In a circular issued earlier today, markets regulator SEBI has said that all fixed-income funds must reveal each and every transaction publically by posting it on their website. The circular says: In order to further enhance transparency, the AMCs shall disclose all details of debt and money market securities transacted (including inter scheme transfers) in its schemes portfolio on AMCs’ website and the same shall be forwarded to AMFI for consolidation and dissemination as per format enclosed. These disclosures shall be made settlement date wise on daily basis with a time lag of 30 days.
As per the format given in the circular, the following items shall have to be reported for each trade: Name of the Security, ISIN, Fund House, Scheme Name, Maturity Date, Residual days, Settlement type, Trade Date, Valuation Date, Settlement Date, Quantity traded, Value of the Trade, Price at which valued, Yield at which valued, Type of trade (Inter-scheme / market trade / off market trade).
This constitutes a radically higher level of transparency than that exists now. Currently, regulations force funds to reveal their portfolios only every quarter. As a matter of practice, almost all funds reveal the portfolios every month. It’s notable that the new rule goes gar beyond just a portfolio revelation by forcing funds to reveal full details about each and every transaction.
This move is the latest in a series of changes that SEBI has carried out since the 2008 financial crisis in the regulations governing fixed-income funds. All the changes have been directed at enhancing the transparency and safety of such funds. However, this latest move is likely to hugely increase the compliance workload of funds, amounting, as it could to hundreds of transactions every day.