SEBI introduces new norm for Mutual fund participation in ETCDs

SEBI - new norm - Mutual fund participation - ETCDS - Taxscan

The Securities and Exchange Board of India (SEBI) on Friday introduced an new norm for investment and disclosure by mutual funds in Exchange Traded Commodity Derivatives. (ETCDs). This is in clarification with the circular dated May 21, 2019 wherein the SEBI had permitted mutual funds to participate in ETCDs.

As per the new circular, SEBI clarified that, “mutual funds shall not write options, or purchase instruments with embedded written options in goods or on commodity futures.”

In May 2019, SEBI had allowed mutual funds in exchange traded commodity derivatives through hybrid schemes, which included multi-asset scheme and gold ETFs with an investment limit of 10% of Net Asset Value on the former.

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