Sebi introduces rules for trading by employees, trustees and board members of mutual funds

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The market regulator Sebi (Securities and Exchange Board of India) on Thursday issued a circular, introducing new set of guidelines for trading by employees, trustees and board members of asset management companies (AMCs) or mutual funds. The market regulator also imposed curbs on buying or selling units of overnight schemes of their mutual fund wherein any information available to the MF is not yet communicated to the unitholders.

As per the Sebi circular, to ensure the employees of AMCs, its board members, and board members of trustees do not take undue advantage of any sensitive information that they may have about any company or its securities or the AMC’s schemes or its units, a category of “access persons” has been created. These “access persons” will have to abide by the new Sebi rules.

“Access person for the purpose of these guidelines shall mean the Head of the AMC (designated as CEO/Managing Director/President or by other  name), Executive Directors, Chief Investment Officer, Chief Risk Officer, Chief Operation Officer, Chief Information Security Officer, Fund Managers, Dealers, Research Analysts, all  employees in the Fund Operations Department, Compliance  Officer and Heads of all divisions and/or departments or  any other employee as decided by the AMC(s) and/or Trustees,” the circular said.

Non-executive directors of the AMC or trustee company or trustees, who own or have access to any  non-public information, which could materially impact the price of the securities, NAV (net asset value) of the schemes or interest  of the unitholders will also be deemed as “access persons”.

The circular states the new rules will apply on transactions for sale and purchase of shares, debentures, bonds, warrants, derivatives and units of MF or AMC schemes where these “access persons” are employed.

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