Indian regulator tightens derivatives rules
Sebi has banned mutual funds from writing options and placed prudential limits on the amount of derivatives investments that can be made by mutual funds in the country in a bid to tighten regulation
The Securities and Exchange Board of India (Sebi) has banned the use of some equity derivatives by mutual funds, including barring them from writing options contracts. The new rules are applicable for all new schemes launched from August 18, whereas for all existing schemes, they become effective from October 1, according to the regulator.
‘'Mutual funds shall not write options or purchase instruments with embedded written options,'' Sebi stated in a circular issued to the market. It also
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