The Securities and Exchange Board of India (SEBI) has issued a significant circular aimed at enhancing the regulatory framework governing mutual fund units concerning insider trading. This development comes in response to a notification from November 24, 2022, which marked the inclusion of mutual fund units under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations). The new rules will take effect on November 1, 2024.
Key Provisions of the Circular
1. Disclosure Requirements: Asset Management Companies (AMCs) must disclose details of holdings by designated persons, trustees, and their immediate relatives on an aggregate basis starting from November 1, 2024. This information, covering holdings as of October 31, 2024, must be reported to stock exchanges by November 15, 2024, and subsequently on a quarterly basis within ten calendar days after each quarter.
2. Transaction Reporting: Any transactions in mutual fund units exceeding INR 15 lakhs within a calendar quarter must be reported by designated persons to the Compliance Officer of the respective AMC within two business days of the transaction. The reporting format has been specified in the circular.
3. Compliance and Violations: Observed violations of the PIT Regulations must be reported using a designated format. AMCs will have a streamlined process to handle any discrepancies.
Conclusion
The new regulations and reporting requirements will be applicable starting November 1, 2024. The inclusion of mutual fund units under the SEBI (Prohibition of Insider Trading) Regulations marks a crucial step towards tightening regulations in the investment sector. Stakeholders are encouraged to familiarize themselves with the new requirements and adjust their compliance mechanisms accordingly.
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