SEBI Tweaks AMC Rules To Curb Front-running, Insider Trading in Mutual Funds
Moneylife Digital Team 05 August 2024
Market regulator Securities and Exchange Board of India (SEBI) has amended rules for mutual funds (MF) that require asset management companies (AMCs) to put in place an institutional mechanism to identify and deter front-running and insider trading in securities. Further, the AMC management will be responsible for ensuring the effectiveness of the institutional mechanism, SEBI says in the circular.
 
To address instances of market abuse, including front-running and fraudulent transactions in securities, SEBI says it held consultations with relevant stakeholders, including MF’s advisory committee (MFAC), on the proposal of putting in place a structured institutional mechanism at the end of AMCs, which can proactively identify and deter instances of market abuse. 
 
Accordingly, the SEBI (Mutual Funds) Regulations, 1996 have been amended. As per the amendment, AMCs will put in place an institutional mechanism for the identification and deterrence of potential market abuse, including front-running and fraudulent securities transactions. This mechanism will consist of enhanced surveillance systems, internal control procedures, and escalation processes such that the overall mechanism is able to identify, monitor and address specific types of misconduct, including front running, insider trading and misuse of sensitive information.
 
SEBI says to ensure uniform implementation of the institutional mechanism across the industry, AMFI in consultation with the market regulator, will prescribe the detailed implementation standards within 15 days.
Comments
adityag
1 month ago
Again?
adityag
Replied to adityag comment 1 month ago
SEBI are just running all over the place without any coherence.
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