Capital market regulator SEBI has sought investor’s view on extending the cut-off time for redemption of liquid and in a single day funds to 7 pm from 3 pm.
The working group of business together with AMFI and members of the Mutual Funds Advisory Committee has advisable a change in cut-off timings to find out relevant NAV with respect to redemption of items in in a single day fund schemes from present 3 pm to 7 pm.
MF In a single day Schemes
The change was proposed to permit time to inventory brokers and clearing members to un-pledge items of MF in a single day schemes and place redemption request with MFs, after the shut of market hours.
They obtain cash invested in securities with in the future maturity on the subsequent working day. For assembly redemption requests, the in a single day schemes should not have to make any sale transaction earlier than market hours.
As a substitute, the in a single day schemes, based mostly on redemption requests, might determine to not reinvest the maturity proceeds to be acquired on T+1 settlement date. For the reason that cash needs to be invested every single day, for the quantity of redemption requests acquired on T-day, such quantity just isn’t reinvested on T+1 day and as a substitute is used for payouts. On account of this, the timeline of redemption, whether or not being 3 pm or 7 pm, is not going to influence the funds valuation or functionality to redeem funding, it stated.
SEBI has sought public feedback on the proposal earlier than February 10.
