Mutual fund orders will soon get the NAV of the day when funds reach the asset managers and not of the day of application, SEBI said in a circular on Thursday. Earlier, orders less than Rs 2 lakh got the NAV of the same day as the application, if placed within the cut-off time. The new orders will be applicable from 1 January 2021. “It has been decided that in respect of the purchase of units of mutual fund schemes, closing NAV of the day shall be applicable on which the funds are available for utilization, irrespective of the size and time of receipt of such application,” SEBI said.
The market regulator added that the existing provision on NAV applicability for liquid and overnight funds and cut-off timings for all schemes shall remain unchanged and the amendments made today will be applicable from 1 January 2021. Earlier, retail investors had the advantage of getting the NAV of the same day despite the fund transfer taking a few days, however, now everybody will be at par as the condition has been removed, said Omkeshwar Singh, Head-RankMF, Samco Group.
In today’s circular, the market regulator also mentioned that AMCs need to put in place a detailed written-down policy. The policy is expected to include details of the specific activities and the roles and responsibilities of various teams engaged in fund management, dealing, compliance, risk management, back-office, etc, with regard to order placement, execution, and trade allocation. It is also instructed that AMCs shall use an automated Order Management System, where the orders for equity and equity-related instruments of each scheme shall be placed by the fund manager of the respective schemes.
Meanwhile, the Mutual funds had earlier temporarily changed the cut-off timings for buying and redeeming from April 7 to April 17, which was in line with RBI’s reduced trading hours for money markets and forex markets. The investors had to put in their transaction requests early to avoid delays in purchases and redemptions by one working day.
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