SEBI

SEBI amends rules for Mutual Funds entering plain vanilla Interest Rate Swaps for hedging

SEBI amends conditions for Mutual Funds entering into plain vanilla Interest Rate Swaps (IRS) for hedging purposes.

SEBI has issued Circular No. Cir/IMD/DF/11/2010 dated August 18, 2010 providing that Mutual Funds may enter into plain vanilla interest rate swaps for hedging purposes. It was provided that the counter party in such transactions has to be an entity recognized as a market maker by RBI. Further, the value of the notional principal in such cases must not exceed the value of respective existing assets being hedged by the scheme. Exposure to a single counterparty in such transactions should not exceed 10% of the net assets of the scheme.
 

Mutual Funds entering into plain vanilla Interest Rate Swaps for hedging purposes – Norms for investment and disclosure by Mutual Funds in Derivatives

 
SEBI has now issued SEBI/HO/IMD/IMD-I DOF2/P/CIR/2021/580 dated 18th June 2021 to provide that Mutual Funds may enter into plain vanilla Interest Rate Swaps (IRS) for hedging purposes.
 
The value of the notional principal in such cases must not exceed the value of respective existing assets being hedged by the scheme.
 
In case of participation in IRS is through over the counter transactions, the counter party has to be an entity recognized as a market maker by RBI and exposure to a single counterparty in such transactions should not exceed 10% of the net assets of the scheme. However, if mutual funds are transacting in IRS through an electronic trading platform offered by the Clearing Corporation of India Ltd. (CCIL) and CCIL is the central counter party for such transactions guaranteeing settlement, the single counterparty limit of 10% shall not be applicable.
 
 

Share
Leave a Comment

Recent Posts

  • Income Tax

TDS can’t be denied for non deposit of tax deducted by the deductor – High Court

One TDS is deducted, credit has to follow, failure of deductor to deposit the amount to the credit of the…

17 hours ago
  • Income Tax

Cash withdrawal from bank can’t be taxed u/s 69C as unexplained expenditure – ITAT

Merely because assessee did not explain purpose of cash withdrawal from bank, it can not be taxed u/s 69C as…

23 hours ago
  • GST

A bland statement of ‘fraud or concealment of facts” in GST Notice u/s 74 not sufficient – SC

In GST Notice u/s 74, allegations should emanate from itself, a bland statement of ‘fraud or concealment of facts” not…

4 days ago
  • Income Tax

For claiming deduction u/s 57(iii), test is of purpose and connection, not actual yield – ITAT

For claiming deduction u/s 57(iii) a reasonable and intelligible nexus should be established between the expenditure incurred and the income…

4 days ago
  • Income Tax

Unless medical certificate are held forged & fictitious, appeal can’t be rejected on ground of delay

Where medical certificate not held to be forged and fictitious, rejecting appeal on ground of delay unjustified In a recent…

4 days ago
  • DGFT

One Star Export House status allowed based on export performance in two FYs

FTP 2023 amended to allow One Star Export House status to applicants (other than for Gems & Jewelry Sector) based…

5 days ago