Sebi modifies framework for limited purpose clearing corporation by MFs

Sebi office

Markets regulator Sebi on Tuesday tweaked its framework pertaining to contribution of asset management companies (AMCs) for setting up of limited purpose clearing corporation by mutual funds.

The regulator had in February issued guidelines wherein AMCs were required to contribute Rs 150 crore as share capital for setting up of limited purpose clearing corporation (LPCC) by mutual funds.

It was prescribed that such contribution from AMCs needs to be in proportion to the average assets under management (AUM) of open-ended debt oriented mutual fund schemes (excluding overnight, gilt fund and gilt fund with 10-year constant duration but including conservative hybrid schemes) managed by them for the financial year 2019-20.

In the latest circular, Sebi said the contribution of AMCs will be based on average AUM of debt oriented schemes for the financial year 2020-21.

This comes following representation from industry body the Association of Mutual Funds in India (Amfi).

The LPCC is an entity established to undertake the activity of clearing and settlement of repo transactions.

The decision to allow the MF industry to set up LPCC was based on recommendation of a working group set up by the mutual fund advisory committee.

Market experts believe that LPCC would help fund houses in tackling with redemption pressure and settle transactions in corporate bond markets.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel