Setting up of Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds
Summary
SEBI mandates Asset Management Companies to establish a Limited Purpose Clearing Corporation for corporate bond repo transactions. The total contribution of INR 150 Crore is to be shared by AMCs in proportion to their Average AUM of specific debt-oriented schemes from FY 2019-20. This directive aims to develop the corporate bond market while ensuring AMCs maintain prescribed networth requirements.
Text
AMCs shall contribute INR 150 Cr. towards share capital of LPCC in proportion to the Asset Under Management (AUM) of open ended debt oriented mutual fund schemes managed by them.
The contribution shall be based on Average AUM of debt oriented schemes for the Financial Year 2019-20, calculated by AMFI, making it obligatory for AMCs to contribute.
AMCs shall ensure that the networth as prescribed under Regulation 21(f) of SEBI (Mutual Funds) Regulations, 1996 shall be maintained over and above the contribution made towards setting up of the LPCC.
Source: SecMarx — Setting up of Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.