August 25, 2021 is the last date to share feedback on the introduction of new concept called ‘swing pricing’ in NAV.
Swing pricing mechanism in debt funds aims to discourage short term traders and protects the interest of existing investors especially during difficult times like market dislocation.
Swing pricing is adjustment of NAV such that if outflow is higher than pre-determined level, the NAV goes down for investors redeeming MF units. Similarly, the NAV price goes up if investors invest more than pre-determined level.
In international markets, swing pricing has two variants – full swing and partial swing. While NAV is adjusted on every calculation day in full swing (applicable during market dislocation), partial swing is applicable only if a scheme witnesses high inflows/outflows on a given day compared to pre-determined level. Partial swing can be applicable on normal market scenario. SEBI hints to implement hybrid model, which would be combination of both – full and partial swings.
You can read the detailed article on Cafemutual by clicking here or the concept paper by clicking here.
You can submit your responses to Harshad Patil, Assistant General Manager at swingpricing@sebi.gov.in and harshadp@sebi.gov.in.
