The new rules will bring mutual fund units under the purview of the PIT regulations. In November 2022, this notification was first sent out.
Mutual funds: The Indian debt and mutual fund sectors will be impacted by regulatory reforms that take effect on November 1, 2024.
Who regulates Mutual Funds in India?
Mutual funds will now be governed by the Prohibition of Insider Trading (PIT) rules, which were adopted by the Securities and Exchange Board of India (SEBI). The purpose of these revisions is to improve financial market operations, protect investors, and promote transparency.
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The inclusion of mutual fund units under the PIT laws, for which a notification was first published in November 2022, is one significant change. This clause will now be put into effect following discussions with industry stakeholders. As part of these new regulations, asset management companies (AMCs) will have to report on a quarterly basis the holdings of trustees, designated individuals, and their close family members.
According to the new rule, senior employees of asset management companies (AMCs) are not allowed to sell their mutual fund holdings if they have access to sensitive information about potential problems affecting their business or its schemes.
This regulation attempts to address concerns regarding fund managers who might have put investors at risk by selling units before market downturns. The definition of insider trading has been broadened by SEBI.