Sebi issues new norms for structure, disclosure of passive funds

The Securities and Exchange Board of India (Sebi) on Monday introduced modifications to pointers for passive funds, aiming to spice up exchange-traded funds (ETFs).

For debt ETFs and index funds, the market regulator capped group-level publicity at 25 per cent. The cap is not going to apply relating to funding in public sector entities.

The constituents of the index will likely be aggregated at issuer degree for the aim of figuring out funding limits for single issuer, group or a sector.

Sebi requested the Association of Mutual Funds in India (Amfi) shall situation a listing of debt indices for launching of debt ETFs inside a month.

In case of change in constituents of the index because of periodic review, the portfolio of ETF or index funds will likely be rebalanced inside seven calendar days.

If the score of a safety is downgraded to under the score mandated within the index methodology (together with downgrade to under funding grade), the portfolio be rebalanced inside 30 calendar days.

Sebi stated asset administration firms (AMC) shall appoint no less than two market makers (MMs) for ETFs to offer steady liquidity on the stock change platform.

Sebi has managed that direct transactions with AMCs shall be facilitated for traders for transactions above a specified threshold.

“In this regard, to begin with any order placed for redemption or subscription directly with the AMC must be of greater than ~25 crore. The aforesaid threshold shall not be applicable for MMs and shall be periodically reviewed,” stated Sebi.

Sebi has additionally allowed AMCs to launch passive equity-linked saving schemes (ELSS) by way of an index fund. The funding universe of such schemes will likely be restricted to high 250 firms by market cap. However, fund homes will launch both a passive or an lively ELSS scheme and never each.

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