NEW DELHI: The Securities and Exchange Board of India (Sebi) on Thursday amended certain rules related to Investment fund (MF) schematics. He said that the end of the day net asset value (NAV) will be applicable during the purchase of MF units, regardless of size or time of receipt. The new rules will go into effect on January 1, 2021.
Currently underwriting in equity and debt plans, if the value added per PAN (permanent account number) is less than 2 lakh rupees, then the NAV of the transaction date was provided and not based on actual realization of funds for these transactions.
In a circular, Sebi said: “It has been decided that with regard to the purchase of units of mutual fund schemes (except liquid and night plans), the closing net asset value of the day on which the funds are available for use will be applied regardless of the size and time of receipt of said request “.
These are some key points of the circular:
* Existing provision on NAV applicability for liquid and one-day funds and closing times for all schemes will remain the same.
* AMCs (asset management companies) have been asked to establish a written policy that, among other things, outlines the specific activities, roles and responsibilities of the various teams involved in fund management, trading, compliance, risk management, back-office, etc. , with regard to order placement, order execution, trade allocation between various schemes and other related matters.
* The aforementioned policy will ensure that all schemes and their investors are treated fairly and equitably. It must also be approved by the AMC Board and the trustees.
* AMCs must use an automated Order Management System (OMS), in which the orders for shares and instruments related to equities of each scheme will be placed by the fund manager of the respective schemes.
* All regulatory limits and allocation limits specified in SID must be incorporated into OMS to ensure that requests that violate these limits are not accepted by OMS.
* AMCs may set soft limits for internal control and risk management based on their internal policy. In addition, any changes to the limits specified in OMS will be subject to approval by the Risk and Compliance Officer.
* AMCs will ensure that the bargaining table is adequately staffed and that all dealer conversations are conducted only via dedicated recorded phone lines. Mobile phones or any other communication device other than recorded phone lines will not be allowed inside the trading room.
* Distributor orders can be placed for each scheme individually or grouped based on multi-scheme orders.
* In the event that mutual funds are required to place certain margins / guarantees to execute certain transactions, the policy will include details on how such margins / guarantees will be segregated / placed among various schemes, without affecting the interest of investors in any scheme. .
* The audit trail of activities related to order placement, trade execution and allocation will be available in the system. In addition, there must be a time stamp regarding the order placed by the fund manager, the order placed by the dealer, the execution of the order and the allocation of trades.
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