Restriction on redemption of Mutual Funds- (Securities and Exchange Board of India) (31 May 2016)
MANU/SMFD/0004/2016
Capital Market
In efforts to quell disparity in imposition of restrictions on redemption of mutual funds, the Securities and Exchange Board of India clarified that redemption can be curtailed “when there are circumstance leading to a systemic crisis or event that severely constricts market liquidity”.
Restrictions are envisaged to last between 10 and 90 working days and the SEBI expects to be informed of the same. Redemption requests up to Rs. 2 lakh will not be subject to restriction.
Information pertaining to restrictions will have to be prominently disclosed to investors in scheme related documentation.
So far, restrictions on redemption of mutual funds have been left to funds’ devices. Such restrictions, at present also used in oblique circumstance being faced by individual entities, were intended to ve limited to excessive requests arising out of market crises.
Tags : MUTUAL FUND REDEMPTION RESTRICTION SEBI
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