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Investment/trading in Securities by Employees of AMC(s) & Trustees of Mutual Funds

SEBI Circular - SEBI/HO/IMD/DF2/CIR/P/2016/124 dated November 17, 2016, reads as follows:-

A. Please refer to SEBI circulars dated May 08, 2001, June 20, 2002, July 11, 2003, December 15, 2009 and May 22, 2014, on the captioned subject. With an objective to bring about alignment of these SEBI circulars providing guidelines for Investment/Trading in Securities by employees of AMC(s) and Trustees with the principles laid down in SEBI (Prohibition of Insider Trading) Regulations, 2015, and to remove difficulty in the implementation of the guidelines, the following provisions stand modified:
1. Clause 1.1 of SEBI Circular dated May 08, 2001 on investments covered under these guidelines shall read as follows:
“These Guidelines cover transactions for purchase or sale of any securities such as shares, debentures, bonds, warrants, derivatives and units of schemes floated by Mutual Funds / AMCs where the concerned persons (in terms of the applicability stated at Clause 1 of the said circular) are employed. These Guidelines do not apply to the following investments by the employees:
i. Investments in fixed deposits with banks/financial institutions/companies, life insurance policies, provident funds (including public provident fund) or Investment in savings schemes such as National Savings Certificates, National Savings Schemes, Kisan Vikas Patra, or any other similar investment.
ii. Investments of a non-financial nature such as gold etc, where there is no likely conflict between the Mutual Fund’s interest and the employees’ interest.
iii. Investments in government securities, money market instruments, money market mutual fund schemes, liquid schemes and schemes floated by other Mutual Funds/ AMCs.”
2. Clause 1.2 of SEBI Circular dated May 08, 2001 on applicability of these guidelines shall read as follows:
"These Guidelines shall cover transactions for sale or purchase of securities made:
i. In the name of employees, either individually or jointly,
ii.In the name of the employees’ spouse,
iii. As a member of HUF,
iv. In the name of employees’ parent, sibling and child of such employee or of the spouse, any of whom is either dependent financially on such employee, or consults such employee in taking decisions relating to trading in securities."
3. Clause 2.2.2 (ii) of SEBI Circular dated May 08, 2001 shall read as follows:
“If the shares/debentures/bonds/warrants of the company or derivatives specified by the employee are held by any Scheme of the Mutual Fund of which the AMC is the investment manager, there should be a "cooling off" period of 15 calendar days. The Compliance Officer shall ensure that the last transaction in that particular security was done by the Mutual Fund at least 15 calendar days prior to the date of the written application by the access person. In other words, an application for a purchase /sale transaction on a personal basis would be cleared only if the Mutual Fund has not transacted in that particular security for at least 15 calendar days. 
However, trades executed pursuant to a trading plan submitted by the employees in terms of SEBI (PIT) Regulations, 2015, shall be exempt from the requirement of a “cooling off” period, provided that such trading plan: 
i. Is in compliance with the norms prescribed in SEBI (PIT) Regulations, 2015.
ii. Is publicly disclosed on the website of the concerned Mutual Fund The Compliance Officer shall also properly monitor trades of the MF scheme and that of the access person, as per the trading plan, in order to ensure that such trading plan does not entail trading in securities for market abuse.”
4. Clause 1.4 of SEBI Circular dated May 08, 2001 read with July 11, 2003 and December 15, 2009 shall read as follows:
“The approval of Compliance Officer for carrying out a transaction of sale or purchase of a security by the access person shall not be valid for more than 7 trading days from the date of approval. If a transaction approved by the Compliance Officer has not been effected within 7 trading days from the date of its approval, the access person shall be required to obtain approval once again from Compliance Officer prior to effecting the transaction.”
5. Clause 3 of SEBI Circular dated June 20, 2002 shall read as follows:
“Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 shall be followed strictly by the Trustees, Asset Management Companies and their employees and directors.”
B. Considering that the provisions for investment / trading in Securities by employees of AMCs and Trustees are set out in various SEBI Circulars namely Circulars dated May 08, 2001, June 20, 2002, July 11, 2003, December 15, 2009, May 22, 2014 along-with amendments to these circulars provided at Point A above, for ease of reference these provisions are consolidated and provided at Annexure A.

C. Applicability of the Circular
The above circular will be applicable from December 01, 2016.

This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

(Annexure - A is available in the Circular - available at SEBI site)