SEBI Revises Cut-off Timings for NAV in Overnight Mutual Fund Redemptions [Read Cicular]

The Securities and Exchange Board of India (SEBI) issued this circular to implement changes in the cut-off timings used to determine the Net Asset Value (NAV) applicable for repurchase (redemption) transactions in overnight mutual fund schemes.

In an earlier circular dated December 12, 2023, SEBI had mandated that client funds lying with SBs/CMs must be upstreamed at the end of the day to CCs. The upstreaming could happen in the form of:

• Cash
• Lien on Fixed Deposit Receipts (FDRs) created from client funds
• Pledge of Mutual Fund Overnight Scheme (MFOS) units purchased with client funds

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To make this mechanism feasible, a Working Group consisting of AMFI, Mutual Funds Advisory Committee (MFAC), and industry participants recommended changes in the NAV determination cut-off timings for overnight schemes.

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The modified cut-off timings for NAV applicability for repurchase/redemption of units in overnight mutual fund schemes are as follows:

1. For Applications Received Up to 3:00 PM: Applicable NAV will be the closing NAV of the day immediately preceding the next business day.
   
   
2. For Applications Received After 3:00 PM: Applicable NAV will be the closing NAV of the next business day.
   
   
3. For Applications Received Through Online Mode (specifically for overnight fund schemes): The cut-off time is extended to 7:00 PM instead of 3:00 PM.

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Explanation of Business Day: The term “business day” excludes any day when money markets are closed or inaccessible.

The new cut-off timings will come into effect from June 1, 2025.

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