Can a Government Employee Invest in Share Market?

Can A Government Employee Invest In Share Market?

Introduction

The stock market is considered to be a reliable economic indicator and in recent times the investment trends of the country are changing with more and more people entering the stock market.

The stock market is considered to be a reliable economic indicator and in recent times the investment trends of the country are changing with more and more people entering the stock market.

But answering the main question– Can Government employees Invest in the Share Market– Yes, they can but it is subject to several restrictions.

Restrictions on Government employees

● Section 16 of the Central Civil Services(Conducts) Restricts any government employee to trade in any stock, share, or other investment.

● This code applies to all government servants whether they are from the Central government, State government, or Union territories.

● As per the rule, any government employee cannot speculate in the stock market whether it is a stock, share, or com othermodities.

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Type of Trading Governments Employee cannot do:

Here, Trading is termed speculation which means that he is planning for a high-risk reward game and when speculation comes in then your main occupation is left behind. Types of Trading that Government Employee can not do:

● Currency Trading

● Commodity Trading

● Futures, and Option Trading

● And any form of short-term selling

● Intraday Trading These type of trading cannot be done, hence it concluded that government Employee cannot do share trading.

Where can Government Employees Invest in Share Market?

As we know a government Employee cannot trade in stock market , but the question is still their can government Employee Invest in share market. The answer to this is - Yes, government employees can invest in the share market but with certain restrictions.

A government Employee can invest in:

● A government Employee can invest in stock market for long term and not speculate.

● Equity Market (minimum for 6 months)

● And also in other Investment Avenue as (Mutual funds, ETFs, Gold bonds, RBI bonds, and such long term investments). In short government employee invest in stock market but not trade as Investment considering for the longer term.

Can Government Employee relative Trade on Behalf of them?

Neither a government employee nor any relative of his can trade in the market on his behalf but can invest for him.

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Can IAS invest in the share market?

● Yes, IAS can invest in the stock market but they are also subject to several restrictions.

● Through IAS officer are strictly Prohibited from engaging in any other business or profession while they are serving at their post

● But IAS officer are allowed to invest in share market with legally earned money only for the long term.

Can government employees invest in IPOs?

● Yes, government employees can invest in Initial Public Offerings(IPO)

● But subject to the fact that government employees are not involved in the price-fixing process of the particular IPO and there should also be no involvement of any employees relative in the price-fixing process.

Are government employees eligible to buy promoter's stocks?

Although government employees are eligible to invest in IPOs however, they are explicitly prohibited from buying promoter stocks of any government or private company as it can cause inconvenience to their duty.

Why so many restrictions on government employees?

● A government employee has to abide by all the regulations set by Section 16 of the Central Civil Services(Conduct) rule and failing to do so could lead to actions against those employees.

● Such regulations are set to ensure that the government officials in power do not misuse the powers bestowed upon them to gain an unfair advantage while trading.

● It is also to ensure that they do not make unfair profits from the practice of insider trading as government employees can have access to inside information courtesy of the position at which they are working. It also ensures that the nature and risks associated with trading in any manner hamper the integrity and tasks of the government employee.

Q1. What is the limit for investment in stock market for government employee?

Ans. As such, there is No limit for government employees to invest in the stock market but there are certain things that government employees need to take care of before investing. According to the new rule by the government all central employees need to send an intimation if their total transaction in shares, debentures, mutual funds, and the like exceeds their six months of basic pay during a calendar year.

Q2. Can government employee invest in the foreign stock market?

Ans. Yes, government employee invest in foreign stock market occasionally through a broker, any authorized, licensed, or certificate holding individual/agency as long as they are not speculating.

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