SEBI allows Mutual Funds in Exchange market |
India`s market regulator, The Securities and Exchange Board of India on Tuesday allowed mutual funds to participate in exchange ¬traded commodity derivatives. However, the regulator has decided to keep away MFs from trading in derivatives of sensitive commodities. The mutual fund schemes cannot invest in physical goods except in `gold` through Exchange Traded Funds. No mutual fund scheme shall have net short positions in exchange traded currency derivatives or the ETCD on any particular good, considering its positions in physical goods as well as ETCDs, at any point of time. Mutual funds are permitted to participate in ETCDs through hybrid schemes, which include multi ¬asset scheme and gold ETFs. Prior to trading in ETCDs, Sebi asked AMCs to appoint a dedicated fund manager with requisite skills and experience in the commodities market (including commodity derivatives market). According to SEBI, Asset management companies shall not onboard foreign portfolio investors (FPIs) in schemes investing in ETCDs until FPIs are permitted to participate in ETCDs.The regulator also said that other hybrid schemes excluding multi¬ assets allocation scheme, the participation in ETCDs shall not exceed 10 percent of Net Asset Value.
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