Sebi proposes insider trading rules for mutual funds

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The Securities and Exchange Board of India (Sebi) has released a consultation paper seeking comments on a proposal to bring the buying and selling of mutual fund units under insider trading rules . The objective is to ensure parity between the units of the FCP and the other securities with regard to the rules on insider trading under the SEBI (Prohibition of Insider Trading) regulation of 2015 (“PIT Regulation”).

The capital markets regulator has proposed that anyone associated with the fund, who has direct or indirect access to sensitive unpublished price information (UPSI) or any close relatives of the related person, officers or employees be subject insider trading rules.

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According to the consultation paper, published price-sensitive information includes the likelihood of changes in investment objectives, accounting policy, asset valuation, plan wind-up and redemption restrictions, among others. Responses must be received by July 29.

The observatory plans to set up an independent platform on which the information can be consulted by plan participants in order to eliminate any discrimination. In addition, Sebi wants related persons to disclose their mutual fund transactions and holdings, or those of their close associates, on a quarterly basis.

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Sebi observed that in the past, a mutual fund registrar and transfer agent had redeemed all the shares of a plan because he was aware of certain sensitive information relating to the plan of the fund which did not have yet been communicated to the unitholders of this particular plan.

The regulator believes that there is a need to harmonize the provisions of the PIT regulations in order to initiate serious enforcement action against those who misuse sensitive and non-public information relating to the mutual fund regime. investment, to which they have access by virtue of their fiduciary capacity.

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