Derivative exposure limits set for mutual funds, ban on writing options, and uniform disclosure format mandated. SEBI prescribes prudential limits on mutual fund derivative activity by capping cumulative gross exposure of a scheme through equity, debt and derivatives at the scheme's net assets, prohibiting writing of options and instruments with embedded written options, and limiting exposure from option premiums. Hedging positions may be excluded from limits only when they demonstrably reduce loss on an existing securities position, use the same underlying, and do not exceed the existing position; excess hedging is counted as exposure. Interest rate swaps for hedging and a standardized exposure computation and disclosure regime are mandated.
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Derivative exposure limits set for mutual funds, ban on writing options, and uniform disclosure format mandated.
SEBI prescribes prudential limits on mutual fund derivative activity by capping cumulative gross exposure of a scheme through equity, debt and derivatives at the scheme's net assets, prohibiting writing of options and instruments with embedded written options, and limiting exposure from option premiums. Hedging positions may be excluded from limits only when they demonstrably reduce loss on an existing securities position, use the same underlying, and do not exceed the existing position; excess hedging is counted as exposure. Interest rate swaps for hedging and a standardized exposure computation and disclosure regime are mandated.
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