Put option valuation: non-exercise requires justification and valuation agencies must ignore remaining puts for pricing. If a mutual fund does not exercise a put option that would have benefited the scheme, the fund must justify non-exercise to valuation agencies, the AMC board and trustees by the last date of the notice period; valuation agencies must then exclude remaining put options from the security valuation. A put is deemed in favour of the scheme where the yield on the valuation price ignoring the put exceeds the contractual yield or coupon by the prescribed threshold. The circular applies prospectively and is issued to protect investors and regulate valuation.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Put option valuation: non-exercise requires justification and valuation agencies must ignore remaining puts for pricing.
If a mutual fund does not exercise a put option that would have benefited the scheme, the fund must justify non-exercise to valuation agencies, the AMC board and trustees by the last date of the notice period; valuation agencies must then exclude remaining put options from the security valuation. A put is deemed in favour of the scheme where the yield on the valuation price ignoring the put exceeds the contractual yield or coupon by the prescribed threshold. The circular applies prospectively and is issued to protect investors and regulate valuation.
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