SEBI Sets New Reporting Rules for High-Value Mutual Fund Transactions Over Rs.15 Lakh
The Securities and Exchange Board of India (SEBI) has introduced new reporting requirements for mutual fund transactions that exceed Rs.15 lakh, specifically targeting transactions executed by designated individuals, trustees, or their immediate family members associated with an asset management company (AMC).
According to SEBI’s circular, transactions at or above this threshold, whether occurring in a single instance or accumulating across multiple trades within a quarter, must be reported to the AMC’s compliance officer within two business days. It will start from November 1, 2024.
Effective November 1, 2024, these requirements apply across all mutual fund schemes under an AMC except exempted schemes. The Rs.15 lakh threshold applies per PAN, making it applicable to all qualifying transactions conducted in a quarter.
Moreover, SEBI mandates that the AMC disclose the holdings of their key employees, trustees, and even immediate relatives on a quarterly basis. It will become effective from November 1, 2024, when the AMCs will have to declare the holdings as of October 31 on the stock exchanges by November 15. Afterwards, the AMCs are obligated to submit subsequent quarter updates within 10 working days after the end of each quarter.
For any transactions in excess of Rs.15 lakh within a quarter, per PAN across non-exempted schemes, the concerned individuals must notify the compliance officer of the AMC within the specified time frame. SEBI also emphasized that employees within AMCs should refrain from taking advantage of trading in the same security within a 30-day period. If an employee does trade within this window, they are required to justify their actions to the compliance officer, who will then relay the information to the AMC’s Board and Trustees.
This regulatory change comes from the SEBI decision in November 2022 that grants mutual fund units the same status as other products under insider trading regulations in order to protect investors and create an environment that is more transparent for AMCs. As indicated in SEBI’s notification, it is not possible for somebody to have access to insider information that may influence the scheme’s net asset value or the interests of unit holders to deal in units in those funds.
Such measures will further exemplify SEBI’s efforts towards making the mutual fund market fairer, where all critical transactions seem to get through transparent and fair processes in the best interest of investors.
