Investing in mutual funds became more secure, Sebi issued guidelines regarding unit transactions

As per the circular issued in October, 2021, the share brokers and clearing members in respect of mutual fund transactions shall not accept payments issued in their own name for mutual fund transactions.

Market regulator SEBI.

Securities and Exchange Board of India (Sebi) has mutual fund ,Mutual Fund) Issued some clarifications regarding the transaction of the unit. Along with this, guidelines were also issued regarding verification in case of redemption of investment amount. This clarification pertains to transactions in mutual fund units on stock exchange platforms. This is also for other entities including online platforms. As per the circular issued in October, 2021, the share brokers and clearing members in respect of mutual fund transactions shall not accept payments issued in their own name for mutual fund transactions. However, now the regulator said that members of a SEBI-approved clearing corporation can accept payments.

SEBI said, from April 1, 2022, only the amount due in favor of a clearing corporation recognized by SEBI will be accepted. This amount will be for purchase of mutual fund schemes only and not for any other purpose.

As per the regulator, the existing payment arrangements being used for mutual fund transactions may continue in the name of the share broker/members of the Clearing Corporation. However, for this it is necessary that the payment acceptors will put in place such a system in which the beneficiary will be the only approved account. This account will be of Clearing Corporation only.

Strong arrangements will be made to prevent disturbances

The stock exchanges and clearing corporations will, among other things, ensure that the payment acceptor makes elaborate arrangements to prevent malpractices. They will also have to make suitable arrangements for redressal of grievances of investors.

SEBI has issued a similar guideline in respect of transactions of mutual fund units. Apart from the stock market, it is for other entities including online platforms, which facilitate transactions.

Swing pricing mechanism will be implemented from May 1

SEBI will implement swing pricing mechanism from May 1. This mechanism, which is applicable for mutual fund schemes, has been designed so that big investors do not suddenly withdraw their entire money in the volatile market. By applying swing pricing, investors will get the NAV during the time of investment and withdrawal in the fund, which is adjusted under the swing factor.

The swing pricing mechanism will be applicable not only in volatile markets but also on normal days, but the swing factor will be determined differently in both the situations. The swing factor will be in the range of 1-2 per cent. Investors will make large withdrawals from open ended debt schemes with high risk volatile market, they will get 2 per cent lower NAV.

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