The Securities and Exchange Board of India has issued a Circular on Mutual Funds on December 10, 2021.
The representations were received from the industry highlighting the instances where pool accounts are used for mutual funds. The issue was discussed in Mutual Funds Advisory Committee (MFAC) & based on the recommendations SEBI has decided that-
- Mutual Funds may use pool accounts, only for such transactions which are executed at mutual fund level owing to certain operational and regulatory requirements, subject to the following conditions:
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- AMCs shall have internal policies approved by the Board of AMC and Trustees to ensure that adequate operational processes and internal controls are in place to segregate and ring-fence the assets and liabilities of each scheme along with segregation and ring-fencing of securities & bank accounts.
- In such cases, at the end of day, the assets and liabilities of each scheme shall be segregated and ring-fenced from other schemes of the mutual fund; and bank accounts and securities accounts of each scheme shall be segregated and ring-fenced. The pool accounts for both securities and funds should have nil balance at the end of the day.
- At no point of time, the securities or funds of one scheme shall be used for another scheme and there shall be any conflict of interest amongst investors of various schemes.
- The responsibility to ensure segregation and ring-fencing of the assets and liabilities of each scheme along with segregation and ring-fencing of bank accounts & securities accounts shall lie with the Board of AMC and Trustees.
- The whole mechanism shall be audited on a half yearly basis by the auditor appointed by the trustees.
SEBI had earlier specified a 2-tiered structure for benchmarking certain categories of mutual fund schemes. It was specified that AMFI shall publish the 1st tier benchmarks for open ended debt schemes as per the Potential Risk Class and the same shall be implemented by the AMCs with effect from January 1, 2022. Based on the request received from AMFI, it has been decided to extend the date of implementation to 1st April, 2022 vide circular dated December 10, 2021.
