Minimum percentage of trades carried out by mutual funds through RFQ platform
Summary
SEBI mandates that mutual funds execute a minimum of 25% of their monthly secondary market corporate bond trades and 10% of commercial paper trades via the RFQ platform. These percentages are calculated on a rolling basis using the average value of trades from the preceding three months, excluding inter-scheme transfers. The circular modifies previous requirements to enhance liquidity and becomes effective from December 1, 2021.
Text
On monthly basis, Mutual Funds shall undertake minimum 25% of their total secondary market trades by value (excluding Inter Scheme Transfer trades) in Corporate Bonds by placing/seeking quotes through one-to-many mode on the Request for Quote (RFQ) platform of stock exchanges
On monthly basis, Mutual Funds shall now undertake minimum 10% of their total secondary market trades by value (excluding Inter Scheme Transfer trades) in Commercial Papers by placing/seeking quotes through one-to-many mode on the Request for Quote (RFQ) platform of stock exchanges
The percentages as specified above shall be reckoned on the average of secondary trades by value in immediate preceding three months on rolling basis
Mutual Funds are permitted to accept the Contract Note from the brokers for transactions carried out in One to One (OTO) and One to Many (OTM) modes of RFQ platform
This circular shall come into force with effect from December 1, 2021
This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996
Source: SecMarx — Minimum percentage of trades carried out by mutual funds through RFQ platform. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.