Norms for investment and disclosure by Mutual Funds in Exchange Traded Commodity Derivatives (“ETCDs”)
Summary
This circular clarifies that specific short positions in Exchange Traded Commodity Derivatives are excluded from cumulative gross exposure calculations. It further prohibits mutual funds from writing options or purchasing instruments with embedded written options on goods or commodity futures. All other conditions from previous circulars regarding ETCD participation remain unchanged.
Text
It is hereby clarified that the following exposures shall not be considered in the cumulative gross exposure as specified in paragraph 4 (v) of SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/65 dated May 21, 2019: a. Short position in Exchange Traded Commodity Derivatives (ETCDs) not exceeding the holding of the underlying goods received in physical settlement of ETCD contracts. b. Short position in ETCDs not exceeding the long position in ETCDs on the same goods.
It is further clarified that mutual funds shall not write options, or purchase instruments with embedded written options in goods or on commodity futures.
All other conditions of the aforementioned circulars shall remain unchanged.
Source: SecMarx — Norms for investment and disclosure by Mutual Funds in Exchange Traded Commodity Derivatives (“ETCDs”). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.