SEBI Wants Mutual Funds to Invest in Listed Securities
Sebi is known as the Securities and Exchange Board of India. It describes the basic functions of the Sebi to protect the interests of investors in securities. Now, it aims to secure the interests of investors who invest in Mutual funds for further days. So, SEBI wants Mutual funds to invest in only listed securities and to be listed securities.
To create a strong fence around investors’ interest and to take defaulters to the task, Sebi plans to reveal a slew of reforms including for greater check on credit rating agencies and rewarding informants in insider trading cases with up to Rs 1 crore reward.
In its board meeting, the Security Exchange Board of India (SEBI) wants Fund houses to invest in listed and to-be listed securities only. In its asset allocation pattern, SEBI wants to reduce MFs exposure to unrated debt instruments from 25 percent to 5 percent.
On Wednesday, it will give a flexible change to Mutual Fund houses to invest in Unlisted NCDs up to a maximum of 10% debt portfolio of the scheme, said Sebi. It will implement in June 2020. Sebi also mentioned that these unlisted NCDs having a simple structure and secured and Monthly coupons.
For Investors, Risky debt securities appeared as a major risk and those coming through the mutual fund space. The SEBI has set efforts to increase its regulatory safety net against debt risks.
The main aim of the proposal is to reduce the overall existing limit for the investment of mutual fund schemes in unrated debt instruments. The proposal should not applicable to specific norms that are separately provided, from 25% to 5%.
Further, the existing provision of the single issuer limit of 10 percent for investment in unrated debt instruments has been proposed to be assigned with, an official said.