In a circular issued today, the Securities and Exchange Board of India (SEBI) has banned trading by employees, trustees and board members of mutual funds. Restrictions also apply to the purchase and sale of units in their own mutual fund scheme, where the employee has any information that has not yet been communicated to the unit holders, which may affect the NAV or the interests of the unit holders. can affect.
The circular also created a category of ‘access persons’ to whom the restrictions would apply. Access persons include AMC heads, executive directors, chief investment officers, chief risk officers and other C-suite officers, fund managers, dealers, research analysts, operations department staff, compliance officers and heads of divisions.
“Non-Executive Directors or Trustees of the AMC/Trustee Company who have any such non-public information which could significantly affect the price of securities, NAV of the schemes or the interest of the unitholders shall also be deemed to have access. as Persons,” SEBI said in a circular on Thursday.
These guidelines include transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives and units of schemes issued by mutual funds/AMCs employing the concerned persons.
SEBI in 2016 barred employees from making profits from the purchase and sale of any security within a period of 30 calendar days from the date of their individual transactions.
In the latest circular, the regulator has provided certain relaxations for the access persons. These exemptions can now be granted by a Compliance Officer not more than twice per access persons in a financial year and only for sale of securities.
As per the periodic disclosure, all Access persons will now have to submit details of their individual transactions of purchase or sale of securities to the Compliance Officer.
Further, any transaction of front running by any employee, directly or indirectly, is strictly prohibited. SEBI has defined front running as any transaction of purchase and/or sale of a security undertaken by any employee, whether for himself or any other person, knowing full well that the AMC also intends to buy and/or sell the same security for its mutual fund. Operation.
The provisions of the circular will come into effect from December 1.
The regulator also said that employees should not give information to any person who induces him to buy/sell securities which are being bought and/or sold by mutual funds in which the AMC is the investment manager.
The guidelines specify minimum requirements that are to be followed and the AMC and the trustees are free to set more stringent norms for investment in and/or trading of securities by their employees.
Don’t miss a story! Stay connected and informed with Mint.
download
Our App Now!!
.