SEBI Allows Flexibility to Mutual Funds to Buy and Sell Credit Default Swaps With Adequate Risk Management
- Blog|News|Company Law|
- < 1 minute
- By Taxmann
- |
- Last Updated on 23 September, 2024
Latest from Taxmann
Circular No. SEBI/HO/IMD/PoD2/P/CIR/2024/125; Dated: 20.09.2024
SEBI has allowed mutual funds (MFs) greater flexibility in buying and selling credit default swaps (CDS) with adequate risk management. This flexibility to participate in CDS would serve as an additional investment product for mutual funds and also aid in increasing liquidity in the corporate bond market.
As per the new framework, MF Schemes can buy CDS only to hedge their credit risk on debt securities they hold in various schemes. The exposure of CDS shall not exceed respective debt security exposure, and such exposure may not be added to the gross exposure of the scheme.
In case, the protected debt security is sold, schemes must ensure that the respective CDS position is closed within 15 working days of selling the above-protected debt security. Further, MF schemes must buy CDS only from such sellers that have instruments with the lowest long-term rating of investment grade and above. The circular shall be effective immediately.
Click Here To Read The Full Circular
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
