Setting up of Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds

Last updated: 08 April 2021

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This SEBI circular updates the requirements for Asset Management Companies (AMCs) regarding the establishment of a Limited Purpose Clearing Corporation (LPCC). The key change is that the proportion of AMC contributions to the LPCC's share capital will now be based on the Average Assets Under Management (AUM) of specific debt-oriented mutual fund schemes for the Financial Year 2020-21, rather than FY 2019-20. All other conditions from the previous circular remain unchanged.

Securities and Exchange Board of India

CIRCULAR

SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/0548

April 06, 2021

Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)

Sir / Madam,

Subject: Setting up of Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds

1. SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/17 dated February 2, 2021 prescribed the modalities for contribution of AMCs towards share capital of LPCC. In this regard, it was prescribed, inter alia, that the contribution from AMCs shall be in proportion to the Average AUM of open ended debt oriented mutual fund schemes (excluding overnight, gilt fund and gilt fund with 10-year constant duration but including conservative hybrid schemes) managed by them for the Financial Year (FY) 2019-20.

2. In consideration of the representation received from AMFI, paragraph 4 of Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/17 dated February 2, 2021 has been modified to the effect that the contribution of AMCs shall be based on Average AUM of debt oriented schemes, as detailed above, for the Financial Year (FY) 2020-21.

3. All other terms and conditions as stated in SEBI circular dated February 2, 2021 shall remain the same.

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

Yours faithfully,

Hruda Ranjan Sahoo
Deputy General Manager
Tel no.: 022-26449586
Email: hrsahoo@sebi.gov.in

FAQ :

The circular concerns the setting up of a Limited Purpose Clearing Corporation (LPCC) by Asset Management Companies (AMCs) of Mutual Funds.

The modification relates to the basis for calculating AMC contributions to the LPCC's share capital. It has been changed from FY 2019-20 to FY 2020-21.

The Average AUM of eligible debt-oriented mutual fund schemes for the Financial Year 2020-21 will be used.

No, all other terms and conditions stated in the SEBI circular dated February 2, 2021, remain the same.

The calculation includes open-ended debt-oriented mutual fund schemes, excluding overnight, gilt fund, and gilt fund with 10-year constant duration, but including conservative hybrid schemes.