AMCs can get membership of bourses to trade in debt segment

India Infoline News Service | Mumbai |

An AMC of a fund house may become a proprietary trading member for carrying out trades in the debt segment of a recognised stock exchange

To enable mutual funds to directly trade on the debt platforms of the stock exchanges, SEBI (Securities and Exchange Board of India) has allowed asset management companies (AMCs) to take membership of the bourses.

AMCs can register themselves under 'proprietary trading members' category. "The asset management company may become a proprietary trading member for carrying out trades in the debt segment of a recognised stock exchange, on behalf of a mutual fund," SEBI said.

Subject to certain conditions, the custodian in which the sponsor of a mutual fund or its associates are holding 50% or more of the voting rights, would be allowed to act as custodian "for a mutual fund constituted by the same sponsor or any of its associates or subsidiary".

These include the sponsor having net worth of at least Rs. 200 billion at all points of time, and 50% or more of the directors of the custodian having to be those who do not represent the interests of the sponsor or its associates. Custodians are referred to entities that are responsible for safe keeping of securities and they also offer other services.

Other conditions include the custodian and the AMC of a mutual fund not being subsidiaries of each other and no person is a director of both the custodian and the AMC of a mutual fund.

So far, the mutual funds were not allowed to appoint a custodian belonging to the same group, if the sponsor of the mutual fund, or its associates held 50%, or more of the voting rights of such a custodian, or where 50% or more of the directors of the custodian represent the interests of the sponsor or its associates.
 

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