Mutual Funds: From November 1, these new rules include MF schemes, debt securities; important details announced

Mutual funds: Effective November 1, 2024, regulatory changes will impact the mutual fund and debt industry in India. The Securities and Exchange Board of India (SEBI) has introduced new rules that will subject mutual funds to Prohibition of Insider Trading (PIT) regulations. These changes are designed to increase transparency, protect investors and facilitate transactions in financial markets.

New rules for investment funds

One of the key changes is the inclusion of mutual fund units under PIT regulations, a notification first issued in November 2022. This provision will now be implemented after consultation with industry stakeholders. Asset management companies (AMCs) will be required to disclose the assets of designated individuals, trustees and their immediate relatives on a quarterly basis as part of these new rules.

The new regulation prohibits senior staff at asset management companies (AMCs) from selling mutual fund investments if they have access to confidential information about potential matters affecting their company or scheme.

The purpose of this rule is to allay concerns about fund managers endangering investors by selling units ahead of market downturns. SEBI has broadened the definition of insider trading regulations to include a wider range of “connected persons”.

SEBI aims to prevent insider trading and protect investor interests more effectively by including mutual fund officers, board members, sponsors, trustees, auditors, legal advisors, bankers and consultants in its restrictions on trading activities within this group.