AgenciesRelated
Mumbai: The Securities and Exchange Board of India (Sebi) on Thursday said that the closing net asset values (NAV) of the day will be applicable when units of mutual fund schemes are purchased, irrespective of the size and time of such transaction. The new circular will be applicable from January 1.
The new rules will not apply to liquid and overnight funds, and cut-off timings for all such schemes will remain unchanged.
The market regulator also asked asset management companies (AMCs) to put in place a writtendown policy which detail the specific activities, role and responsibilities of various teams engaged in fund management, dealing, compliance, risk management, back-office, etc., with regard to order placement, execution of order, trade allocation amongst various schemes and other related matters.
Sebi said such a policy will ensure that all the schemes and its investors are treated in a fair and equitable manner.
It asked AMCs to use an automated Order Management System (OMS), wherein the orders for equity and equity-related instruments of each scheme will be placed by the fund managers of the respective schemes, and all regulatory limits and allocation limits should be in-built in the OMS to ensure that orders in breach of such limits are not accepted by the OMS.
It also allowed AMCs to further place soft limits for internal control and risk management based on its internal policy.
Sebi said orders of fund managers shall be received by dedicated dealers responsible for order placement and execution, and all conversations of the dealer will be only through the dedicated recorded telephone lines, and no mobile phones or any other communication devices other than the recorded telephone lines should be allowed inside the dealing room.
In case mutual funds are required to place certain margins or collaterals in order to execute certain transactions, the policy will include details on how such margins or collaterals shall be segregated or placed from amongst various schemes, without affecting the interest of investors of any scheme.
The new rules will not apply to liquid and overnight funds, and cut-off timings for all such schemes will remain unchanged.
The market regulator also asked asset management companies (AMCs) to put in place a writtendown policy which detail the specific activities, role and responsibilities of various teams engaged in fund management, dealing, compliance, risk management, back-office, etc., with regard to order placement, execution of order, trade allocation amongst various schemes and other related matters.
Sebi said such a policy will ensure that all the schemes and its investors are treated in a fair and equitable manner.
It asked AMCs to use an automated Order Management System (OMS), wherein the orders for equity and equity-related instruments of each scheme will be placed by the fund managers of the respective schemes, and all regulatory limits and allocation limits should be in-built in the OMS to ensure that orders in breach of such limits are not accepted by the OMS.
It also allowed AMCs to further place soft limits for internal control and risk management based on its internal policy.
Sebi said orders of fund managers shall be received by dedicated dealers responsible for order placement and execution, and all conversations of the dealer will be only through the dedicated recorded telephone lines, and no mobile phones or any other communication devices other than the recorded telephone lines should be allowed inside the dealing room.
In case mutual funds are required to place certain margins or collaterals in order to execute certain transactions, the policy will include details on how such margins or collaterals shall be segregated or placed from amongst various schemes, without affecting the interest of investors of any scheme.