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TMI BlogParticipation of Mutual Funds in Commodity Derivatives Market in IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... (ETCDs), SEBI has permitted Category III Alternative Investment Funds to participate in exchange traded commodity derivatives vide circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/61 dated June 21, 2017 and also vide circular no. SEBI/HO/CDMRD/DMP/CIR/P/2018/134 dated October 09, 2018 permitted Eligible Foreign Entities (EFE) having actual exposure to Indian commodity markets, to participate in the commodity derivative segment of recognized stock exchanges for hedging their exposure. In furtherance to this objective, it has been decided to permit mutual funds to participate in ETCDs. 3. The participation of mutual funds in ETCDs would be subject to the following: i. Mutual funds are permitted to participate in ETCDs in India, except in commodi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange in fundamental attributes of the scheme and all unitholders shall be given a time-period of at least 30 days to exercise the option to exit at prevailing NAV without charging of exit load, if any. vii. Prior to participation in ETCDs, the AMCs shall adhere to the following: a) Appoint a dedicated fund manager with requisite skill and experience in commodities market (including commodity derivatives market). b) Appoint a custodian registered with the Board for custody of the underlying goods, arising due to physical settlement of contracts. c) Have written down investment policy for participation in ETCDs approved by the Board of the Asset Management Company and the Board of Trustees. d) Have written down valuation policies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETCDs untill FPIs are permitted to participate in ETCDs. Investment Limits: 4. Participation of mutual funds in ETCDs shall be subject to the following investment limits: i. Mutual fund schemes shall participate in ETCDs of a particular goods (single), not exceeding 10% of net asset value of the scheme. However, the limit of 10% is not applicable for investments through Gold ETFs in ETCDs having gold as underlying. ii. In case of multi assets allocation schemes, the exposure to ETCDs shall not be more than 30% of the net asset value of the scheme. iii. In case of other hybrid schemes excluding multi assets allocation scheme, the participation in ETCDs shall not exceed 10% of net asset value of the scheme. iv. In partial modificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers of the Exchange and also to disseminate the same on their website.
iii. communicate to SEBI, the status of the implementation of the provisions of the circular.
7. All the provisions of the circular will be applicable from the date of the circular.
8. This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Yours faithfully,
Jyoti Sharma
General Manager
Email: [email protected] X X X X Extracts X X X X X X X X Extracts X X X X
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