New SEBI Norms: Boost to investors! Regulator opens commodity markets for Mutual Funds, Portfolio Managers

New SEBI Norms: The Securities and Exchange Board of India (SEBI) has now allowed mutual funds (MFs) and portfolio managers to invest in commodity derivatives. The move is set to strengthen market offerings and attract more players. On Friday, SEBI announced a slew of reform measures. The market regulator has also approved changes in its norms for open offer exemptions for corporates facing debt restructuring as also for debt instrument valuation by mutual funds to make these processes fairer.

At present, retail level traders and a few corporate hedgers and speculators dominate the commodity market. Overall development is expected with the entry of mutual funds and portfolio managers. This will likely attract more hedgers to the market. The introduction of Mutual Funds and portfolio managers would add long-term liquidity to the markets.

Here is a look at some important decisions approved by the SEBI Board:

- The SEBI Board has eased the norms for raising of funds through instruments like real estate and infrastructure investment trusts.

- SEBI has decided to amend its norms for valuation of money market and debt securities by mutual funds. This will make the process fairer and uniform across the industry to safeguard investors from default-like scenarios witnessed in the aftermath of IL&FS crisis and other defaults.

- SEBI proposal aims to make the valuation practices more reflective of the realizable value of money market and debt securities with residual maturity up to 60 days.

- The residual maturity limit for amortisation based valuation by mutual funds will be reduced from 60 days to 30 days.

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- The threshold maintained between the reference price and valuation price would be plus or minus 0.025 per cent, while the reference price will be taken as security level price given by the valuation agencies.

- The board has decided to approve a proposal to bring uniformity and consistency across the mutual fund industry on the valuation of money market and debt securities rated below investment grade.