SEBI bans front-running and insider trading in mutual funds, market regulator changes rules Trending Global News

New Delhi: Market regulator SEBI has amended mutual fund norms, requiring asset management companies (AMCs) to put in place an institutional framework to identify and prevent ‘front running’ and insider trading in securities. Apart from this, it will be the responsibility of the AMC management to ensure the efficiency of the system. In such a situation, SEBI has directed the AMC to create a ‘whistleblower’ system. SEBI’s decision comes after it passed two orders regarding the sale of shares or any other financial asset of Axis AMC and Life Insurance Corporation of India (LIC) regarding insider trading on futures. There is information that could significantly affect the price of this transaction. According to the notification, the CEO or Managing Director or any other person of equivalent rank and the Chief Compliance Officer of the asset management company shall be responsible and accountable for the implementation of such institutional procedures.

The largest private sector bank has done this, now only mutual funds will be available here.

The rules will come into effect from November 1.

SEBI said that the AMC company will establish, implement a ‘whistleblower’ policy… which will inform employees, directors, trustees and other stakeholders of suspected fraud, unfair or unethical conduct, regulatory or statutory. Will enable reporting of violations of requirements or business conduct. There will be a confidential procedure for raising concerns about Steps will also be taken to ensure adequate protection of whistleblowers. For all these changes, the Securities and Exchange Board of India has amended the mutual fund rules. These changes will be effective from November 1.

Major announcement regarding bonus shares

SEBI has come up with a proposal so that the bonus shares reach the demat accounts of the investors as soon as possible. Once this is implemented, your bonus shares will soon appear in your demat account within two days of the record date. As per the new advisory paper issued by SEBI, the bonus shares issued by the company must be deposited within two days (T+2) of the record date.

SEBI has proposed a uniform timeline to ensure crediting and trading of bonus shares in the account. A new rule proposed by SEBI states that bonus shares issued by a company should reach the demat account within two days (T+2) of the record date. At present the ICDR Rules prescribe an overall timeline regarding the implementation of the bonus issue. However, there is no specific time limit for trading such shares from the record date of crediting and issue of bonus shares to the account.

After all, what are people doing that the governor of the Reserve Bank and the Sebi chief also expressed concern?
“Thus, in the absence of any specific guidelines, there is inconsistency regarding timelines,” SEBI said. At that time after the bonus is issued, the existing shares continue to trade under the same ISIN (International Securities Identification Numbering System) and the new bonus shares are credited to the account within 2-7 working days after the record date. and are available to them. Trading is available. SEBI has invited feedback on this consultation paper till August 26, 2024.