SEBI also brought buying and selling of mutual funds under insider trading rules

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AHMEDABAD: Capital markets regulator SEBI has amended the rules to bring buying and selling of mutual fund units under the ambit of insider trading rules. At present, insider trading rules are applicable only in respect of securities of listed companies.

Apart from this the rules also apply to companies proposed to be listed but mutual fund units were excluded from the definition of securities.

Sebi's decision comes in the wake of the Franklin Templeton episode and the Axis Mutual Fund episode. In Franklin's case, some fund house executives are alleged to have redeemed their holdings in six debt schemes before they were placed under moratorium.

In a notification, SEBI said that 'any insider-connected person having any undisclosed sensitive information shall not transact in fundo-units of any scheme of mutual fund. The net asset value of the scheme is likely to be affected.'

Under the new rules, asset management companies (CHASBAJ) will have to disclose the shareholding of AMCs, trustees and their close relatives in units of their mutual fund schemes.

In addition, SEBI has also increased the responsibility of compliance officers of asset management companies. The newly implemented insider trading rules will come into effect from November 24.

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