(LiveMint)
Market regulator Securities and Exchange Board of India (Sebi) hinted on Tuesday that it may tighten existing asset valuation norms, which guide mutual fund investments to shield investors from risks of capital erosion in debt-oriented mutual funds and to protect asset management companies (AMCs) from unwarranted redemption pressure.
In a meeting between Sebi and the MF industry body Association of Mutual Funds in India or Amfi, Sebi chairman Ajay Tyagi said, “Sebi has reviewed the existing valuation provisions to make them more reflective of the realizable value, to bring in uniformity and consistency in approach, increase robustness of the process and address possible loopholes and misuse of the provisions.”
Mutual funds currently have at least Rs. 24.5 trillion of assets under management (AUM) with around 850 million investor folios. “Based on the review, it has been decided to take certain measures including those relating to the waterfall approach for valuation of non-traded money market and debt securities, flexibility for valuation agencies to ensure fair pricing of securities while continuing to have the final responsibility on the AMC for fair valuation, norms relating to valuation of inter-scheme transfers, disallowing the use of own trades for valuation, etc.,” said Tyagi.
