Market regulator Securities and Exchange Board of India (Sebi) on Tuesday approved amendments to SEBI (Mutual Funds) Regulations, 1996, to enhance the existing regulatory framework by requiring asset management companies (AMCs) to put in place a structured institutional mechanism for identification and deterrence of potential market abuse, including front-running and fraudulent transactions in securities.
The decision was taken on Tuesday at the 205th meeting of the Sebi board held in Mumbai. Under the mechanism, the AMCs will be required to ensure enhanced surveillance systems, internal control procedures and escalation processes to identify, monitor and address specific types of misconduct, including front-running, insider trading and misuse of sensitive information, among other things.
The Sebi board also approved amendments to the regulations to enhance responsibility and accountability of management of AMCs for such an institutional mechanism. The AMCS will also be required to have a whistle blower process to foster transparency.
While Sebi will specify the broad framework of the institutional mechanism, industry body Association of Mutual Funds in India (Amfi) will have to detail on standards for such an institutional mechanism.
The Sebi board also streamline prudential norms for passive schemes with respect to exposure to securities of group companies of the sponsor to facilitate a level playing field for mutual funds.
Currently, mutual fund schemes are not allowed to invest over 25% of their net asset value (NAV) in group companies of the sponsor, which Sebi said restricts the passive funds to effectively replicate the underlying index, in cases where group companies of sponsor comprise over 25% in the index.
"This also puts such AMCs to a relative disadvantage as compared to other AMCs who may not have a sponsor group company(ies) comprising more than 25% in the underlying index," the Sebi release said further.
Accordingly, Sebi approved amendment to SEBI (Mutual Funds) Regulations, 1996, to allow equity passive schemes on indices to be specified by SEBI and to take exposure up to the weightage of the constituents in the underlying index. This exposure would be subject to an overall cap of 35% investment in the group companies of sponsors.
The board also approved a regulatory framework to provide flexibility for increased contribution by NRIs, OCIs and RI Individuals, in the corpus of certain FPIs based out of IFSCs in India and regulated by IFSCA.
Under this, 100% contribution limits will be available to them subject to the FPI submitting copies of PAN cards of all their NRI/OCI/RI individual constituents, along with their economic interest in the FPI, to the DDP (Designated Depository Participants).If a constituent does not have a PAN, the FPI will be required to submit a declaration along with copies of prescribed identity documents viz. Indian passport, OCI Card, Aadhaar, etc.
No comments:
Post a Comment