The Securities and Exchange Board of India (SEBI) recently issued a circular aimed at simplifying regulations for mutual funds venturing into commodities and overseas securities. SEBI constituted working groups to review existing regulatory frameworks and propose measures to streamline operations for mutual funds. The focus was particularly on enhancing flexibility and reducing compliance burdens. Following recommendations from these groups, SEBI conducted public consultations to gather feedback and insights from stakeholders.
Commodity-Based Funds: The circular introduces modifications to Clause 3.3.11 of the Master Circular for Mutual Funds, offering optional appointment of dedicated fund managers for commodity-based funds such as Gold ETFs and Silver ETFs. However, it emphasizes the importance of appointing individuals with sufficient expertise and experience in managing investments within the commodities market. The responsibility for compliance oversight rests with the Boards of the Asset Management Companies (AMCs).
Overseas Investments: Similarly, Clause 12.19.3.1 of the Master Circular has been revised to provide optional appointment of dedicated fund managers for overseas investments specified in paragraphs 12.19.2.1 to 12.19.2.9. Again, the emphasis is on ensuring that appointed fund managers possess the requisite skills to navigate investments in overseas securities. AMCs are tasked with ensuring compliance and reporting to trustees periodically.
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Securities and Exchange Board of India
Circular No. SEBI/HO/IMD/IMD-PoD-2/P/CIR/2024/30 Dated: April 30, 2024
To
All Mutual Funds (MFs)/
All Asset Management Companies (AMCs)/
All Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)
Madam/ Sir,
Subject: Ease of doing business- Fund manager for Mutual fund schemes investing in commodities and overseas securities.
1. SEBI constituted various Working Groups to recommend measures to simplify and ease compliances under various SEBI Regulations. Accordingly, a working group was constituted to review the present regulatory framework under SEBI (Mutual Funds) Regulation, 1996 and recommend measures to promote ease of doing business for mutual funds. Based on the recommendations of the working group, a public consultation was carried out.
2. Accordingly, the following has been decided:
2.1. In partial modification to the Clause 3.3.11 of the Master Circular for Mutual Funds dated May 19, 2023, it has been decided as under:
“For commodity based funds such as Gold ETFs, Silver ETFs and other funds participating in commodities market, appointment of a dedicated fund manager shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in commodities market. The Board of the AMCs shall be responsible for ensuring compliance and reporting regarding the same to trustees, on a periodic basis.”
2.2. Further, in partial modification to the Clause 12.19.3.1 of the Master Circular for Mutual Funds dated May 19, 2023, it has been decided as under:
“Appointment of a dedicated fund manager for making the above overseas investments stipulated under paragraph 12.19.2.1 to 12.19.2.9 shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in overseas securities. The Board of the AMCs shall be responsible for ensuring compliance and reporting regarding the same to trustees, on a periodic basis.”
3. 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 Regulation 25(22)(a)(ii) and Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
4. This circular is available at sebi.gov.in under the link “Legal ->Circulars”.
Yours faithfully,
Lakshaya Chawla
Deputy General Manager
+91-22-26449369
lakshayac@sebi.gov.in
