Sebi's insider trading regulations seeks quarterly disclosures from mutual funds: Key details

AMCs shall now have to disclose holdings of 'Designated Persons' of AMCs, trustees and their immediate relatives on from November 1, on a quarterly basis.

Effective November 1, regulations governing insider trading shall apply to employees of mutual fund (MF) houses as well, bringing MF units under the ambit of the SEBI (Prohibition of Insider Trading) rules.

To facilitate this, the regulator has asked for more disclosures on the holdings of designated persons of the asset management company (AMC), trustees or immediate relatives, and on the transactions made by them above a threshold in MF units. The regulator has also placed restrictions on the trading of securities by the employees of MF houses, in the circular issued on October 22.

These directives have been issued by the Securities and Exchange Board of India (Sebi) following recommendations from the representatives of AMCs, Stock Exchanges, and Depositories:

AMCs shall now have to disclose holdings of 'Designated Persons' of AMCs, trustees and their immediate relatives on from November 1, on a quarterly basis. Now onwards, for every quarter, the AMC has to disclose these holdings within 10 days from the end of the quarter. The regulator has shared a specified format to disclose the MF holdings of the senior employees of the AMC.

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The AMC is now required to disclose all transactions of its own mutual funds above Rs 15 lakh in total value, done by the designated employees and their immediate relatives, to the company's Compliance Officer within two working days. Sebi has also shared an annexure format in which these are to be recorded.

The latest circular further adds that employees of a Mutual Fund shall refrain from profiting from buying and selling, or selling and buying of any security with in 30 days from their personal transaction. Instances when this is done shall have to be explained to the Compliance Officer of the AMC, who shall have to report the matter to the board after review.

SEBI had floated a consultation paper in 2022, seeking feedback to effect changes to the (Prohibition of Insider Trading) rules. The approved suggestions will now come into effect in November 1.

This is being updated.