In a major policy shift, the U.S. Securities and Exchange Commission (SEC) on Monday proposed sweeping changes to insider trading regulations, marking the most significant overhaul in nearly two decades. The proposal, which is now open for public comment, aims to enhance transparency and curb potential abuse by corporate executives and board members who may exploit material nonpublic information for personal gain. Under the new rules, corporate insiders would be required to wait a minimum of 30 days before executing any trades after adopting or modifying pre-arranged trading plans, commonly known as 10b5-1 plans. Currently, there is no mandatory cooling-off period, a loophole that critics argue allows executives to manipulate the timing of trades. Additionally, the SEC is proposing to mandate more frequent and detailed disclosures of insider transactions and company policies surrounding insider trading. Executives would be obligated to report trades within one business day, compared to the current two-day window. Companies would also need to disclose their insider trading policies annually in their Form 10-K filings. "These reforms are designed to increase investor confidence in the fairness and integrity of our markets," SEC Chair Gary Gensler said in a statement. "When insiders profit from information not available to the public, it undermines trust and erodes the foundation of our financial system." The announcement has already begun to ripple through the stock market. Shares of several large-cap tech companies, whose executives have been prolific sellers of stock in recent years, dipped in early trading Tuesday. Analysts say the proposed restrictions could lead to increased market volatility, especially around earnings seasons and major corporate announcements. Market participants are closely watching how the proposed regulations could affect corporate behavior. "This move by the SEC could change how and when executives sell their shares, potentially reducing some of the predictable patterns that traders have come to rely on," said Lisa Tran, chief equity strategist at CapitalMark Advisors. The rule proposal comes amid growing public scrutiny of insider trading activities, especially during the pandemic, when several high-profile executives sold off large blocks of stock ahead of sharp market declines. Lawmakers on both sides of the aisle have also introduced legislation aimed at curbing insider abuse, adding momentum to the SEC’s actions. If finalized, the new rules could take effect as early as the first quarter of 2025. In the meantime, market watchers will be monitoring the public comment period and any revisions to the proposed framework, which could further influence market dynamics and investor behavior in the months ahead.