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  • MF News SEBI provides clarity on investment guidelines of AMC officials

    SEBI provides clarity on investment guidelines of AMC officials

    This will come into effect from December 1, 2016.
    Nishant Patnaik Nov 19, 2016

    In order to check insider trading, SEBI has come out with a circular to provide clarity on how AMC officials can invest their own money.

    Among the key changes are cooling period of 15 days for employees to invest in stocks and relaxation in disclosure of certain investments.

    Here are the key investment guidelines for the AMC officials

    • Employees need not disclose their investments in fixed deposit instruments like bank FDs, PPF, NSC and Kisan Vikas Patra, investment in non-financial instruments like gold and investment in government securities, liquid funds.
    • However, no officials can buy/sell stocks without taking prior approval from compliance officer of the AMC.
    • If an employee wants to buy a particular listed security, she has to take prior approval of the compliance officer. The compliance officer has to check with the fund management team if they have executed any trade in that stock for the period of 15 calendar days. If no trade has been executed within 15 calendar days, compliance officer will give approval. The employee has to execute trade within 7 days of receiving such approvals. Also, the fund manager cannot execute trade in that particular stock within 15 calendar days if employee has executed trade. This 15 days is termed as cooling period.
    • Employee can invest in IPOs through public placement route without taking prior approval from the AMCs.
    • Employees will have to intimate the compliance officer if they participate in preference or right issue.
    • Front running is strictly prohibited. Front-running is a practice where a person or a group of persons buy or sell shares in their own account taking advantage of advance information about orders from clients. Front-running is detrimental to the interests of investors and therefore, an illegal practice.
    • Employees are expected not to book any profit from the purchase or sale of any security within a period of 30 calendar days. However, in cases where it is done, the employee will have to provide suitable explanation to the compliance officer.
    • Employees will have to disclose their mutual fund investments except liquid fund holding to the compliance officer within 7 calendar days from the date of transaction. However, employees need not disclose their investments with the other fund houses.
    • Employees will have to disclose  their SIP investments in mutual funds at the time of making first installment.
    • Employees cannot execute transaction in the scheme if investors have not been communicated changes in fundamental attributes like change in investment objective, fund manager etc.

    AMCs will have to maintain a record of all transactions of their employees made during the financial year and ensure compliance within 30 days from the end of the financial year.

    The Board of the AMC and the trustees will have to review the compliance of these guidelines.

    This will come into effect from December 1, 2016.

     

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    3 Comments
    PRASHANT · 7 years ago `
    Good summary..beautiful articulation of the circular.. . Great work Cafemutual
    Banali Banerjee · 7 years ago
    Thank you Prashant for your kind words!
    Reply
    mohammed faisal · 7 years ago `
    in this circular other family member of fund manager like mother father brother sister wife child father in law mother in law also be cover or not and need to disclose if ther create wealth more than 10 laks in short term or long term trade shold also be mention in circular ,

    what you thing ? are you agree this plesase put on message board,
    Login or Sign up to post comments.
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