Insider trading norms for MFs to be applicable from Nov 1

All transactions in the units of an asset management company's mutual funds exceeding Rs 15 lakh executed by designated persons, trustees, or their immediate relatives must be reported to the compliance officer within two business days from such transactions, Sebi said on Tuesday.

The threshold of Rs 15 lakh could be either in a single transaction or multiple transactions within a quarter, per PAN, across all schemes except exempted ones.

The new rules will be applicable from November 1, the Securities and Exchange Board of India (Sebi) said in a circular.

The regulator asked asset management companies (AMCs) to disclose the details of the holdings of their designated persons, trustees and their immediate relatives on aggregate from November 1, 2024 on a quarterly basis.

The holdings as on October 31 will be disclosed on the platform of the stock exchanges by November 15.

Thereafter, for all subsequent quarters, AMCs will have to provide the information within 10 calendar days from the end of the quarter.

"Details of all transactions in the units of its own mutual funds, above the threshold amount which aggregates to excess of Rs 15 lakh, in one transaction or a series of transactions over any quarter, per PAN across all schemes excluding the exempted schemes, executed by the designated persons of AMC, trustees and their immediate relatives shall be reported by the concerned person to the compliance officer of AMC within two business days from the date of transaction," Sebi said.

The regulator said employees must avoid profiting from trading in the same security within 30 days and if they transact, they must explain it to the Compliance Officer, who in turn will report it to the AMC Board and Trustees.

Sebi, through a notification in November 2022, included trading in mutual fund units under the insider trading rules.

This was aimed at enhancing the integrity and transparency within AMCs.

The notified rules will be applicable from November 1, 2024.

As per the notification, an insider cannot trade in the units of a mutual fund scheme while in possession of unpublished price-sensitive information (UPSI), which may have a material impact on the net asset value of a scheme or on the interest of the unit holders of the scheme.