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AMFI establishes a plan to stop front running at AMC theaters

August 30, 2024 Uncategorized
Minimum guidelines have been established by the Association of Mutual Funds in India (AMFI) to stop asset management companies (AMCs) from abusing the market and front running.
 
The revised standards will go into effect gradually beginning in November 2024. Important points to note are as follows: –
 
AMCs must establish standard operating processes to analyze 3-tier level alerts on suspicious trading activity that they generate on a weekly basis.
 
To investigate suspicious warnings, AMCs will go over critical staff recordings, entry logs, and CCTV footage. Dealing rooms will require biometric entry.
 
If suspicious warnings are connected to the transactions of its staff members or close family members, AMCs have the authority to investigate those transactions and take legal action against the brokers involved.
 
AMCs will pay more for compliance with the new standards.

1. What are the key measures introduced by AMFI to prevent front running and market abuse by AMCs?

2. When will the new standards be implemented, and for which types of mutual fund schemes?

3. What kind of monitoring and review mechanisms are AMCs required to put in place under the new norms?

4. How will the new standards impact the compliance costs and obligations for AMCs?

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