A deadline for significant modifications to the mutual fund sector has been established by market regulator SEBI. Starting on November 1, new insider trading regulations will be in place to encourage openness in mutual funds. New regulations will also help asset management companies operate more efficiently. Employees who possess sensitive information will need to receive extra attention under the new regulations. These workers will also need to sign a contract.
There will be a confidentiality agreement to sign.
Market experts state that mutual fund businesses will be required by the new regulations to uphold transparency about personnel who possess information that is sensitive to price. These workers will be regarded as designated individuals. They’ll be known as the designated individuals. Following the revised guidelines, a list of employees and other individuals 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.
The industry’s resistance caused the
regulations to be implemented later than planned. November 1, 2024, is when the new insider trading regulations would go into force, according to a notice released by SEBI on July 26. Asset management firms will need to periodically assess their internal controls by the new regulations. In July 2022, SEBI released a consultation paper on insider trading and buying and selling in mutual fund companies. However, market analysts claim that the industry’s resistance has caused a delay in the new regulations’ adoption.
Disclosure of holdings will be required from AMC,
trustees, and their family members. The SEBI announcement states that under the new insider trading regulations, anyone possessing price-sensitive knowledge 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 its holdings in the mutual fund scheme by the AMC, trustees, and their relatives on the stock exchange. Also, information about the transaction made by the nominee will have to be given within two days.
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