Mutual Funds: Starting November 1, 2024, regulatory changes will impact the mutual fund and debt industry in India. The Securities and Exchange Board of India (SEBI) has introduced new rules that will bring mutual funds under the Prohibition of Insider Trading (PIT) regulations. These changes aim to increase transparency, protect investors and streamline operations in financial markets.

New rules for mutual funds

A key change concerns the inclusion of mutual fund units in the IPO regulations, for which a notification was initially issued in November 2022. After consultation with industry stakeholders, this provision will now be implemented. Asset management companies (AMCs) will be required to disclose the assets of nominees, trustees and their immediate relatives on a quarterly basis under these new rules.

The new regulations prohibit senior executives of asset management companies (AMCs) from selling their mutual fund investments if they have access to confidential information regarding possible problems affecting their company or its programs.

The rule aims to address concerns that fund managers may have sold shares before market downturns, putting investors at risk. SEBI has expanded the definition of insider trading regulations to encompass a wider range of “related persons”.

SEBI aims to prevent insider trading and protect the interests of investors more effectively by including mutual fund managers, board members, sponsors, trustees, auditors, legal advisors, bankers and consultants in its restrictions on commercial activities within this group.