Credit Default Swaps flexibility expands mutual funds' ability to buy and sell CDS with tightened cover, disclosure, and risk rules. SEBI permits Mutual Funds to buy and sell Credit Default Swaps (CDS) with risk management limits: buy CDS only to hedge credit risk on held debt (not exceeding protected security exposure), close positions within fifteen working days after selling the protected security, and attribute exposure to the higher rated of reference entity or CDS seller for concentration limits. Funds may sell CDS only as synthetic debt securities backed by earmarked Cash/G Sec/T bills with cover, buffer and daily review; such synthetic positions count as notional exposure for issuer, group and sectoral limits and gross exposure, and schemes must comply with operational, disclosure, and valuation rules.
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.
Credit Default Swaps flexibility expands mutual funds' ability to buy and sell CDS with tightened cover, disclosure, and risk rules.
SEBI permits Mutual Funds to buy and sell Credit Default Swaps (CDS) with risk management limits: buy CDS only to hedge credit risk on held debt (not exceeding protected security exposure), close positions within fifteen working days after selling the protected security, and attribute exposure to the higher rated of reference entity or CDS seller for concentration limits. Funds may sell CDS only as synthetic debt securities backed by earmarked Cash/G Sec/T bills with cover, buffer and daily review; such synthetic positions count as notional exposure for issuer, group and sectoral limits and gross exposure, and schemes must comply with operational, disclosure, and valuation rules.
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