𝐌𝐮𝐭𝐮𝐚𝐥 𝐅𝐮𝐧𝐝 𝐔𝐧𝐢𝐭𝐬 𝐈𝐧𝐜𝐥𝐮𝐝𝐞𝐝 𝐢𝐧 𝐒𝐄𝐁𝐈’𝐬 𝐈𝐧𝐬𝐢𝐝𝐞𝐫 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐑𝐞𝐠𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬

Recently, SEBI issued a circular to streamline the implementation of the amendment to the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”), introduced on November 24, 2022. This amendment, which will come into effect from November 1, 2024, provides a framework for the prohibition of insider trading specifically in relation to units of mutual funds.
SEBI had constituted a working group consisting of representatives from AMCs, AMFI, Stock Exchanges, RTAs and Depositories for suggesting effective implementation of the aforesaid amendment.

𝐊𝐞𝐲 𝐮𝐩𝐝𝐚𝐭𝐞𝐬 𝐮𝐧𝐝𝐞𝐫 𝐭𝐡𝐞 𝐜𝐢𝐫𝐜𝐮𝐥𝐚𝐫

1. 𝐐𝐮𝐚𝐫𝐭𝐞𝐫𝐥𝐲 𝐃𝐢𝐬𝐜𝐥𝐨𝐬𝐮𝐫𝐞: AMCs are required to disclose, under Regulation 5(E)(1) of PIT Regulations, the mutual fund unit holdings of their Designated Persons including trustees and immediate relatives starting from November 01, 2024. The first disclosure is due on November 15, 2024. For subsequent disclosures, the same have to be made within 10 calendar days from the end of the quarter Designated people shall be specified by the board of directors of the asset management company and trustees, in consultation with the compliance officer, in accordance with Regulation 5G.

2. 𝐓𝐫𝐚𝐧𝐬𝐚𝐜𝐭𝐢𝐨𝐧 𝐑𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠: Transactions in the units of an asset management company’s own mutual funds, exceeding INR 15 lakhs in value—whether in a single transaction or a series of transactions within any calendar quarter, per PAN across all schemes (excluding exempted schemes)—executed by Designated Persons of the asset management company, trustees, or their immediate relatives, must be reported to the Compliance Officer of the AMC within two business days from the date of the transaction, in terms of Regulation 5(E)(2) of the PIT Regulations.

3. 𝐔𝐩𝐝𝐚𝐭𝐞𝐬 𝐭𝐨 𝐭𝐡𝐞 𝐌𝐚𝐬𝐭𝐞𝐫 𝐂𝐢𝐫𝐜𝐮𝐥𝐚𝐫: To harmonize the framework of investment and trading restrictions on securities by employees of AMCs and Trustees, as provided under Clause 6.6 of the Master Circular for Mutual Funds dated June 27, 2024, with the amended PIT Regulations, Clause 6.6 of the Master Circular has been revised under this circular. These clarify the regulatory obligations for AMC employees and trustees regarding mutual fund units, ensuring they align with the updated PIT Regulations while specifying what transactions are covered under existing guidelines.

A copy of the Circular is enclosed. Readers can provide their feedback to Regstreet Law Advisors at info@regstreetlaw.com.

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