SEBI, which regulates the stock market, has brought the buying and selling of mutual fund units under the ambit of insider trading rules. At present, the insider trading rules are applicable in respect of securities of listed companies.
Apart from this, these rules are also applicable to the companies proposed to be listed. Explain that till now mutual fund units were kept out of the definition of securities.
What SEBI said: SEBI said- No insider shall transact in units of any scheme of a mutual fund in the event of his becoming aware of any unpublished sensitive information, the net asset value of which may be affected by reason of that information.
Under the new rules, asset management companies (AMCs) will have to disclose the shareholding of the AMC, trustees and their close relatives in units of their mutual fund schemes. Further, the compliance officer of the AMC will determine the closure period during which the designated person cannot deal in units of the mutual fund.
Reason for the decision: Sebi’s latest decision comes in the wake of the Franklin Templeton episode, in which some executives of the fund house are alleged to have redeemed their holdings in six debt schemes before they were put under moratorium.