SEBI Board Meets Today: Tighter Regulations for Mutual Fund

SEBI Board Meets Today: Tighter Regulations for Mutual Fund

The Board of SEBI, the capital market regulator, is diving into institutional measures in mutual funds to address the problem of insider trading and front-running.

Vikrant DurgaleUpdated: Tuesday, April 30, 2024, 12:42 PM IST
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SEBI Board Meet | Representative Image/File

Market Regulator floated a white paper in march 2023 which talks about having a well established mechanisms for frauds in mutual fund. In the situation of breaching this supposed regulation chief compliance office Chief executive officer can be held responsible.

The Board of SEBI, the capital market regulator, is meeting today, Tuesday, April 30, 2024. Following the meeting on March 15, this is the second board meeting in as many months.

The board meeting is to approve the regulator's annual financial report for FY24, but it may also discuss other unresolved matters, such as institutional measures in mutual funds to address the problem of insider trading and front-running.

Identify and prevent fraudulent trades in mutual funds (MFs) Mutual funds or Asset Management Companies (AMCs) will be required by the proposed institutional mechanism to establish a written policy for handling guilty parties.

The regulatory body wants AMCs to strengthen internal management and staff surveillance after witnessing a number of high-profile front running cases in recent years.

The proposal to fast-track debt issues may be approved by the SEBI board in order to improve non-institutional participation and the ease of doing business for listed debt companies.

Debt Market Regulations

If the face value is lowered from Rs 1 lakh to Rs 10,000, more non-institutional participation on a private placement basis could be attracted.
This could aid in expanding the market for corporate debt. In order to facilitate the quicker issuance of such issues, the board may also modify the regulations.

Some changes that may be made include the inclusion of a QR code for publicly accessible financial data, an exemption from newspaper publication, and a quicker listing on a T+3 basis. Fast-track public issues can be left open for up to ten days, with a minimum of one day.

The regulator suggested in the paper it floated last year that the fund house's CEO, Managing Director, Compliance Officer, or other authorised person be in charge of making sure a well-documented system is put in place to stop such wrongdoings by its employees, brokers, or affiliated third-party agencies.

In order to protect whistleblowers who report such misconduct, AMCs will also need to have a whistleblower policy.

The new tighter regulations on AMC's will result in increased trust among retail investors on capital markets.

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