TMI BlogSEBI advises Franklin Templeton mutual fund to focus on returning money to investorsX X X X Extracts X X X X X X X X Extracts X X X X ..... SEBI advises Franklin Templeton mutual fund to focus on returning money to investors - News and Press Release Dated:- 8-5-2020 - News - PR No. 26/2020 May 7, 2020 SEBI advises Franklin Templeton mutual fund to focus on returning money to investors SEBI has advised Franklin Templeton mutual fund (FT) to focus on returning money to investors, in the context of their winding up six of their debt schemes. SEBI has also noted that a section of the media has reported quoting FT that tightening of norms for investment in unlisted debt by SEBI was one of the factors that added to pressure on their debt schemes which resulted in winding up of their schemes. In this context, it may be noted that in light of credit ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents since September 2018, that led to challenges in the corporate bond market, a need was felt to review the regulatory framework for Mutual Funds and take necessary steps to safeguard the interest of investors and maintain the orderliness and robustness of their investments. It was observed that unlisted debt securities, particularly bespoke securities in which only a single investor invested, suffered from both forms of opaqueness: opaqueness of structure and true nature of risk on the one hand and lack of ongoing disclosure in respect of financials of the issuer on the other. In order to address these issues and improve transparency and disclosure of investments in debt securities made by mutual funds with money entrusted to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem by investors, SEBI had constituted various working groups. Working groups representing AMCs, industry and academia were set up to review the risk management framework with respect to liquid schemes and to review the existing practices on valuation of money market and debt securities. Further, an internal working group was constituted to, inter-alia, review prudential norms for Mutual Funds for investment in various debt and money market instruments. The analysis along with recommendations of the working groups were placed in a meeting of Mutual Fund Advisory Committee (MFAC) held in June, 2019. ( Annex A lists the members of MFAC during that period ). MFAC had made several recommendations for prudential norms for Investment in Debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Money Market instruments by Mutual Funds including investments only in listed NCDs and Commercial Papers (CPs) in the interest of greater transparency and accountability. SEBI Board after deliberations in its meetings held in 2019, and taking into account the recommendations of MFAC, inter-alia, approved the following prudential norms for investment in listed debt securities: Mutual Fund schemes shall be mandated to invest only in listed non-convertible debentures (NCDs) and the same would be implemented in a phased manner. All fresh investments in Commercial Papers (CPs) shall be made only in listed CPs pursuant to issuance of guidelines by SEBI in this regard. However, the mutual funds to have flexibility to invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in unlisted NCDs up to a maximum of 10% of the debt portfolio of the scheme subject to such investments in unlisted NCDs having simple structures as may be specified from time to time, being rated, secured and with monthly coupon payments. This shall be implemented in a phased manner by June 2020. The details of the Board Memorandum and minutes are available on the website of SEBI. SEBI vide circular dated October 01, 2019 , provided a timeline to comply with the investment limits for unlisted NCDs as 15% and 10% of the debt portfolio of the scheme as on March 31, 2020 and June 30, 2020 respectively (over a year from the date of recommendations by MFAC). In addition, it permitted mutual funds to grandfather the existing inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stments in unlisted debt instruments (as on the date of the circular) till maturity of such instruments, so as to not disrupt the market. These dates were subsequently extended to Sept 30th, 2020 and Dec 31st 2020 respectively in view of Covid related disruptions. Despite the regulations being clear, some mutual fund schemes seem to have chosen to have high concentrations of high risk, unlisted, opaque, bespoke, structured debt securities with low credit ratings and seem to have chosen not to rebalance their portfolios even during the almost 12 months available to them so far. In the current scenario, Franklin Templeton should focus on returning the money of investors as soon as possible. Mumbai May 07, 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Encl: Annexure A Annexure A Details of Mutual Fund Advisory Committee Members Sr. No. Members Details Capacity 1. Ms. Arundhati Bhattacharya Former Chairman, State Bank of India Chairperson 2. Mr. Ananth Narayan Associate Professor, Finance, SPJIMR Member 3. Mr. Brij Gopal Daga Independent Trustee Director, Motilal Oswal Mutual Fund Member 4. Shri. Deepak Ranjan Deputy Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor, Ministry of Finance Member 5. Mr. Dhirendra Kumar CEO, Value Research India Pvt. Ltd Member 6. Mr. Kailash Kulkarni CEO, L T Investment Management Ltd Member 7. Mr. K. N. Vaidyanathan Chief Risk Officer, Mahindra Mahindra Ltd Member 8. Ms. Monika Halan Editor, Mint Money Member 9. Dr. M. S. Kamath General Secretary, Consumer Guidance Society of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member 10. Mr. Nilesh Shah Managing Director, Kotak Mahindra Asset Management Company Ltd Member 11. Mr. Nilesh Vikamsey Partner, Khimji Kunverji Co. Member 12. Mr. Nitin Vyakaranam CEO, ArthaYantra Member 13. Mr. N. S. Venkatesh Chief Executive, Association of Mutual Funds in India Member 14. Mr. Rajnish Narula CEO, Canara Robeco Asset Management Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd Member 15. Mr. Sandeep Parekh Managing Partner, Finsec Law Advisors Member 16. Mr. Sanjay Sapre President, Franklin Templeton Asset Management (India) Pvt. Ltd. Member 17. Mr. Saurabh Mukherjea CEO, Marcellus Investment Managers Ltd Member 18. Mr. S V Muralidhar Rao Executive Director, SEBI Member - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
