new Delhi. Market regulator SEBI has taken a special step to increase the security of your transactions if you invest in Mutual Funds. The Securities and Exchange Board of India (Sebi) has issued some clarifications regarding the transactions of Mutual Fund units. Guidelines have also been issued regarding verification in the case of redemption of investment amount.
This clarification pertains to transactions in Mutual Fund units on Stock Exchange Platforms. This is also for other entities including online platforms. In a circular issued in October last year, SEBI had said that stockbrokers and clearing members will not accept payments issued in their own name for mutual fund transactions in respect of mutual fund transactions. However, now the regulator has allowed members of a SEBI-approved clearing corporation to accept payments.
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Transaction not accepted for any other purpose
SEBI said in the clarification that from April 1, 2022, only the amount due in favor of a regulatory recognized clearing corporation will be accepted. This amount will be for the purchase of mutual fund schemes only. It will not be accepted for any other purpose. SEBI said that the existing system of payment being used for mutual fund transactions may continue in the name of the share broker/members of the clearing corporation.
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Strong arrangements to prevent disturbances
The stock exchanges and clearing corporations will ensure that the payment acceptor will make elaborate arrangements to prevent malpractices. They will also have to make suitable arrangements for redressal of grievances of investors. SEBI has issued a similar guideline in respect of transactions of mutual fund units. Apart from the stock market, this is for other entities including online platforms, which facilitate transactions.
Swing pricing mechanism from May 1
SEBI will implement swing pricing mechanism from May 1. This mechanism, applicable to mutual fund schemes, is designed so that large investors do not suddenly withdraw their entire money from volatile markets. By applying swing pricing, investors will get the NAV during the time of investment and withdrawal in the fund, which is adjusted under the swing factor.
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Will be applicable in normal circumstances also
The swing pricing mechanism will be applicable not only in volatile markets but also on normal days, however, the swing factor will be determined differently in both the situations. The swing factor will be in the range of 1-2 per cent. If investors make large withdrawals from open ended debt schemes with volatile market high risk, they will get 2% lower NAV.
Tags: investment, mutual fund, mutual fund investors, SEBI
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