Circular on Mutual Funds

Last updated: 29 May 2014

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CIRCULAR

CIR/IMD/DF/10/2014 May 22, 2014

All Mutual Funds/Asset Management Companies (AMCs)/
Trustee Companies/Boards of Trustees of Mutual Funds

Sir/ Madam,

Subject: Circular on Mutual Funds

A. Cash investments in Mutual Funds

1. SEBI, vide circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, had
permitted cash transaction in mutual funds to the extent of `20,000/- per investor,
per mutual fund, per financial year.

2. In partial modification to para I (1) of the aforesaid circular, it has been decided to
increase the limit of cash transactions in mutual funds from the existing limit of
`20,000/- per investor, per mutual fund, per financial year to `50,000/- per investor,
per mutual fund, per financial year, subject to (i) compliance with Prevention of
Money Laundering Act, 2002 and Rules framed there under, the SEBI Circular(s)
on Anti Money Laundering (AML) and other applicable AML rules, regulations and
guidelines and (ii) sufficient systems and procedures in place.

B. Investment/Trading in Securities by Employees of Asset Management
Companies and Trustees of Mutual Funds

1. Please refer to SEBI circular dated May 08, 2001 and circular dated July 11, 2003,
on guidelines for Investment/Trading in Securities by Employees of Asset
Management Companies (AMCs) and Trustees of Mutual Funds.

2. Considering that since the issuance of aforesaid guidelines, liquid schemes have
emerged as a distinct category of Mutual Fund scheme having features similar to
that offered by Money Market Mutual Fund (MMMF) schemes, thus, in partial modification to aforesaid circulars, it has been decided that -

a. In point 1.1 (iii) of the guidelines for Investment/Trading in Securities by
Employees of Asset Management Companies (AMCs) and Trustees of Mutual
Funds, along-with MMMF schemes, Liquid schemes shall be added in list of
securities to which the aforesaid guidelines do not apply.

b. In point 3 of the aforementioned guidelines, along-with MMMF schemes,
transaction in Liquid schemes shall be exempted from being reported by
employees to compliance officer within 7 calendar days from the date of
transaction.

c. In Point 3.2 of the aforesaid guidelines, which mentions various situations
wherein employees of AMC & Trustees of Mutual Funds shall not purchase or
sell units of any schemes, term 'liquid scheme' shall be included along-side
MMMF schemes.

This circular is issued in exercise of the powers conferred under Section 11 (1) of the
Securities and Exchange Board of India Act, 1992, read with the provision of Regulation
77 of SEBI (Mutual Funds) Regulations, 1996 to protect the interests of investors in
securities and to promote the development of, and to regulate the securities market.