{"id":328219,"date":"2024-08-07T12:30:07","date_gmt":"2024-08-07T07:00:07","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=328219"},"modified":"2024-08-07T11:40:46","modified_gmt":"2024-08-07T06:10:46","slug":"sebi-inserts-provisions-market-abuse-mechanism-for-identification-market-abuse-sebi-mutual-funds-second-amendment-regulations-2024","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/08\/07\/sebi-inserts-provisions-market-abuse-mechanism-for-identification-market-abuse-sebi-mutual-funds-second-amendment-regulations-2024\/","title":{"rendered":"Provisions for &#8216;market abuse&#8217; and &#8216;mechanism for identification of market abuse&#8217;, introduced vide SEBI (Mutual Funds) (Second Amendment) Regulations, 2024"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\">On 02-08-2024, the Securities and Exchange Board of India (&#8216;SEBI&#8217;) notified the SEBI (Mutual Funds) (Second Amendment) Regulations, 2024 to amend the <a href=\"http:\/\/www.scconline.com\/DocumentLink\/lJL9S095\" target=\"_blank\" rel=\"noopener\">SEBI (Mutual funds) Regulations, 1996<\/a>.<\/p>\n<p style=\"margin-bottom: 3%;\">The provisions of sub-regulations I and II of Regulation 3 of these regulations (mentioned in points 1 and 2) will come into force on 02-11-2024 and sub-regulation III of Regulation 3 (mentioned in point 3) will come into force on 02-08-2025. However, the provisions of sub-regulations I and II of Regulation 3 shall come into force on 02-02-2025 for asset management companies of mutual funds that have assets under management less than rupees ten thousand crores.<\/p>\n<p style=\"font-weight: bold;\">Key Points:<\/p>\n<ol style=\"list-style-type: decimal;\">\n<li>\n<p>By way of amendment, a new clause has been added to Regulation 2(1) for defining &#8216;market abuse&#8217;.<\/p>\n<\/li>\n<li>\n<p>The 2024 Regulations have added the following three sub-regulations after sub-regulation (26) of Regulation 25 which lays down provisions for asset management company and its obligations:<\/p>\n<ul style=\"list-style-type: disc;\">\n<li>\n<p>The asset management company must set up an institutional mechanism for identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities.<\/p>\n<\/li>\n<li>\n<p>The CEO\/Managing Director\/such person having equivalent or analogous rank and the Chief Compliance Officer have been made responsible and accountable for the implementation of the institutional mechanism.<\/p>\n<\/li>\n<li>\n<p>The asset management company must establish, implement, and maintain a documented whistle-blower policy.<\/p>\n<\/li>\n<\/ul>\n<\/li>\n<li>\n<p style=\"margin-bottom: 3%;\">By way of amendment in Clause 2 in Part B of the Fifth Schedule which provides for the channels, disclosures, and transparency of the communication of fund managers and dealers, a proviso has been added to sub-clause (b) which says that face to face communication including interactions which take place out of office may not be recorded.<\/p>\n<\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">Apart from provisions for market abuse, the 2024 Amendment Regulations also direct asset management companies to establish a whistle-blower policy which must provide a confidential channel to raise concerns about fraud, unfair practices, etc.<\/p>\n","protected":false},"author":67011,"featured_media":316838,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,15],"tags":[71818,70458,15642,2563,41404],"class_list":["post-328219","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislationupdates","category-rules_regulations","tag-identification-mechanism","tag-market-abuse","tag-mutual-funds","tag-SEBI","tag-sebi-regulations"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEBI inserts provisions for \u2018market abuse\u2019 and \u2018mechanism for identification of market abuse\u2019 vide SEBI (Mutual Funds) (Second Amendment) Regulations, 2024 | SCC Times<\/title>\n<meta name=\"description\" content=\"Securities and 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