Mutual fund cut-off times restored: Now, buy, sell units before this time for same day NAV

Mutual fund investors, from today, can place their orders for subscription or redemption of units in line with the revised cut-off time. Capital markets regulator SEBI on Friday restored the buying and selling time for all schemes other than debt mutual fund schemes and conservative hybrid funds to their normal cut-off time of 3 PM. The restoration of the cut-off time comes six months after SEBI decided to trim the cut-off timing for both equity and debt funds in April, keeping in mind the coronavirus-aided disruptions. Earlier the cut-off time for debt, equity or hybrid funds had been revised to 1 PM.

From today investors looking to purchase liquid or overnight funds will have to place their orders before 12:30 PM for availing the same day’s net asset value (NAV). On the other hand for redemption of liquid and overnight funds, orders need to be placed before 1 PM. Similarly, investors looking to buy or sell units of debt mutual fund schemes and conservative hybrid funds, other hand liquid and overnight funds will now have to place orders before 1 PM. However, investors of all other schemes can now place their order till 3 PM for both purchase and selling of units.

SEBI had trimmed the cut-off timing for purchases and redemption of mutual fund units in April, as India witnessed the first few weeks of the nation-wide lockdown, and tackled challenges faced by financial institutions and market participants. The move followed Reserve bank of India’s (RBI) circular where it changed trading hours for various markets such as, commercial papers and certificates of deposits market repo in government securities; call/notice/term money; tri-party repo in government securities; repo in corporate bonds; foreign currency; foreign interest rate derivatives and government securities. The central bank, earlier this month, extended the trading hours in these markets by an hour.

Although the revised timing will be applicable from today, the mutual fund industry will see a change in NAV applicability rules in less than three months. The market regulator last month tweaked rules for buying of units that will come into effect from January next year. According to SEBI’s revised rules, Mutual fund orders will soon get the NAV of the day when funds reach the asset managers and not of the day of application. Earlier, investor orders worth less than Rs 2 lakh, had the advantage of getting the NAV of the same day despite the fund transfer taking a few days.