New Delhi, In a major step to enhance investor protection, Sebi on Tuesday decided to amend the regulatory framework to give asset management companies (AMCs) a mandate to prevent front-running and fraudulent transactions in mutual funds. “Institutional mechanisms” will need to be put in place.
This decision was taken in the 205th board meeting of SEBI. This is the second board meeting after March 15.
Apart from the institutional mechanism, the regulator approved streamlining of prudential rules for passive mutual fund schemes regarding investments in securities of group companies.
In its statement after the conclusion of the board meeting, Sebi said it has allowed equity passive schemes to take exposure up to the weighting of the constituents in the underlying index. This will be applicable to the index specified by SEBI and subject to an overall limit of 35 per cent investment in the group companies of the sponsor.Apart from mutual funds, SEBI has taken steps to increase participation of retail investors in the bond market by reducing the face value of debt securities and non-convertible redeemable preference shares to Rs 10,000 from the current Rs 1 lakh.
Further, it revised the SEBI (Issue and Listing of Non-Convertible Securities) norms relating to disclosure of financial results in the offer documents, record date and due diligence certificate, and provided flexibility to venture capital funds and the issue of non-convertible securities. Addressed the issues faced by them in this regard. Investment.
Further, SEBI has introduced a regulatory framework to enable enhancement of contributions by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Resident Indians (RIs) to the funds of certain Foreign Portfolio Investors (FPIs) on IFSC basis in India. Permission has been granted. .
Further, SEBI has decided to introduce a framework for Unit-Based Employment Benefits (UBEB) in the context of REITs and InvITs.
With regard to institutional mechanisms, SEBI said that such mechanisms should include enhanced monitoring systems, internal control procedures, an escalation process to identify, monitor and address specific types of misconduct, including front running, insiders Involves trading and misuse of sensitive information.,
"Taking into account the recent precedents set by SEBI, the Board approved amendments to the SEBI (Mutual Funds) Regulations, 1996, to enable AMCs to set up a structured institutional mechanism for identification and redressal of potential market abuses." The requirement is to enhance the existing regulatory framework to prevent abuses, including front-running and fraudulent transactions in securities,” the regulator said.
This comes in the wake of SEBI passing orders in two front-running cases related to Axis AMC and Life Insurance Corporation of India (LIC).
This decision was taken in the 205th board meeting of SEBI. This is the second board meeting after March 15.
Apart from the institutional mechanism, the regulator approved streamlining of prudential rules for passive mutual fund schemes regarding investments in securities of group companies.
In its statement after the conclusion of the board meeting, Sebi said it has allowed equity passive schemes to take exposure up to the weighting of the constituents in the underlying index. This will be applicable to the index specified by SEBI and subject to an overall limit of 35 per cent investment in the group companies of the sponsor.Apart from mutual funds, SEBI has taken steps to increase participation of retail investors in the bond market by reducing the face value of debt securities and non-convertible redeemable preference shares to Rs 10,000 from the current Rs 1 lakh.
Further, it revised the SEBI (Issue and Listing of Non-Convertible Securities) norms relating to disclosure of financial results in the offer documents, record date and due diligence certificate, and provided flexibility to venture capital funds and the issue of non-convertible securities. Addressed the issues faced by them in this regard. Investment.
Further, SEBI has introduced a regulatory framework to enable enhancement of contributions by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Resident Indians (RIs) to the funds of certain Foreign Portfolio Investors (FPIs) on IFSC basis in India. Permission has been granted. .
Further, SEBI has decided to introduce a framework for Unit-Based Employment Benefits (UBEB) in the context of REITs and InvITs.
With regard to institutional mechanisms, SEBI said that such mechanisms should include enhanced monitoring systems, internal control procedures, an escalation process to identify, monitor and address specific types of misconduct, including front running, insiders Involves trading and misuse of sensitive information.,
"Taking into account the recent precedents set by SEBI, the Board approved amendments to the SEBI (Mutual Funds) Regulations, 1996, to enable AMCs to set up a structured institutional mechanism for identification and redressal of potential market abuses." The requirement is to enhance the existing regulatory framework to prevent abuses, including front-running and fraudulent transactions in securities,” the regulator said.
This comes in the wake of SEBI passing orders in two front-running cases related to Axis AMC and Life Insurance Corporation of India (LIC).
