The Association of Mutual Funds in India (AMFI) has introduced new guidelines to enhance surveillance and curb front-running in mutual fund trades. According to CNBC-TV18 the updated measures aim to establish clear procedures for addressing suspected market abuse and ensure swift action against any irregularities.
As reported by CNBC-TV 18, the new AMFI regulations include the requirement for Asset Management Companies (AMCs) to submit detailed reports on suspicious trades to the Securities and Exchange Board of India (SEBI) every quarter. AMCs must also develop Standard Operating Procedures (SOPs) to address suspected market abuse promptly, including thorough reviews of alerts and employee communications. To enhance security, AMCs are now mandated to implement biometric access to their dealing rooms. Additionally, AMFI has enforced mandatory reviews of personal trades conducted by key AMC employees and requires AMCs to issue weekly alerts on suspicious mutual fund trades. Fund managers are obligated to take a mandatory 10-day leave annually, and AMFI has mandated action against brokers involved in suspicious trades. Lastly, all AMCs must establish compulsory whistleblower policies.
Key aspects of the new AMFI regulations include:
- Quarterly Reporting: Asset Management Companies (AMCs) are now required to submit detailed reports on suspicious trades to the Securities and Exchange Board of India (SEBI) every quarter.
- Standard Operating Procedures: AMCs must develop Standard Operating Procedures (SOPs) for promptly addressing suspected market abuse. This includes thorough reviews of alerts and employee communications.
- Biometric Security: To strengthen security, AMCs are mandated to implement biometric access to their dealing rooms.
- Employee Trade Reviews: AMFI has enforced a mandatory review of personal trades conducted by key AMC employees.
- Weekly Alerts: AMCs must now issue weekly alerts on suspicious mutual fund trades.
- Mandatory Leave: Fund managers are required to take a mandatory 10-day leave annually.
- Broker Accountability: AMFI has mandated action against brokers involved in suspicious mutual fund trades.
- Whistleblower Policies: All AMCs must now have compulsory whistleblower policies in place.
These steps are part of AMFI’s broader effort to maintain integrity and transparency in mutual fund operations and to foster a fair trading environment.