Market regulator Sebi has strengthened the regulatory framework in relation to prohibition of insider trading in units of mutual funds. According to the new regulations, AMCs shall disclose the details of the holdings of Designated Persons of AMCs, trustees and their immediate relatives on an aggregate basis from November 1, 2024 on quarterly basis.
The details of all the transactions in the units of its own mutual funds, above the threshold amount, shall be reported by the concerned person to the Compliance Officer of AMC within two business days from the date of transaction. The threshold amount is set at a value in excess of Rs 15 lakh in one transaction or a series of transactions over any calendar quarter.
The above-mentioned transaction should have been executed by the Designated Persons of asset management company, trustees and their immediate relatives. This threshold amount is per PAN across all schemes excluding the exempted schemes.
In order to harmonize the framework of investment/trading restriction in securities by employees of the AMCs and trustees prescribed under Clause 6.6 of Master Circular for Mutual Funds dated June 27, 2024 has been modified.
The clause 6.6.2.1 (a) of the Master Circular has been modified so that the guidelines cover transactions for sale and purchase of any security.
“These Guidelines cover transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives.”
Sebi has also modified Clause 6.6.2.3(f) of the Master Circular as that all employees shall refrain from profiting from purchase and sale or vice versa of any security within a period of 30 calendar days from the date of their personal transaction.
“All employees shall refrain from profiting from the purchase and sale or sale and purchase of any security within a period of 30 calendar days from the date of their personal transaction. However, in cases where it is done, the employee shall provide a suitable explanation to the Compliance Officer, which shall be reported to the Board of the AMC and the Trustees at the time of review.”
This circular is issued to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.