The rules for buying mutual funds changed; investors to obtain NAV, units on credit of funds, not on demand

Mutual fund orders will soon get the NAV of the day the funds reach asset managers and not the day of the request, SEBI said in a circular Thursday. Previously, orders less than Rs 2 lakh had the NAV on the same day as the request, if placed within the time limit. The new orders will be applicable as of January 1, 2021. “It has been decided that with respect to the purchase of units of mutual fund schemes, the NAV of the close of the day on which the funds are available for use will be applicable. , regardless of the size and time of receipt of said request, ”said SEBI.

The market regulator added that the existing provision on the applicability of the NAV for liquid funds and one day and the cut-off periods for all schemes will remain unchanged and the amendments made today will be applicable as of January 1, 2021. Previously, Retail investors had the advantage of getting the same day NAV, even though the funds transfer took a few days, however now everyone will be on par as the condition was removed, said Omkeshwar Singh, Head-RankMF, Samco Group.

In today’s circular, the market regulator also mentioned that AMCs must implement a detailed written policy. The policy is expected to include details of the specific activities and the roles and responsibilities of various teams involved in fund management, trading, compliance, risk management, back-office, etc., with respect to placement, execution and allocation order transactions. AMCs are also instructed to use an automated Order Management System, where orders for shares and instruments related to the shares of each scheme will be placed by the fund manager of the respective schemes.

Meanwhile, the mutual funds had temporarily changed the closing times for buying and trading from April 7 to 17, which was in line with RBI’s shortened trading hours for money markets and currency markets. Investors had to submit their transaction requests in advance to avoid delays in purchases and refunds of one business day.