or special order, require a Government servant to furnish within a period specified in the order, a full and complete statement of such movable or immovable property held or acquired by him or on his behalf or by any member of his family as may be specified in the order. Such statement shall, if so required by the Government or by prescribed authority, include the details of the means by which or the source from which, such property was acquired.
2. Sub-rule (1) of Rule 16 also provides that no Government servant shall speculate in any stock, share or other investment. It has also been explained that frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.
3. It has been brought to the notice of the Government that a number of employees are investing in shares, securities and debentures etc. frequently. With a view to enable the administrative authorities to keep a watch over such transactions, it has been decided that an intimation may be sent in the enclosed proforma to the prescribed authority in the following cases :-
(i) Group ‘A’ and ‘B’ Officers – If the total transaction in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 50,000/- during the calendar year.
(ii) Group ‘C’ & ‘D’ Officers – If the total transactions in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 25,000/- during the calendar year.
4. It is clarified that since shares, securities, debentures etc. are treated as movable property for the purpose of Rule 18 (3) of the CCS (Conduct) Rules, 1964 if an individual transaction exceeds the amount prescribed in Rule 18 (3), the intimation to the prescribed authority would still be necessary. The intimation prescribed in para 3 will be in addition to this, where cumulative transaction(s) i.e. sale, purchase or both in shares, securities, debentures or mutual funds etc. in a year exceed the limits indicated in para 3.

Advocate Rajat Goel LawRato

406 votes

Speculation now includes trading products such as intraday, futures and options. According to the Central Civil Services (Conduct) Rules of 1964, public servants are prohibited from engaging in any form of speculative activities. Therefore, government employees are not allowed to trade on the stock exchange.

Advocate Chikirsha Mohanty LawRato