The Securities and Exchange Board of India (SEBI) has made it mandatory for mutual fund houses to put in place a policy specifying the specific roles and responsibilities of various teams engaged in activities dealing with order placement, execution of order, trade allocation amongst various schemes.
In a circular, the market regulator said that the policy shall ensure that all the schemes and its investors are treated in a fair and equitable manner.
"It has been decided that AMCs shall put in place a written down policy which inter-alia detail the specific activities, role and responsibilities of various teams engaged in fund management, dealing, compliance, risk management, back-office, etc., with regard to order placement, execution of order, trade allocation amongst various schemes and other related matters," it said.
As per the circular, for orders pertaining to equity and equity related instruments, asset management companies (AMC) shall use an automated Order Management System (OMS), wherein the orders for equity and equity related instruments of each scheme shall be placed by the fund manager of the respective schemes.
In case a fund manager is managing multiple schemes, the fund manager shall necessarily place scheme wise order, it said.
"All regulatory limits and allocation limits as specified in SID shall be in-built in the OMS to ensure that orders in breach of such limits are not accepted by the OMS," said the circular released on Thursday evening.
Further, SEBI also said that in respect of purchase of units of mutual fund schemes, except liquid and overnight schemes, closing NAV of the day shall be applicable on which the funds are available for utilisation irrespective of the size and time of receipt of such application.
The existing provision on NAV applicability for liquid and overnight funds and cut-off timings for all schemes shall remain unchanged, it added.
The circular would come into effect from January 1, 2021.
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