Securities & Exchange Board of India Imposed Mandatory Requirement for Asset Management Firms to Have Internal Control on Market Misconduct Including Whistleblower Program, Front-Running, Insider Trading, Misuse of Sensitive Information and Recorded Communications by Fund Managers & Dealers
9th May 2024 | Hong Kong
The Securities & Exchange Board of India (SEBI) has imposed mandatory requirement for asset management firms to have internal control on market misconduct including whistleblower program, front-running, insider trading, misuse of sensitive information and recorded communications by fund managers & dealers. Securities & Exchange Board of India (2/5/24): “Asset Management Companies (AMCs) to have an institutional mechanism for deterrence of potential market abuse including front-running. Considering the recent front-running instances observed by SEBI, the Board approved amendments to SEBI (Mutual Funds) Regulations, 1996 (‘Regulations’) for enhancing the existing regulatory framework by requiring Asset Management Companies (AMCs) to put in place a structured institutional mechanism for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities. The mechanism shall consist of enhanced surveillance systems, internal control procedures and escalation processes to identify, monitor and address specific types of misconduct including front running, insider trading, misuse of sensitive information, etc. The Board also approved amendments to the Regulations to a) enhance responsibility and accountability of management of AMCs for such an institutional mechanism; and b) foster transparency by requiring AMCs to have a whistle blower mechanism. While SEBI will specify the broad framework of the institutional mechanism, the industry body i.e. Association of Mutual Funds in India (‘AMFI’), in consultation with SEBI, shall specify detailed standards for such an institutional mechanism. Further, with respect to the requirement of recording of all communication by Dealers and Fund Managers, the Board approved exemption from the requirement of recording face to face communication, including out of office interactions, during market hours. This will be made effective after implementation of the institutional mechanism by the AMCs.”
“ Securities & Exchange Board of India Imposed Mandatory Requirement for Asset Management Firms to Have Internal Control on Market Misconduct Including Whistleblower Program, Front-Running, Insider Trading, Misuse of Sensitive Information and Recorded Communications by Fund Managers & Dealers “
Securities & Exchange Board of India Imposed Mandatory Requirement for Asset Management Firms to Have Internal Control on Market Misconduct Including Whistleblower Program, Front-Running, Insider Trading, Misuse of Sensitive Information and Recorded Communications by Fund Managers & Dealers
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