The Securities and Exchange Board of India (Sebi) has imposed curbs on trading by employees, trustees and board members of mutual funds, in a circular released on Thursday. The curbs also extend to purchase and sale of units in their own mutual fund scheme where the employee is in possession of any information not communicated to unit holders that could materially affect the net asset value (NAV) or the interest of unit holders.
The markets regulator also created a category of ‘access persons’ on whom restrictions shall be applicable. Access persons include the head of the asset management company (AMC), executive directors, chief investment officer, chief risk officer and other C-suite executives, fund managers, dealers, research analysts, employees in the operations department, compliance officer, and heads of divisions. “Non-executive directors of the AMC/trustee company or trustees who are in possession of /have access to any non-public information that could materially impact the price of the securities, NAV of the schemes or interest of the unit holders shall also be deemed as access persons,” Sebi said.
The guidelines cover transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives and units of schemes floated by mutual funds/AMCs.
Sebi had in 2016 restrained employees from profiting from the purchase and sale of any security within 30 days from the date of their personal transaction. In the latest circular, it has provided certain relaxations for access persons. These relaxations now can be given by a compliance officer for not more than two times in a financial year per access persons and only for the sale of securities.
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