SEBI has allowed the MF industry to set up Limited Purpose Clearing Corporation (LPCC) based on recommendation of a working group set up by the Mutual Fund Advisory Committee (MFAC). The working group had members from fund houses, AMFI and Clearing Corporation of India.
SEBI said that LPCC would clear and settle repo transactions in corporate debt securities. Industry experts believe that LPCC will help fund houses deal with redemption pressure and settle transaction in corporate bond markets.
Here are some features of LPCC:
- LPCC will have corpus of Rs.150 crore
- Each fund house will have to contribute to this corpus in proportion of their debt assets
- AMFI will calculate contribution for fund houses based on the average AUM of debt funds
