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Journalism of Courage
The Securities and Exchange Board of India Sebi has finally made changes in the characteristics of liquid funds that caused considerable heartburn and churn in the October market crash. Sebi has now mandated that liquid fund schemes and plans will,with effect from February 1,2009,make investment in debt and money market securities with maturity of up to182 days only instead of the current level of one year. With effect from May 01,2009,securities with maturity of up to 91 days only should be purchased.
The regulator has further said that the nomenclature liquid plus scheme should be discontinued since it gives a wrong impression of added liquidity. In another order,Sebi has barred fund houses from offering indicative portfolios and indicative yields in their fixed income debt products.
In another order,Sebi said that the indicative portfolio and yield might be misleading to the investors. No communication regarding the same in any manner whatsoever,shall be issued by any mutual fund or distributors of its products, said Sebi. It is an obvious move as it is against the spirit of law for a MF house to provide indicative portfolio in conjunction to the yield. How can a fund house talk about its portfolio even before raising the sum? said Kumar.
Sebi further said inter-scheme transfers of securities having maturity up to 365 days and held in other schemes as on February 01,2009 will be permitted till October 31,2009.
