Amfi committee to review Sebi regulations for MFs

Sujoy Manna

Mumbai, Nov 4: The Association of Mutual Fund in India (Amfi) has set up a committee for reviewing various operational aspects of mutual fund regulations issued by the Securities and Exchange Board of India (Sebi).

The committee is headed by Prudential ICICI Asset Management Company Ltd senior vice-president (finance & operations) H Shriram .
Speaking to The Financial Express, Mr Shriram said: “The idea of the committee is to study the regulations, identify areas where the implementation of the regulations, as they are worded now, create practical difficulties for the AMCs, and suggest appropriate amendments to the existing regulations. The objective is that the regulations should actually achieve what the regulators want to achieve and at the same time make the practical aspects of implementation simpler.

The committee is expected to shortly submit its initial draft for consideration by the various mutual funds and to seek inputs from other fund houses.

As an example, under the existing regulations, mutual funds can invest in derivatives instruments that are listed on stock exchanges. However, mutual funds may enter into interest rate swaps in order to hedge their interest rate risks and enter into some interest swap agreements (IRS). As IRS are not listed on exchanges (being more of a, over-the-counter product), the funds cannot, technically, do interest rate swap. Also, IRS comes under the purview of the Reserve Bank of India (RBI). The committee will recommend an expansion of the clause in the mutual fund regulations by allowing mutual funds to invest in IRS.

Currently, mutual funds have to publish unaudited results every six month and audited accounts at the end of the year. Annual reports also have to be sent to investors. This amounts to three publications and one mailer of accounts of the schemes during a one-year period.