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Capital markets regulator Sebi has changed mutual fund rules, which require fund companies to invest in their own programs based on level of risk to ensure “skin in the game.”
The current rule requires an investment of 1 percent of the amount raised in a New Fund Offering (NFO) or an amount of Rs 50 lakh, whichever is less.
In a notification, Sebi said asset management companies (AMCs) will need to invest in their own programs depending on its level of risk.
“The asset management company will invest these amounts in such mutual fund schemes, depending on the risks associated with the schemes, as may be specified by the board from time to time,†Sebi said.
However, the regulator has not quantified the minimum amount that must be invested by fund houses.
According to market experts, fund houses will need to invest more in riskier programs like equity funds compared to less risky offers like debt funds.
In the event of a violation of the new provisions, Sebi may issue an order suspending the launch of any mutual fund scheme for a period not exceeding one year and have the amount invested by a portfolio management company in the fund forfeited. one of his diagrams.
This is conditional on the non-order being made without giving the party an opportunity to hear, the regulator said.
The new mutual fund rules will come into effect on the 270th day from the date of their publication in the Official Journal, according to the August 5 notification.
In June, Sebi’s board of directors approved an amendment to the mutual fund rules to provide for the investment of a minimum amount as “skin in the game” in MF plans by AMCs based. of risk, instead of the current requirement of 1% of the amount. high in NFO or Rs 50 lakh, whichever is less.
In a separate notification dated August 3, the regulator said it would have the right to investigate complaints received from investors and clients regarding the rating of the securities.
Sebi will have the power “to investigate complaints received from investors and clients regarding the rating of securities or any other person on any matter affecting the activities of the credit rating agency which relate to the rating of securities listed or proposed to be listed on a stock exchange. “
To give effect, the Securities and Exchange Board of India (Sebi) amended the rules for credit rating agencies.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)
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