SEBI implements insider trading rules for mutual funds starting November 1, 2024

In a significant move for mutual fund investors, the Securities and Exchange Board of India (SEBI) has announced the implementation of insider trading rules for mutual fund units, effective from November 1, 2024. These regulations, originally decided upon in November 2022, are now set to be enforced following comprehensive industry preparations.

Key Announcements from SEBI

SEBI declared on Tuesday that the new insider trading rules will mandate all transactions exceeding Rs 15 lakh by nominees, trustees, or their close relatives in the mutual funds of asset management companies (AMCs) to be reported to the compliance officer within two working days.

Reporting Requirements:

Transactions of Rs 15 lakh or more, whether a single transaction or cumulative transactions within a quarter, must be reported.

Investments made up until October 31, 2024, need to be reported to stock markets by November 15, 2024.

For subsequent quarters, companies are required to submit this information within 10 days after the quarter ends.

Specifics of the New Rule

From November 1, 2024, nominees, trustees, and their close relatives must report any transactions exceeding Rs 15 lakh per PAN in any mutual fund schemes, excluding exempted schemes. This information must be communicated to the AMC's compliance officer within two working days of the transaction.

Previous SEBI Decisions

Previously, SEBI mandated that employees should avoid making profits from trading the same security within 30 days. If any transaction occurs, the reason must be reported to the compliance officer, who will then inform the AMC’s board of directors and trustees. These rules were introduced through a notification in November 2022 to enhance integrity and transparency within asset management companies.

SEBI's proactive measures aim to bolster the transparency and ethical management of mutual fund investments, ensuring a fairer market environment for all investors.