Short Selling and Securities Lending and Borrowing & Net Settlement of Government Securities Transactions – Amendments to SEBI (Mutual Funds) Regulations, 1996
Summary
This document comprises a SEBI circular and two Gazette notifications regarding amendments to the SEBI (Mutual Funds) Regulations, 1996. The primary subject matter is the permission for mutual funds to engage in short selling and securities lending and borrowing activities. Additionally, it introduces provisions allowing the net settlement of government securities transactions.
Text
Existing mutual fund schemes may engage in short selling of securities as well as lending and borrowing of securities after making additional disclosures including risk factors in the Scheme Information Document in accordance with clause 5(ii)(b) of SEBI circular SEBI/IMD/CIR No.5/126096/08 dated May 23, 2008.
The Board hereby specifies 21st day of April, 2008 as the notified date for the purposes of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2007 and regulation 2 of the Securities and Exchange Board of India (Foreign Institutional Investors) (Second Amendment) Regulations, 2007.
Provided further that sale of government security already contracted for purchase shall be permitted in accordance with the guidelines issued by the Reserve Bank of India in this regard.
Source: SecMarx — Short Selling and Securities Lending and Borrowing & Net Settlement of Government Securities Transactions – Amendments to SEBI (Mutual Funds) Regulations, 1996. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.