SEBI Mandates Reporting Of High-Value Mutual Fund Transactions Over Rs 15 Lakh

On October 22, SEBI announced that any transaction involving trustees, designated individuals, or members of their immediate family that surpasses Rs 15 lakh in an asset management company’s mutual fund units must be reported to the compliance officer within two business days of the transaction. All schemes, except exempt ones, can reach the Rs 15 lakh threshold per PAN in a single transaction or throughout multiple transactions over a quarter.

SEBI regulations for investing Rs. 15 lakh in mutual funds

For all schemes except exempt ones, the Rs. 15 lakh threshold can be reached in a single transaction or multiple transactions over a quarter, per PAN.

The new rules from SEBI will go into effect on November 1st

In a circular, the Securities and Exchange Board of India (SEBI) stated that the new regulations would take effect on November 1. The regulator requested that asset management firms report every quarter, starting on November 1, 2024, the specifics of the holdings of their trustees, designated persons, and their close family members.

Regarding family members’ mutual holding

According to SEBI, all AMC designated persons, trustees, and their immediate family members are required to provide “details of all transactions in the units of its mutual funds, above the threshold amount which aggregates to excess of Rs 15 lakh, executed by the concerned person to the compliance officer of AMC within two business days from the date of transaction,” in a single transaction or a series of transactions over any quarter, per PAN, across all schemes except the exempted schemes.

Limitations on AMC staff

According to the regulator, employees must not profit from trading in the same security for 30 days. If they do, they must tell the Compliance Officer, who will then inform the Trustees and AMC Board.

About insider trading notification in November 2022

Through a notification issued in November 2022, SEBI expanded the scope of the insider trading regulations to include trading in mutual fund units. The purpose of this was to improve AMC’s transparency and integrity. Starting on November 1, 2024, the notified rules will be in effect.

As per the notification, an insider cannot trade in the units of a mutual fund scheme while in possession of unpublished price-sensitive information, which may have a material impact on the net asset value of a scheme or the interest of the unit holders of the scheme.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.