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The Securities and Exchange Board of India (Sebi) has proposed to bring buying and selling of mutual fund (MF) units under the ambit of insider trading rules. The aim is to ensure parity between MF units and other securities in terms of insider trading rules under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations), the regulator said in a consultation paper.
Sebi has proposed that any person related to the fund having direct or indirect access to unpublished price sensitive information (UPSI) or any direct relative of the related person, officers or employees shall be subject to the insider trading rules.
According to the consultation paper, the price-sensitive information disclosed includes the likelihood of a change in investment objectives, accounting policy, asset valuation, plan termination and redemption restrictions, among others. Sebi also plans to set up an independent platform where scheme participants can access information so as to eliminate any discrimination.
Sebi also wants related parties to disclose their transactions and holdings in mutual funds or those of their immediate relatives every quarter.
The market watchdog noted that in the past, a registrar and transfer agent of a mutual fund had bought back all the units of a scheme because they were aware of certain sensitive information relating to the scheme of the fund which was not yet communicated to unit holders of that particular scheme fund.
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