The inclusion of mutual fund units under the SEBI (Prohibition of Insider Trading) Regulations, 2015
Inclusion of Mutual Fund Units in PIT Regulations
Mutual fund units are now explicitly covered under SEBI’s insider trading regulations.
The rules, amended in 2022, will apply from November 1, 2024.
Key Obligations for Asset Management Companies (AMCs):
Disclosure of Holdings: Designated persons (DPs) of AMCs, trustees, and their immediate relatives must disclose their holdings in mutual fund units on a quarterly basis. The first disclosure, as of October 31, 2024, must be made by November 15, 2024, via the stock exchanges.
Transaction Reporting: Any transactions involving mutual fund units exceeding INR 15 lakhs (in one or a series of transactions during a calendar quarter) by DPs must be reported to the compliance officer within two business days.
Disclosure of Transactions: Such reported transactions will be publicly disclosed in a specified format.
Handling Violations: Violations of the PIT Regulations will be reported using the format provided in Annexure C.
Clause 6.6 of the Master Circular shall not be applicable for investments and redemption of mutual fund units. For mutual funds units, Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time, shall be followed strictly by the Trustees, Asset Management Companies and their employees and directors.
Clause 6.6.2.1 (a) of the Master Circular stands modified as under: “These Guidelines cover transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives.”
The following is inserted as Clause 6.6.2.1 (b)(4) in the Master Circular:
“Investments in units of schemes floated by mutual funds /AMCs where the concerned persons (in terms of the applicability stated at 6.6.1.1.a above) are employed.”
Clause 6.6.2.3(f) of the Master Circular stands modified as under:
“All employees shall refrain from profiting from the purchase and sale or sale and purchase of any security within a period of 30 calendar days from the date of their personal transaction. However, in cases where it is done, the employee shall provide a suitable explanation to the Compliance Officer, which shall be reported to the Board of the AMC and the Trustees at the time of review.
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