New rules for insider trading will be implemented from November 1, the mutual fund industry will change

Capital Market Regulator SEBI has announced the date of major changes in the Mutual Funds industry. To promote transparency in mutual funds, new insider trading rules will come into effect from November 1.

Under these new rules, the functioning of asset management companies will be improved and special attention will be paid to employees who hold sensitive information. Apart from this, these employees will also have to sign the necessary agreement.

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A confidentiality agreement will need to be signed

According to market experts, under the new rules, mutual fund companies will have to maintain transparency regarding employees who have access to price sensitive information. Such employees will be considered as designated persons. They will be identified as designated persons. Under the new rules, 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.

There was a delay in implementing the rules due to opposition from the industry

SEBI issued a notification on July 26 saying that the new insider trading rules will come into effect from November 1, 2024. Under the new rules, asset management companies will have to review their internal controls from time to time. SEBI had issued a consultation paper on buying and selling in mutual fund companies regarding insider trading in July 2022. But, according to market experts, the implementation of the new rules has been delayed due to opposition from the industry.

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AMC, trustees and their relatives will have to disclose their holdings

According to the SEBI notification, under the new insider trading rules, those holding price sensitive information 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 also have to be given within two days.

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