The Securities and Exchange Board of India (SEBI) has allowed listing of units of mutual fund schemes that are in the process of winding up so that investors get an exit option.
“As per MF regulations, there are several steps envisaged with respect to winding up of mutual fund schemes before the scheme ceases to exist. During this process, such units can be listed and traded on a recognised stock exchange, which may provide an exit to investors,” stated a SEBI circular issued on Wednesday, while highlighting the fact that close-ended schemes and units of segregated portfolio are allowed to list on the bourses.
Trading via the stock exchange mechanism will not be mandatory for investors; rather, they may avail an optional exit channel, it added. SEBI also directed stock exchanges to submit the operational modalities of the mechanism within seven days.
It may be recalled that last month saw Franklin Templeton MF wind up six debt schemes with cumulative assets worth ₹26,000 crore. Incidentally, the asset management company (AMC), along with its employees and trustees will not be allowed to transact in the units on the stock exchange.
Separately, the fund house appointed Kotak Mahindra Bank to assist the fund house in the monetisation of assets of the six schemes.
“The trustees have appointed Kotak Mahindra Bank, who, through its debt capital markets team, will work closely with the Franklin Templeton trustees, to assist with all portfolio actions in these six schemes that are being wound up,” stated Franklin Templeton MF in a statement.
Their appointment will provide the trustees with the added experience and ability to monetise assets at the earliest possible time, it added.