New Delhi: The Securities and Exchange Board of India (SEBI) has issued a circular with guidelines for Asset Management Companies (AMCs). The guidelines aim to set up institutional mechanisms to identify and prevent market violations such as transaction fraud and illegal use of information in trading.
Under the new norms, the AMCs have to implement procedures to generate alerts in case of market abuse. In addition, they need to formulate policies to take action in case market rules are violated. These include suspension/termination of employees, brokers, or dealers engaged in fraudulent practices. AMCs will also have to review all recorded communications, such as chats, emails, CCTV footage, and entry logs to the firm’s premises. SEBI has also instructed the mutual fund houses to establish a whistle-blower policy for employees, directors, trustees, and others to voice concerns on suspected unethical practices. The circular makes the Chief Executive Officer or the Managing Director of the company responsible for implementing the guidelines.
The deadline to establish the new mechanisms is within three months for bigger firms, while smaller firms get six months for implementation.
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