look news india
Market regulator Securities and Exchange Board of India (SEBI) has changed some rules related to mutual funds, according to which front running trades and wrongly executed trades.
It is mandatory for asset management companies (AMCs) to put in place institutional mechanisms to identify and prevent such transactions, if they occur, that may be hazardous to the interests of investors. This decision was taken in the SEBI board meeting today. According to a list released by SEBI today, such mechanisms include a robust monitoring system, internal control procedures and an escalation process to ensure that certain types of fraudulent transactions such as front running trades, insider trading and specific Trading can be stopped on the basis of information. Transactions can be quickly detected and monitored and even stopped.
SEBI has also decided to address the problem faced by venture capital funds registered under the earlier VCF scheme. Such funds are not in a position to return the investments made in their funds during the period of the investment plan. Such funds have been given the option by SEBI to comply with the Alternative Investment Fund (AIF) regulations. Therefore now AIFs will be able to proceed as per the rules in respect of those investments which have not been liquidated by the VCF in compliance with these rules.
SEBI has also allowed foreign funds operating in gift cities to take full investment from NRIs and other citizens of Indian origin. However, if such foreign funds have invested 33 per cent of their total assets under management in a single group company in India, information about such investors will have to be disclosed.