STOCK MARKET BSE NSE

Sebi modifies framework for setting up of limited purpose clearing corporation by mutual funds

The regulator had in February issued guidelines wherein AMCs were required to contribute Rs 150 crore as share capital for setting up of limited purpose clearing corporation (LPCC) by mutual funds.

Published: 06th April 2021 07:46 PM  |   Last Updated: 06th April 2021 07:46 PM   |  A+A-

SEBI building

SEBI building (File Photo | Reuters)

By PTI

NEW DELHI: Markets regulator Sebi on Tuesday tweaked its framework pertaining to contribution of asset management companies (AMCs) for setting up of limited purpose clearing corporation by mutual funds.

The regulator had in February issued guidelines wherein AMCs were required to contribute Rs 150 crore as share capital for setting up of limited purpose clearing corporation (LPCC) by mutual funds.

It was prescribed that such contribution from AMCs needs to be in proportion to the average assets under management (AUM) of open-ended debt oriented mutual fund schemes (excluding overnight, gilt fund and gilt fund with 10-year constant duration but including conservative hybrid schemes) managed by them for the financial year 2019-20.

In the latest circular, Sebi said the contribution of AMCs will be based on average AUM of debt oriented schemes for the financial year 2020-21.

This comes following representation from industry body the Association of Mutual Funds in India (Amfi).

The LPCC is an entity established to undertake the activity of clearing and settlement of repo transactions.

The decision to allow the MF industry to set up LPCC was based on recommendation of a working group set up by the mutual fund advisory committee.

Market experts believe that LPCC would help fund houses in tackling with redemption pressure and settle transactions in corporate bond markets.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp