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  • Jul 25, 2024

SEBI: Market regulator SEBI has set a date for making major changes for the Mutual Funds industry. To promote transparency in mutual funds, new insider trading rules are going to be implemented from November 1. With the help of new rules, the functioning of asset management companies will also improve. Under the new rules, special attention will have to be paid to employees who have sensitive information. Also, such employees will have to sign an agreement.

Confidentiality agreement will have to be signed

According to market experts, under the new rules, mutual fund companies will have to maintain transparency regarding employees who have price sensitive information. Such employees will be considered as nominees. They will be identified as Designated Persons. Under the new rules, a list of employees and other persons who have access to sensitive information will have to be maintained. All of them will have to sign a confidentiality agreement. This will help SEBI in preventing insider trading.

There was a delay in implementing the rules due to opposition from the industry

SEBI issued a notification on July 26 saying that the new insider trading rules will come into effect from November 1, 2024. Under the new rules, asset management companies will have to review their internal controls from time to time. SEBI had issued a consultation paper in July 2022 regarding insider trading and buying and selling in mutual fund companies. But, according to market experts, there has been a delay in implementing the new rules due to opposition from the industry.

AMC, trustees and their relatives will have to disclose their holdings

According to the SEBI notification, under the new insider trading rules, those holding price sensitive information will no longer be allowed to trade mutual fund units. This information can affect the net asset value of the scheme as well as the interests of the unit holders. Insider trading rules will not allow people to make unethical profits. Under the new rule, the AMC will have to disclose the details of holdings in the mutual fund scheme by the AMC, trustees and their relatives on the stock exchange. Also, information about the transactions made by the nominee will have to be given within two days. 
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