(F.P)
Capital markets regulator Sebi on Friday extended the deadline to May 1 for implementation of swing pricing mechanism, for mutual fund schemes, aimed at discouraging large investors from sudden redemptions. The new framework, aimed at ensuring fairness in treatment of entering, exiting and existing investors in mutual fund schemes, particularly during market dislocation, was to be applicable from March 1.
Based on the request received from Amfi, it has been decided to extend the implementation date of the provisions of swing pricing mechanism to May 1, 2022, Sebi said in a circular. The regulator, in September last year, introduced swing pricing mechanism for open-ended debt mutual fund schemes in a bid to discourage large investors from sudden redemptions. To begin with, the swing pricing framework will be made applicable only for scenarios related to net outflows from the schemes.
The industry body will prescribe an indicative range of swing threshold to the industry for normal times. For normal times, Sebi said AMCs will decide on the applicability of swing pricing and the quantum of swing factor depending on scheme specific issues. These needs to be disclosed in the Scheme Information Document (SID). For the purpose of determining market dislocation, the regulator said Amfi will develop a set of guidelines for recommending the same to Sebi.
