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SEBI has directed fund houses to set up an institutional mechanism to prevent market abuse like front running and fraudulent transactions in the capital market.
In a gazetted notification, SEBI has given 3 months’ time to fund houses with AUM of over Rs.10,000 crore to set up this mechanism. Fund houses with AUM less than Rs. 10,000 crore as on August 1, 2024 have been given 6 months.
Further, the regulator clarified that senior officials like managing director, chief executive officer, chief compliance officer and other equivalent officials will be held responsible for timely implementation of this mechanism.
In addition, SEBI has directed fund houses to maintain a documented whistle blower policy that can provide confidence to employees, directors, trustees and shareholders to raise concerns about suspected practices. Also, AMCs will have to ensure adequate protection to the whistle blowers, said SEBI.
