Mumbai: Market regulator SEBI Published a discussion paper on Friday aimed at bringing buying and selling of mutual fund units under insider trading rules. Currently, these are specifically excluded from Insider trading prevention ,Ditch) SEBI rules.
The discussion paper mentions that there have been cases where some people had prior knowledge of negative developments with a scheme and based on such information, sold all their stake in that scheme. In one instance, this was done by certain officials of a mutual fund’s register and transfer agent.
Another case pertains to officials of a fund house. In both these instances, these select groups of people sold their stake on the basis of what qualified as unpublished price-sensitive information (UPSI), before the unitholders of those schemes were informed about the negative development.
“PIT Regulations are applicable for dealing in securities of a listed company or proposed to be listed, when in the possession of UPSI. Units of Mutual Funds are specifically excluded from the definition of securities under the PIT Regulations,” SEBI said. “Therefore, a need has been felt to harmonize the provisions” PIT Regulations To initiate serious enforcement action against those who directly or indirectly misuse sensitive non-public information relating to schemes of mutual funds to which they have access by virtue of their fiduciary capacity,” SEBI said.
The regulator wants to know from the public whether its PIT regulations should be amended and if so, the reasons therefor. It said suggestions and comments on the proposed changes should be sent to the regulator by July 29.
Suggestions and comments on the proposed changes should be sent to the market regulator by July 29.
The discussion paper mentions that there have been cases where some people had prior knowledge of negative developments with a scheme and based on such information, sold all their stake in that scheme. In one instance, this was done by certain officials of a mutual fund’s register and transfer agent.
Another case pertains to officials of a fund house. In both these instances, these select groups of people sold their stake on the basis of what qualified as unpublished price-sensitive information (UPSI), before the unitholders of those schemes were informed about the negative development.
“PIT Regulations are applicable for dealing in securities of a listed company or proposed to be listed, when in the possession of UPSI. Units of Mutual Funds are specifically excluded from the definition of securities under the PIT Regulations,” SEBI said. “Therefore, a need has been felt to harmonize the provisions” PIT Regulations To initiate serious enforcement action against those who directly or indirectly misuse sensitive non-public information relating to schemes of mutual funds to which they have access by virtue of their fiduciary capacity,” SEBI said.
The regulator wants to know from the public whether its PIT regulations should be amended and if so, the reasons therefor. It said suggestions and comments on the proposed changes should be sent to the regulator by July 29.
Suggestions and comments on the proposed changes should be sent to the market regulator by July 29.