Motilal Oswal Asset Management Company (AMC) on Tuesday announced that it has temporarily suspended creation of exchange-traded fund (ETF) units directly with the fund house for Motilal Oswal Nasdaq 100 ETF and Motilal Oswal Q 50 ETF with effect from January 18.
Applications for creation of said ETF units received by the mutual fund (MF) from any investor, including large investors other than 'authorised participants’ (AP), post the cut-off timing of January 17, 2022, shall not be accepted and processed.
“We wish to highlight that suspension is not applicable to the redemption applications received by MF from any investors, including large investors or authorised participants’ in 'creation unit' size under the aforesaid schemes,” said fund house in its note to investors.
However, ETF units continue to trade on the BSE and the NSE and investors may buy or sell ETF units on the stock exchanges. The fund house in its note also added that to provide liquidity on the exchange, authorised participants are exempted from the said suspension.
However, there may be impact on liquidity on the stock exchanges and trading prices may deviate from its indicative real-time net asset value.
“Investors should take precaution while buying or selling ETF units on exchange. You may give ‘limit orders’ where buying or selling price is explicitly mentioned by the investors,” said the fund house.
In ETFs, many times if large investors want to trade in multiples of creation unit size, thet can also buy or sell ETF units from AP or AMC, instead of the stock exchange.
Last week, the fund house had temporarily halted lump-sum subscription and switch-ins under Motilal Oswal S&P 500 Index Fund, Motilal Oswal MSCI EAFE Top 100 Select Index Fund and Motilal Oswal Nasdaq 100 Fund of Fund, to manage overseas investment limits.
The steps taken by the fund house in the last few days is because its international investments are believed to have reached the market regulator's overall $ 1 billion investment limit in foreign stocks.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU