The Market Regulator, the Securities and Exchange Board of India (SEBI) notified the Usage of pool accounts by Mutual Funds.
In terms of Clause (5) of the Fifth Schedule of SEBI (Mutual Funds) Regulations, 1996 (hereinafter referred to as “MF Regulations”), it is stipulated that, “Trustees and asset management companies shall ensure that the assets and liabilities of each scheme are segregated and ring-fenced from other schemes of the mutual fund; and bank accounts and securities accounts of each scheme are segregated and ring-fenced.”
In this regard, representations were received from the industry highlighting the instances where pool accounts are used, as certain transactions are carried out only at the Mutual Fund level for operational ease and due to certain regulatory requirements. However, the securities or funds held in the pool accounts at the Mutual Fund level are duly segregated scheme-wise and appropriately reflected in the books of the respective schemes, at the end of the day.
Mutual Funds may use pool accounts, only for such transactions which are executed at the mutual fund level owing to certain operational and regulatory requirements, subject to the various conditions. 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 a nil balance at end of the day. At no point of time, the securities or funds of one scheme shall be used for other schemes (s) and there shall be any conflict of interest amongst investors of various schemes.
Based on the request received from AMFI, it has been decided to extend the date of implementation of the circular to April 01, 2022. Till such time, the existing circular no. MFD/CIR/15/19133/2002, dated September 30, 2002, on “Risk Management System” shall remain operational. However, AMCs may choose to adopt the provisions of the circular dated September 27, 2021, before April 01, 2022.
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